Audience: This Notice will be of particular interest to:
- HR Managers and HR Policy advisers
- To note information about Automatic Enrolment legislation requirements and support available
- To note the revised Staff Transfer form (Annex 6B to the Employer’s Pension Guide), which should be used with immediate effect
Timing: The first PCSPS employers stage on 1 November 2012
- EPN323 drew employers’ attention to their forthcoming legal requirement to automatically enrol all eligible jobholders into a pension scheme. The requirement takes effect from the employer’s staging date, which for the largest PCSPS employers is 1 November 2012.
- An eligible jobholder is defined in legislation as a worker who is over age 22, under State Pension Age, and earning at least the specified minimum (currently £8,105 per year). The Civil Service already enrols the majority of new entrants into a qualifying scheme as part of their contractual arrangements, and this will continue irrespective of the wider eligibility criteria in the legislation. The Minister for the Cabinet Office (MCO), in his capacity as minister with day to day responsibility for the Civil Service, has directed that Civil Service employers will automatically enrol all their employees who are not currently enrolled into a qualifying scheme irrespective of their age or earnings.
- Most Civil Service Departments are signed up to receive CS Employee Policy’s Services. This includes a full suite of supporting products, face-to-workshops approximately 12 months prior to staging, and 6 and 3 months telekits prior to staging. These are at no additional cost to those signed up and CS Employee Policy will contact you to invite you to these events. However, if you have any queries about CS Employee Policy or their services please e-mail:
- MyCSP also offer employers a range of additional services in relation to automatic enrolment, including a suite of Penserver reports and training courses. Please contact your MyCSP Client Relationship Manager for further details.
- Non-Civil Service employers
Employers who participate in the PCSPS by virtue of being listed in Schedule 1 of the Superannuation Act 1972 (known as Schedule 1 bodies), are not covered by the MCO’s direction referred to in paragraph 2, above. They may, however, choose to adopt this policy for their own employees.
- Employees with a Partnership Pension Account
Employees who have opted out of the PCSPS and opened a partnership pension account instead, do not need to be automatically enrolled into the PCSPS. This is because partnership is a ‘qualifying scheme’ as defined under the automatic enrolment legislation.
- Lifetime Allowance and Fixed Protection
EPN326 provided information about changes to the Lifetime Allowance and the implications of applying for fixed protection. To retain fixed protection in a defined benefit scheme, such as the PCSPS, the individual cannot accrue any further benefit. Consequently, the vast majority of those who have applied for fixed protect will have opted out of the PCSPS. When such people are automatically enrolled or re-enrolled into the scheme, they will have to opt out of the scheme again within one month of being enrolled, or (if later) within one month of their employer telling them that they have been automatically enrolled. Otherwise, they will build up benefits and may lose their fixed protection.
- Members with preserved awards
People who have opted out and have preserved benefits in the PCSPS must also opt out within one month of being automatically enrolled, or (if later) within one month of their employer telling them that they have been automatically enrolled if they do not wish to build up further benefits in the scheme. This is because there is no minimum qualifying service required for those who already have preserved benefits in the scheme.
- One-person schemes
People who are pensionable in one-person pension arrangements (often operating by analogy to the PCSPS) do not need to be auto-enrolled into the PCSPS. This is because they are already in a qualifying pension scheme.
- Employees transferred in from another PCSPS employer
If an employee transfers from one PCSPS employer to another, and they are in the PCSPS or partnership, their membership of that scheme will continue unchanged. However, if they have previously opted out of the PCSPS and not joined partnership, the new employer must automatically enrol them into the section of the PCSPS they previously opted out of.
- Therefore, it is essential that the transferring employer advises the new employer which section of the PCSPS the individual opted out of previously. In the absence of this information, they should advise what date the individual commenced Civil Service (or Schedule 1) employment, and the date they opted out of the scheme.
- Revised OGD transfer form
In order to ensure compliance with automatic enrolment legislation, when an employee transfers between departments, the importing department must ensure that the worker is in a qualifying pension scheme from the first day of employment in the importing department, if they are not already in one.
- To help with this, the form employers complete when transferring employees to another employer covered by the Civil Service pension arrangements has been revised. This form can be found in Annex 6B of the Employer’s Pension Guide. A copy of the revised form is attached as an annex to this EPN.
- The revised form (OGDTF1) is designed to facilitate the necessary change to current practices, and replaces the previous E18 and GS470 forms. OGDTF1 form is not intended to go via MyCSP as the E18 did, but should instead be sent directly from exporting to importing department. The CSP Trans 1 form remains unaffected and should continue to be sent to MyCSP.
- Departments should consider their internal security procedures when sharing personal information with other departments, and ensure that the employee has given their permission for this data to be shared.
- Re-enrolment of people who opt out before age 22 and/or whilst earning below the specified minimum
If an employee opts out of the PCSPS after being automatically enrolled on their department’s staging date, whilst below age 22 and earning less than the specified minimum, they must be automatically re-enrolled once both these criteria are met.
If an employee opts out of the PCSPS (and does not join partnership) below age 22, their employer must automatically enrol them into the PCSPS once they reach age 22 – irrespective of when they last opted out.
Similarly if someone opts out (and does not join partnership) whilst earning less than the specified minimum, they must be automatically re-enrolled if their earnings rise up to or above that minimum.
- Action at three year re-enrolment date
All employees who have opted out of the PCSPS, and have not joined an alternative qualifying scheme, must be re-enrolled by the employer periodically. The default position is that re-enrolment will take place on the third anniversary of the employer’s staging date. However, employers do have some flexibility as to their exact re-enrolment date (further information is available from the Pensions Regulator’s website).
- Under current proposals, there is likely to be a new Civil Service pension scheme in place when employers’ re-enrolment dates come round. We will issue further guidance closer to the time on what impact this will have regarding what scheme/section any optant out will need to be re-enrolled into at that time.
- Revised opt out process
To ensure that the opting out process can be managed and monitored and any automatic enrolment obligations met, a revised single opt out process has been introduced, whether or not the employing department has staged.
- The employer is now responsible for taking appropriate and timely action to process requests from members to opt out of the PCSPS, before passing information to MyCSP to update their records. The single opt out process applies regardless of whether or not a department has staged under automatic enrolment, or which scheme the member wishes to opt out of, or their reason for opting out.
- If an employee wishes to opt out of the scheme they must now complete the single opt out form that is available on the Civil Service website. Any members who enquire about opting out should be directed to the opt out form and associated factsheet which can be found under ‘forms’ on the website.
- The following process must then be followed:
The member should complete and sign the opting out form and return it to their employer.
The employer (HR/Payroll) must insert a date received (or date stamp) in the appropriate box on the opt out form as soon as they receive it - see note A below.
The employer must take appropriate action to amend payroll records and provide a refund to the member if the opt out form has been received within the relevant timeframe – see note B below.
The employer should complete the employer information at the end of the form which should be signed by an appropriate HR/Payroll representative and send it (or a copy) by post to their MyCSP Pension Service Centre.
MyCSP will check any opt out forms received to ensure they have been date stamped on receipt and completed by the employer. Any forms that do not have received date or completed employer section to show that they have been processed by the employer first will be returned. MyCSP will process fully completed opt out forms received and take necessary administrative action.
Note A: An opting out period begins from the date that an employee is enrolled into a qualifying scheme or (if later) receives a letter from the employer stating that they have been enrolled into a scheme. An opt out request is valid from the date the form is received by the employer. Therefore, it is extremely important (particularly for two groups of employees - see note B below), that the employer date stamps any opt out forms they receive on the day they receive them.
Note B: The three month opting out period for new starters who wish to opt out of the PCSPS and receive a full refund of their contributions, will continue to apply under the scheme rules, irrespective of automatic enrolment legislation. However, for employees who have previously opted out of the scheme and are automatically enrolled from the employer’s staging date, there are two groups who must opt out within one month of being automatically enrolled if they wish to protect their existing pension status:
Employees with fixed protection will need to opt out within one month in order to keep their fixed protection;
Employees with a previous preserved pension in a Civil Service scheme will need to opt out within one month if they wish to receive a refund of contributions made from the automatic enrolment date.
It is therefore, particularly important that the employees in the above groups complete and submit an opt out form quickly and that it is received (and date stamped) by the employer within one month of the start of the opting out period.
- The Employer Pension Guide will shortly be updated to reflect this revised process and will include illustrative flow charts.
Additional information for employers to refer employees to following automatic enrolment
- Forms and publications
In addition to the obligation employers have to inform employees about automatic enrolment and the date on which employees have been or will be automatically enrolled, employers should also let members know what other actions they might need to take. Employers should tell employees automatically enrolled that may need to complete:
- A death benefit nomination form (if they haven’t been in a scheme before or their nominee details have changed);
- A partner declaration form (if required);
- The forms can be found on the Civil Service pensions website:
- There is an automatic enrolment factsheet for members under publications on the Civil Service pension website that gives an overview of automatic enrolment and what it means in the Civil Service.
- More information about the Civil Service pension arrangements, such as copies of the main scheme booklets, overview booklets and other publications about can also be found on the Civil Service website.
- Letters and starter packs
The model appointment letter texts provided in Annex 4B of the Employer Pension Guide have been amended to reflect automatic enrolment. Some letters include a standard generic statement, but for some scenarios, a choice of text has been provided for use depending on whether an employer has staged or not. In these cases, the employer must read the context and chose the appropriate statement to use to fit their situation.
- The contents of the starter packs that employers order from St Ives printers have been updated in preparation for automatic enrolment. Generic statements about automatic enrolment are included in the main scheme booklets. The PensionChoices forms NE1, NE2 and RJP will also be replaced with effect from 15 October with revised versions that include text about automatic enrolment.
Please note: the revised PensionChoices form NE1 will no longer give new starters an immediate choice not to join a pension scheme. Employees who do not wish to join or want to opt out will have to complete an opting out form that is available on the Civil Service website and follow the process in paragraph 22 (above).
- Prior to staging under automatic enrolment legislation, departments will continue to order and issue starter packs (and PensionChoices forms) NE1, NE2 or RJP as appropriate.
- Once a department has staged under automatic enrolment, it will no longer be necessary to order or issue starter pack NE2 for new starters joining on or after the staging date as all employees, including those employed for less than 12 months, will be automatically enrolled in a qualifying scheme.
Enquiries regarding content please refer to Scheme Management Executive SMEemployers@cabinet-office.x.gsi.gov.uk
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