Date posted: 20/02/2002

Issue: Announcement of the main changes made to the Principal Civil Service Pension Scheme (PCSPS), the Civil Service Compensation Scheme (CSCS) and the Civil Service Additional Voluntary Contribution Scheme (CSAVCS).

Action: HR and personnel areas to note the changes.

Timing: Normal course of business.

Background

  1. In addition to the introduction of new pension arrangements for the Civil Service from October 2002, a number of amendments were made in July 2002 to the existing (i.e. classic) arrangements. Technical guidance on these changes was issued earlier to APACs in the normal way by means of a Pensions Circular. We are sorry for the delay that has occurred in providing employers with a summary of the changes.

Changes to the PCSPS

  1. Fixed Term Appointments – The Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 came into force on 10 July 2002. Two amendments were made to comply with these regulations.

First, to permit fixed term appointees to buy added years. (FTAs are also able to buy added years in classic plus and premium.) For purchase by lump sum, the 12 month time limit begins on 10 July 2002 or, if later, the date the fixed term appointment began. Where a member who was employed on a fixed term appointment on 10 July 2002 applies to buy added years by periodical contributions, the contributions will normally begin from their next birthday following the option. However, where their birthday falls between 10 July 2002 and the date one month after being notified of their ability to buy added years, the option may be allowed to apply retrospectively from the date of that birthday.

Second, the removal of the 5 year cut-off point on service enhancement for fixed term appointees medically retired on or after 10 July 2002; service is now enhanced by the unexpired part of the fixed term contract.

  1. Added years – medical retirement following non-reckoning sick leave – where a member started buying added years by periodical contributions on or after 21 August 1984 and moved to sick pay at pension rate (or sick leave on no pay) immediately before being medically retired, the period of sick pay at pension rate has been treated as a non-reckoning absence and the amount of added years the members is credited with reduced accordingly. This had the unintended effect of providing for a less favourable outcome than the member who is medically retired without moving to no pay or SPPR. Opportunity has been taken to remove this anomaly so that in both cases where medical retirement takes place on or after 22 July 2002, any period on sick leave immediately preceding medical retirement during which the member received no pay or pay at pension rate, is treated as if added years contributions had been paid in full. Note: all other non-reckoning absences (or periods where contributions were not paid) result in a proportionate reduction in the member’s added years contract.
  2. Purchase of added years by lump sum on return from loan to the EC (as an Agent Temporaire or Auxiliaire) – the rules were amended to bring them into line with the current policy and practice of allowing for the lump sum purchase of added years after a period of special leave to take up an EC appointment as an Agent Temporaire or Auxiliaire.
  3. Scope for purchase of added years by part-timers – this rule change maximises the scope for part-timers to buy added years within the limits set down by the Inland Revenue. At the same time we have relaxed the rules in connection with added years scope for those who have earlier non-reckoning periods of service (e.g. earlier service for which a marriage gratuity was received).
  4. Pensionable pay – a new rule to accommodate the transitional pension protection arrangements introduced for the Senior Civil Service.
  5. Unpaid statutory maternity leave – Unpaid statutory maternity leave up to the ordinary maternity leave limit (currently 18 weeks) is treated as reckonable service when taken on or after 19 October 1994. Employer pension contributions (ASLCs) have been, and continue to be, payable in respect of such periods based on the notional salary that would have been received had it not been for the maternity leave. A new rule confirms the former arrangements under which employee WPS contributions are not charged. (NOTE: Additional maternity leave – i.e. taken after the ordinary maternity leave period has expired – qualifies but does not reckon, and therefore no ASLCs or WPS contributions are payable in respect of such periods.)
  6. Transfers in of trivial CSAVC funds – a rule to assist members whose CSAVC fund on retirement is too small to purchase a retirement annuity by allowing the CSAVCS fund to be transferred to the PCSPS for the sole purpose of increasing the member’s PCSPS pension. Changes to the CSCS
  7. Forfeiture – a rule revision to ensure that forfeiture provisions can be applied to all persons (including members of premium) serving in the Civil Service, or who formerly served in the Civil Service.
  8. Earnings Cap – rule revisions allowing the earnings cap to be disregarded in calculating redundancy benefits unless the CSCS rules specify otherwise. The revision also reflects the fact that the pension and annual compensation payment (ACP) will not necessarily be the same, since the pension will be based on capped pensionable pay, and the ACP on uncapped salary.

Changes to the CSAVC Scheme

  1. Incoming transfers – a rule revision to allow incoming transfers where these contain employer contributions. As employers are now able to make contributions to members’ CSAVC Scheme funds, it is appropriate to allow transfer values containing employer contributions to be accepted.
  2. Forfeiture – as employers may now make contributions to member funds, it is appropriate and necessary that the forfeiture rules of the main scheme can be applied in relevant circumstances to CSAVC funds and related pension benefits arising from employer contributions. Members are now covered by the forfeiture provisions of the PCSPS section (classic or premium) to which they belong.

Contacts:

Added years, pensionable pay, trivial commutation, maternity leave

Colin Hennem

colin.hennem@cabinet-office.x.gsi.gov.uk

Tel: GTN 1439 6447 or 01256 846447

Medical retirement

Andy Black

andy.black@cabinet-office.x.gsi.gov.uk

Tel: GTN 1439 6461 or 01256 846461

CSCS & CSAVCS

Davinder Webster

davinder.webster@cabinet-office.x.gsi.gov.uk

Tel: GTN 1439 6402 or 01256 846402

Published:
20 February 2002
Last updated:
25 January 2022