Date posted: 20/02/2003

Issue: Staff retiring on age grounds, or being retired early for management reasons, understandably expect prompt payment of the lump sum retirement benefit. The PCSPS performance standard is for lump sums to be paid on, or within a few days of, the first day of retirement. Pension payments should commence within one calendar month of the last day of service.

Action: All employers should make sure that their procedures provide the required information to their APACs in sufficient time for the scheme performance standard to be met. All HR staff involved in the retirement process need to be aware of the actions and timescales required.

Timing: Ongoing

Background

The scheme standard for payment of pension awards is as set out above. All employers are bound to comply with this standard as a key function of their delegation for pension administration. It is evident from information received from Capita Hartshead, our new pensioner payroll provider, that many awards are not sent to them within contractual timescales with the result that they are unable to make payment within the standard. Enquiries of APACs have revealed that late notification by employers of age retirements is a problem.

Requirements

The Employer Pension Guide (EPG) sets out your roles and responsibilities, including the appropriate service standards. You can access the EPG on our website. The EPG is in the Employers and APACs section, which you need to use your password to enter. (Details below) If you have not yet ordered a copy of the EPG please contact the order point shown below.

Section 7.1 of the EPG ‘Your responsibilities when staff leave at or after pension age’ sets out your actions and the required timescales. The key duties are :

  • You should notify your Authorised Pension Administration Centre (APAC) of retirement dates at least 2 months before the date so that they can take the appropriate action
  • If members retire at a different date to the usual pension age (60) you
  • must give your APAC, wherever possible, 3 months’ notice of the expected retirement date
  • You must ensure that your APAC gives the member a pensions benefit estimate and instructions on the retirement procedure 6-12 months before their pension age.
  • You must agree arrangements with your APAC to invite members who
  • are within 2 years of retiring to attend a pre-retirement course. All members attending should receive individual benefit statements in advance of the course, and the course must include:
  • A presentation on pension matters
  • An opportunity for those attending to have individual discussions about their pension position
  • You must also make arrangements with your APAC to provide the member with all the information and forms that they will need

Paying awards on time

The 2-month advance notification of retirement date is essential to allow for all the information relevant to the award to be collected and actioned. The member also has to provide information on their award application form. You should remind them to return this promptly to enable the payment to be made.

Your APAC needs time to process the information and send it to Capita Hartshead for payment. APACs need to be able to schedule their work efficiently and they cannot do this if they are constantly sent urgent requests for immediate payment. A scheme standard time of 10 working days is allowed to make payment into the member’s account after the award has been received by the pensioner payroll provider from the APAC. This includes bank processing time.

As with all systems. there are possible ‘emergency’ routes that can reduce turnaround time. These have often been used in the past to try and make up for late receipt of awards, but these increase the risk of error. There are also system limits, including the BACs process, that cannot be overriden, and late payments are the result. The emergency routes should only be used in exceptional circumstances, as they divert resources from other essential work and increase costs.

As part of a retirement process, your APAC may need details from you or sight of documents or files. You should handle these requests as a matter ofurgency. Delays in providing essential information may mean a delay in payment of the member’s lump sum or pension. It can also expose employers to risk of compensatory payments when retirement benefits are paid late. The cost of such payments are a charge on employer, not the pension scheme. The Pensions Ombudsman is taking a hawkish line where payments are made late as a result of departmental (or APAC) failure.

You should make sure that you know what needs to be done on retirement and that you have details of the relevant contacts. (See Annex 1 to EPN37 for APAC contact details)

Contacts:

Enquiries about content:

Pam Stone

pam.stone@cabinet-office.x.gsi.gov.uk

Tel: 01256 846396

Contact for EPG hard copies:

Roger Winter

roger.winter@cabinet-office.x.gsi.gov.uk

Tel: 01256 846201

Enquiries about EPN distribution:

Judith Hornby

judith.hornby@cabinet-office.x.gsi.gov.uk

Tel : 01256 846271

Published:
20 February 2003
Last updated:
25 January 2022