This notice is for staff involved in the preparation of Remuneration Reports required for the Annual Resource Accounts exercise. It will be of particular interest to:
1. The resource accounts of organisations covered by the Civil Service pension arrangements must include a Remuneration Report of information about the salary and pension packages of Ministers and the senior management team.
2. In EPN586 we gave advance warning of the information that you will need to supply to the Scheme Administrator for them to provide pension information for your Remuneration Report. This EPN provides further details of what you need to do now.
3. Section 13 of the Employer Pension Guide (EPG) contains detailed guidance about what should be included in your Remuneration Report. Please refer to this guidance if you have any questions about the disclosure of salary, bonus, pension, and compensation information in your report.
4. Please note: Section 13 of the EPG also includes guidance on alpha.
Requesting pension information from the Scheme Administrator
5. You are responsible for identifying the individuals whose details should be included in your Remuneration Report, and for requesting pension information from the Scheme Administrator.
6. To request pension information from the Scheme Administrator, you will need to complete Annex 13A in Section 13 of the EPG. You will need to contact your payroll provider in order to obtain some of the information that you need to give to the Scheme Administrator. Please note: you do not need to include figures from last year’s exercise.
9. IMPORTANT: the Scheme Administrator will not be able to provide you with pension information unless:
a) you have completed Annex 13A fully and accurately; and
b) they have received and processed the interface from your March payroll.
10. If both of these criteria have been satisfied, the Scheme Administrator will provide you with the pension information you need within 20 days of processing your interface (which usually takes 10 working days from when they received it).
11. To reduce the risk of transcribing errors, the Scheme Administrator will send you the results (both inputs and outputs) from the calculator they use to produce the information. This includes all the pension figures you need for the Remuneration Report.
Requesting pension information for Ministers from RPMI (Annex 13B)
12. Civil Service Departments that need information about their Ministers should complete Annex 13B in Section 13 of the EPG and send it to RPMI (the administrators for the Parliamentary Contributory Pension Fund).
Example Remuneration Report (Annex 13C)
13. Annex 13C in Section 13 of the EPG contains an example Remuneration Report that shows how pay, pension and compensation information is presented. Apart from an update to the figures and dates, the only other change is that severance payments made to former Ministers are now disclosed.
Note to senior staff covered by Remuneration Report (Annex 13D)
14. Please issue the note contained in Annex 13D of Section 13 of the EPG to all staff who will be included in the Remuneration Report to provide advance warning of the exercise. Once you have obtained all the necessary figures, you should provide the staff in question with details of what you propose to publish and invite them to correct any factual errors.
Figures that will be used by the Scheme Administrator this year
15. When calculating the real increase in CETV and the pension benefits accrued during the year 2019-20 for the single total figure of remuneration, the Scheme Administrator will take account of inflation.
16. The CPI increase for September 2019 was 1.7%. Consequently, the Pensions Increase (PI) factor for April 2020 will be 1.7%. The in-service revaluation factor for alpha will also be 1.7%.
17. The earnings that count towards the calculation of pensions is limited for some staff to a figure referred to as the “earnings cap” or “permitted maximum”. Where this is relevant, the Scheme Administrator will calculate pensions based on the 2019-20 earnings cap of £166,200.
18. In some cases, the real increase in CETV and the pension benefits accrued for the single total figure of remuneration can be negative. In other words, there can be a real decrease. This is likely to happen during periods of pay restraint and/or where inflation is higher than pay increases.
19. The final salary pension of a person in employment is calculated by reference to their pay and length of service. Their pension will increase from one year to the next by virtue of them having an extra year’s service and by virtue of any pay rise during the year. Where there is no pay rise, the increase in pension due to extra service may not be sufficient to offset the inflation increase. This means that in real terms, the pension value can reduce, hence the negative values.
20. This is likely to happen for members in classic plus where no service after 30 September 2002 counts towards the calculation of the lump sum.
21. Another scenario where there can be negative results is where a member is over their Normal Pension Age (NPA). The factors used to calculate the CETV are such that the value of pension that could have been taken at NPA decreases as the member gets older.
22. When the Scheme Administrator supplies you with the requested pension information, they will explain the reasons for any real decrease in CETV or pension element of the single figure of remuneration. They will also provide you with the combined information you need for your reports with the relevant rounding applied.
Further support available to you
25. If you have an urgent issue regarding the submission of your Remuneration Report and need to speak to a member of the Resource Accounts team, please contact: Julie McComish on (01903 760068).
If you have a question about the distribution of EPNs, or would like to receive them in a different format, please contact EPN@MyCSP.co.uk.
This notice is for employers and should not be issued to scheme members.
Members can find information about their pension by visiting the member's section.