It is essential that any change in employment conditions that will ultimately affect the calculation of a scheme member's benefits, be notified to the pension scheme administrators by completing Form LGS15B (or by completion of a different form as agreed between the employing authority and the scheme administrator).
The service standards require the employing authority to notify the scheme administrators of any contractual change within 20 working days of the effective date of the change.
The following changes should be notified to the pension administrators:
- Change in name and/or status;
- Change in contribution rate (see Contributions section for further information)
- Change in home address;
- Any period of Unpaid Leave.
If an employee moves to a period of reduced contractual or nil pay as a result of sickness or injury or during a period of relevant child related leave (ordinary maternity, paternity or adoption leave and paid additional maternity, paternity or adoption leave) the Scheme employer is required to apply Assumed Pensionable Pay (APP) for pension purposes.
Note that this does not include unpaid additional maternity, paternity or adoption leave available at the end of relevant child related leave. This is to be treated as unpaid leave of absence and no APP accrues during that period (unless the member enters into an APC contract to purchase the 'lost' pension in which case the APP figure will be required in order to calculate the 'lost' pension).
If the member was in the 50/50 section prior to dropping to nil contractual pay because of sickness or injury they should be returned to the main section from the beginning of the next pay period (provided they are still on no pay at that time due to sickness or injury).
Reserve Forces Service Leave
For reserve forces service leave a Scheme employer needs to calculate APP whilst the reservist is on leave and drop that into the member's cumulative figures so that they continue to build up pension as if they were still at work. The employer would pay no employer contribution to the Pension Fund on that APP but would tell both the reservist and the Ministry of Defence (MoD) of the APP figure and the employee and employer contribution due on that amount. The MoD would deduct the employee contribution from the reservist and pay that, together with the employer contribution, directly over to the administering authority.
If the Scheme employer continues to pay the reservist some pay whilst they are on reserve forces service leave, neither the employee or employer contributions are payable on that pay (because contributions are payable on the APP figure) and that pay is not added into the member's cumulative figures because the APP has been added into the cumulative figures.
Scheme employers will still be responsible for providing details of breaks in membership that occur prior to Normal Pension Age (NPA) due to :
- A trade dispute;
- Authorised unpaid leave of absence, or
- Unpaid additional maternity, paternity or adoption leave,
for those members who:
- Were in the Scheme on 31 March 2012 and within 10 years of their NPA on 1 April 2012, and
- Were in the Scheme on 31 March 2014 and 1 April 2014, and
- Have not paid pension contributions to cover the whole of the pension that would have accrued during that period of absence e.g. a shared cost APC to cover the whole of a pension 'lost' during a period of authorised unpaid leave of absence (up to a maximum of 36 months) or unpaid additional maternity, paternity or adoption leave.
This is so the administering authority can determine whether the final salary benefit underpin for these members at NPA exceeds their post 31 March 2014 CARE pension.
Buying back Lost periods of pension
If a member has had a leave of absence due to authorised unpaid leave, unpaid additional child related leave they can elect to buy back the 'lost' period of pension through the purchase of a Shared Cost Additional Pension Contributions (SCAPC) contract . As the member will not have earned any pensionable pay the pension they would have built up during the period has been lost.
Members can choose to buy the lost pension by spreading payment over a number of complete years or by means of a one off lump sum. The employer will meet two thirds of the cost of buying back lost pension other than for an absence due to a trade dispute, provided the member elects to buy back the 'lost' pension within 30 days of returning to work.
Employers are required to contact scheme members who have returned from a period of unpaid leave or child related leave to advise them of the option to buy back the 'lost pension' during that time. The following list of actions must be followed by employers in this instance:
Action to be taken by scheme employers
- Identify members who have returned to work following a break in service due to child-related leave or agreed unpaid leave.
- Send a list of all those members to the Pension Fund setting out Name, National Insurance Number, Date of Birth, Payroll Number, Post Reference (if member has more than one job), and Date of Absence. Submit this to firstname.lastname@example.org
- Check that none of your scheme members who have had a leave of absence have already entered into an APC contract to purchase the maximum additional pension permissible (currently £7,194) as this would deny them the opportunity of buying back the pension they have 'lost' as a result of their absence.
- Write to your scheme members using specimen letter 1 and enclose the guide 'Option to pay back contributions to avoid a break in service' produced by the pension team.
- Provide details of the Assumed Pensionable Pay, dates of absence, reason for absence and confirmation of the section of the scheme (MAIN or 50/50) into which the member contributes as part of specimen letter 1.
- Once an application form has been returned by the member and received in payroll, arrange to make the necessary deduction as a monthly amount or lump-sum (depending on the method of repayment that the member has opted for). Complete specimen letter 2 and send this to your employee remembering to send a copy to the pension team at email@example.com.
- Make sure that for all members who do buy back their 'lost' pension that you add the 'lost' pay figure to the member's Cumulative Pensionable Pay (CPP) when submitting your year end return to the pension team.
A series of specimen letters have been produced for your use when contacting your scheme members:
- Specimen Letter 1 From an Employer to a Scheme member who has returned from a period of unpaid leave.
- Specimen Letter 2 From an employer to a Scheme member who has elected to pay SCAPCs in respect of a period of absence [one job only]
- Specimen Letter 3 From an employer to a Scheme member who has elected to pay SCAPCs in respect of a period of absence [multiple job employee]