EPN 552 and EPN 523 detailed that employers would take over making cash exit payments from 01 January 2019. The purpose of this EPN is to provide guidance for employers taking over responsibility for making cash exit payments. Guidance on how to deliver these changes can be found below. Please be aware that the requirement to deduct employer National Insurance when cash exit payments are in excess of £30,000.00, is not expected to apply until 06 April 2020 (subject to planned HM Treasury legislation). More information can be found at paragraph 3.12 on page 42 of Budget 2018.
For all exit schemes (excluding efficiency exits), the timescale for returning Compensation Declaration Forms (CDF) will be agreed with employers during the initial commissioning phase of work and documented within the F1 form. The date for returning CDF forms will be a joint agreement between employers and the Scheme Administrator (MyCSP). This will ensure employers have enough time to process payments. The decision will take into account the size of the individual exit schemes and the proposed timings of the exits.
Employers must not pay employees their compensation prior to their Last Day Of Service (LDOS). Some payrolls may only be able to make payments on a single day each month. Where this applies, careful consideration about the dates and communication with employees about their exit payments should be undertaken before finalising LDOS. In order to achieve this, it is recommended that employers are fully aware of any timing constraints laid down by their payroll (or payroll providers).
The amended process is detailed in the attached employers guide ‘What to expect when you set up an exit scheme’.
Efficiency departures are separate from redundancy exit schemes, and will continue to use the Request for Services process. The Scheme Administrator will provide employers with final compensation values within ten working days of receipt of a fully completed Personal Details Form (PDF) from the employee, to enable employers to arrange for payment of compensation via payroll.
Employers are reminded that they are responsible for making all relevant tax HM Revenue & Customs (HMRC) income tax deductions and payments, including National Insurance contribution deductions once legislation has been laid down.
Transitional Arrangements – pre 01 January 2019
If CDF forms are received before the 12 December 2018 and the LDOS falls prior to the 01 January 2019, the Scheme Administrator will process the Compensation Lump Sum payment into the employees’ bank account and bill the appropriate employer. For employees with a LDOS after 31 December 2018, employers will be instructed by the Scheme Administrator to process the Compensation Lump Sum payment into the employees’ bank account.
If CDF forms are received after the 12 December 2018, the Scheme Administrator will instruct the appropriate employer to pay the Compensation Lump Sum in all cases.
For in train exit schemes, if employers wish to discuss CDF return and processing timescales, please contact the Scheme Commissioner on email address firstname.lastname@example.org
If you have a question about the distribution of EPNs or you need to receive them in a different format, contact email@example.com.
This notice is for employers and should not be issued to scheme members.
If members have a question about their pension, they can find information on this website or by contacting the Scheme Administrator (MyCSP).