EPN567 – Employer contribution rates and administration charges

Audience

  • Pension leads
  • Payroll managers
  • Finance directors
  • HR directors

Summary

This EPN provides information on the changes in employer contribution rates from 1 April 2019. These rates have been calculated based on the latest actuarial valuation. They also include the administration charge for the scheme which was previously paid via monthly contributions and an annual invoice.

Actions

  • To instruct your payroll provider to amend contribution percentages to the latest rates
  • To inform colleagues (as per the audience outlined above) of the change in rates

Timing

  • Informing payroll providers and colleagues: as soon as possible
  • New rates apply from: 1 April 2019

Detail

1. The scheme is currently undergoing a valuation designed to set employer contribution rates from 1 April 2019. HM Treasury have directed that part of the valuation process (“the cost control mechanism”) should be paused but have confirmed that the valuation will be used to set employer contribution rates

(see https://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-01-30/HCWS1286/).

2. To provide certainty, we are setting employer contributions on the basis of the current draft valuation results. The new rates and revised salary bands are set out below in paragraph 4. Once the valuation has been completed it will be used to set employer rates from 1 April 2020 for the remaining three years of the valuation period. We do not expect these to be substantively different from the 2019/20 rate, but if there is any variation, rates from 2020 onwards will take account of this.

3. The rates listed below also include 0.32% to pay for the administration levy. Previously this was split between monthly contributions and an annual invoice, but to reduce the administrative burden and harmonise across all employers we have reformed the way we bill.

4. Rates:

Band

Current (2018/19)

Revised (2019/20)

Band 1 (£23,000 and under)

20.0%

26.6%

Band 2 (£23,001 to £45,500)

20.9%

27.1%

Band 3 (£45,501 to £77,000)

22.1%

27.9%

Band 4 (£77,001+)

24.5%

30.3%

Pre-Fresh Start Prison Officers

27.9%

34.1%

Mini-ASLC (Death In Service cover for Partnership members)

0.5%

0.5%

5. A proposal to keep employee contribution rates from 1 April 2019 at their current levels is under consultation with the unions and a separate notice will be sent when these rates have been finalised. We expect to send this notice in early March.

6. Employer contributions to the Partnership scheme are remaining the same as those for the 2018/19 scheme year.

Contacts

If you require further assistance on the content of this EPN, please contact ian.korner@cabinetoffice.gov.uk

If you have a question about the distribution of EPNs contact employerpensionnotice@cabinetoffice.gov.uk.

You can find electronic copies of the Employer Pension Guide, all current EPNs and forms on our website.

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).

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