Home - East Riding of Yorkshire Council · Web viewRapunzel is leaving on 31 August 201 5. She works 18.50 hours a week and is on a pay figure of £18,0000 (FTE) - no pay increases

East Riding Pension Fund

Example Estimate Forms 2015/16

Training Notes

Prepared by: Joanne Goddard

Version: 1.1

ERPF Estimate Form Examples 2015/16 Page 1

Contents

Introduction……………………………………………………………………………………3

Example 1 – Snow White (Normal Retirement over age 60)………..…4

Example 2 – Rapunzel (Over age 55 Redundancy)………………………….8

Example 3 – Tiana (Flexible Retirement)……………………………………….12

Example 4 – Belle (Age 55-60 and Switching on the 85-Year Rule)..16

Example 5 – Aurora (Ill Health Retirement)……………………………………20

Example 6 – Elsa (Normal Retirement (Age 55-60))……………………….24

Frequently Asked Questions…………………………………………………………..27


Introduction

With the new LGPS regulations coming into force from 01 April 2014, the East Riding Pension Fund has had to revise all of its literature and forms to accommodate the changes. This document is simply to give you some examples on how to fill in the new estimate request form. The website www.lgpsregs.org has the employers Payroll and HR guides which will give further information on various elements of the new scheme.

The amount of situations that an employer can come across would be endless – these examples are just to give you guidance in certain situations to see how each part of the form should be completed. Also, this guide can only tell you what information is required – the East Riding Pension Fund has no access to your payroll records so cannot tell you where to gain this information from.

This document is designed to talk the employers through the estimate form for anybody who is planning on leaving between 01 April 2015 and 31 March 2016.

When will there be a strain cost?

Dependant on the member’s age, service and the type of estimate you are requiring will determine whether there is a strain cost. In certain circumstances, there will never be a cost, so you will have no need to request the strain cost figures. Looking at the different types of retirement:

Voluntary Leaver – Over age 55. These estimates will never create a strain cost. Therefore, when completing the estimate request form, you only ever need tick “Member Benefits Only”. Unless you tick the “Waive Reductions” box to waive the reductions applied to any post 2014 benefits.

Voluntary Leaver – Over age 55 to eve of 60th birthday and switching on Rule of 85. These estimates will produce a strain cost.

Retirement – Ill Health. These retirements do not produce an up-front strain cost. The costing for ill health retirements are dealt with during the triennial valuation.

Efficiency of Service – over age 55. Where the member is between 55 and 60, these will produce a strain cost. Where the member is between 60 and State Pension Age, these may have a strain cost, dependant on the 85-Year rule. Where the member is past their State Pension Age, these will not create a strain cost.

Redundancy – over age 55. Where the member is between 55 and 60, these will produce a strain cost. Where the member is between 60 and State Pension Age, these may have a strain cost, dependant on the 85-Year rule. Where the member is past their State Pension Age, these will not create a strain cost.

Flexible Retirement. Where the member is between 55 and 60, these may have a strain cost, dependant on the 85-Year rule. Where the member is past their 60th birthday, these will not create a strain cost.

Once you have received confirmation of any strain cost and wish the member calculation to be sent, you can simply send an email to ERPF confirming this – you do not need to complete another estimate form.


Example 1 – Snow White (Normal Retirement over age 60)

Snow White is leaving on 31 December 2015. She works full-time and is on a pay figure of £20,000 – no pay increases in the final 24 months and no extras.

As the member is voluntarily retiring, there are no strain costs, so for section two, you just need tick “Member Benefit Only”. For part three, simply tick “Voluntary Leaver – Over age 55”.

For part five, the member’s monthly pay is worked out as:

£20,000 / 12 = £1,666.67

Therefore, for the Main Section Cumulative Pensionable Pay, the figure required would be:

Current Tax Year - £1,666.67 x 9 = £15,000.03

Tax Year 2014/2015 - £1,666.67 x 12 = £20,000.00

The Final Years Pay for the 2008 definition will run from 01/01/2015 to 31/12/2015.

The one year’s full time equivalent final pay will be £20,000.00 as there were no pay changes in the 12 months and the Actual rate of full-time equivalent pay on final day of membership will also be £20,000.00.


Request for estimateof retirement benefitsFailure to complete all sections of this form will result in the form being returned to you without being processed

Employer:

Part One - Member Details

Full name: Snow White Mrs

Address:1 The Cottages

The Forest Postcode:

Job title: Gardener Payroll No: 13456

Department: Housing NI No: AA112233B

Date of Birth: 01/08/1950

Estimated Date of Leaving: 31/12/2015

Part Two – Information Required

Strain Cost & Member Benefits Strain Cost Only Member Benefit Only

Part Three – Estimate Details

Voluntary Leaver – Over age 55

The Employer’s Discretionary Policy has been checked.

Full reductions will apply unless stated otherwise.

Actuarial reductions for pre April 2014 benefits can only be waived on compassionate grounds. For post April 2014 benefits, actuarial reductions can be waived on any grounds.

WAIVE REDUCTIONS Voluntary Leaver – Over age 55 to eve of 60th birthday and switching on Rule of 85


Retirement - Ill health

Note: The Ill Health Certificate should have already been provided. If not you need to submit this now.

Please state TIER:

Efficiency of Service – over age 55

Redundancy - over age 55

Flexible RetirementThe Employer’s Discretionary Policy has been checked.


WAIVE REDUCTIONS

Part Four –Additional Pension awarded by employer

Additional PensionThe Employers Discretionary Policy has been checked.

For estimate purposes only, the member has been awarded an Additional Pension of £ per annum


Request for estimate (continued)of retirement benefits

Employee’s full name: Snow White NI Number: AA112233B

Part Five – Pay and Service Details

Career Average Re-valued Earnings - CARE (2014 Scheme )

Main Section Cumulative Pensionable Pay/Assumed Pensionable PayCurrent Tax Year £15000.03

Tax Year 2014/2015 £20000.00

50/50 Section Cumulative Pensionable Pay/Assumed Pensionable PayCurrent Tax Year £

Tax Year 2014/2015 £

Assumed Pensionable Pay for Ill Health retirements £

Final Pay (2008 definition) Only use this section if member started prior to 1 April 2014

Final Years Pay from : 01/01/2015 to : 31/12/2015

Please state one year’s full time equivalent final pay: £20000.00

Actual rate of full time equivalent pay/salary on final day of membership: £20000.00

Contractual Hours for the Final Year (please complete if member started prior to 1 April 2014)

From ToActual hours worked

(plus formula if applicable)Enter ‘C’ if casual

FTE Hours

01/01/2015 31/12/2015 37 37

Part Six- Request for estimate of retirement benefits notes

Part Seven – Contact Details

Completed by: Simon Goddard Signed: Date: 29/05/2015 Position: HR Officer Telephone Number: 01482 394184

Return address: Council Offices, Goole


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Example 2 – Rapunzel (Over age 55 Redundancy)

Rapunzel is leaving on 31 August 2015. She works 18.50 hours a week and is on a pay figure of £18,0000 (FTE) - no pay increases in the final 24 months and no extras.

As the member is leaving on the grounds of redundancy and is aged between 55 and 60, there will be a strain cost, so for section two, I will need to tick “Strain Cost Only”. For part three, simply tick “Redundancy – Over age 55”.


(£18,000 x 18.50/37.00) / 12 = £750.00


Current Tax Year - £750.00 x 5 = £3,750.00

Tax Year 2014/2015 - £750.00 x 12 = £9,000.00


The one year’s full time equivalent final pay will be £18,000.00 as there were no pay changes in the 12 months and the Actual rate of full-time equivalent pay on final day of membership will also be £18,000.00.



Employer:


Full name: Rapunzel Mrs

Address:1 The Tower

Middle of Nowhere Postcode:

Job title: Hairdresser Payroll No: 789456

Department: Catering NI No: ZZ998877Y

Date of Birth: 24/06/195831/08/2014









WAIVE REDUCTIONS Voluntary Leaver – Over age 55 to eve of 60th birthday and switching on Rule of 85




Please state TIER:





WAIVE REDUCTIONS






Employee’s full name: Rapunzel NI Number: ZZ998877Y




Tax Year 2014/2015 £9000.00


Tax Year 2014/2015 £









FTE Hours

01/09/2014 31/08/2015 18.50 37.00



Completed by: Simon Goddard Signed: Date: 29/05/2015 Position: HR Officer Telephone Number: 01482 394184





Example 3 – Tiana (Flexible Retirement)

Tiana is leaving on 30 September 2015. She works 25 hours a week and is on a pay figure of £18,000 (FTE) – increased from £16,000 on 01 April 2015 and no extras.

As the member is flexibilly retiring AND is over the age of 60, there are no strain costs, so for section two, you just need tick “Member Benefit Only”. For part three, simply tick “Flexible Retirement”.


Before the pay increase – (£16,000 x 25.00/37.00) / 12 = £900.90

After the pay increase – (£18,000 x 25.00/37.00) / 12 = £1,013.51



Tax Year 2014/2015 - £900.90 x 12 = £10,810.80


The one year’s full time equivalent final pay will be (£16,000 x 6/12) + (£18,000 x 6/12) = £17,000 and the Actual rate of full-time equivalent pay on final day of membership will be £18,000.



Employer:


Full name: Tiana Mrs

Address:The Restaurante

New Orleans Postcode:

Job title: Cartering Manager Payroll No: 654123

Department: Catering NI No: TT147258A

Date of Birth: 15/04/195430/09/2014









WAIVE REDUCTIONS

Voluntary Leaver – Over age 55 to eve of 60th birthday and switching on Rule of 85




Please state TIER:





WAIVE REDUCTIONS






Employee’s full name: Tiana NI Number: TT147258A




Tax Year 2014/2015 £10810.80


Tax Year 2014/2015 £









FTE Hours

01/10/2014 30/09/2015 25 37



Completed by: Simon Goddard Signed: Date: 29/05/2015

Position: HR Officer Telephone Number: 01482 394184





Example 4 – Belle (Age 55-60 and Switching on the 85-Year Rule)

Belle is leaving on 30 November 2015. She works full-time and is on a pay figure of £30,000 – no pay increases in the final 24 months but receives an extra £200 per month for weekend work.

As the employer is looking at “switching on” the 85-Year rule, there will be a cost however, due to the urgently of wanting to send the estimate out, the employer has ticked “Strain Cost and Member Benefit”. For part three, simply tick “Voluntary Leaver – Over age 55 to eve of 60th birthday and switching on Rule of 85”.


£30,000 / 12 = £2,500 plus the £200 per month weekend work = £2,700



Tax Year 2014/2015 - £2700.00 x 12 = £32,400.00


The one year’s full time equivalent final pay will be (£30,000 + £200 x 12) = £32,400 and the Actual rate of full-time equivalent pay on final day of membership will be £32,400.

Should extras be included in the estimate? As an estimate is normally provided to a future date, the questions is, how should you deal with the extra for the future period? You can obviously include the extras that the member has received up to the date you are doing the estimate form.

Where the extra is a set amount every month and there is no indication this will cease, you can include that amount projected forward.

Where the extra amount varies from month to month or even is not paid every month (for example, non-contractual overtime). It is recommended that you only include the extra’s up to the date you are doing the estimate form and not project forward. Although this will under-estimate the figures, it is safer to do so than over-estimate the pension to the member.



Employer:


Full name: Belle Mrs

Address:The Chateau

France Postcode:

Job title: Housekeeper Payroll No: 852369

Department: Domestic Services NI No: JA874569C










WAIVE REDUCTIONS





Please state TIER:





WAIVE REDUCTIONS






Employee’s full name: Belle NI Number: JA874569C




Tax Year 2014/2015 £32400.00


Tax Year 2014/2015 £









FTE Hours

01/12/2014 30/11/2015 37 37









Example 5 – Aurora (Ill Health Retirement)

Aurora is retiring on ill health grounds on 31 October 2015. She works 10 hours a week and is on a pay figure of £15,000 - no pay increases in the final 24 months and no extras. Period of nil-pay covers 01 May 2015 to 31 October 2015.

As the member is retiring on ill health grounds, there are no up-front strain costs, so for section two, you just need tick “Member Benefit Only”. For part three, simply tick “Retirement – Ill Health”. If it has not already been sent, you will need to forward a copy of the Ill Health Certificate, as completed by the Independent Registered Medical Practitioner.

For part five, the member’s monthly pay (when on full pay) is worked out as:

(£15,000 x 10.00/37.00) / 12 = £337.84

The APP figure used for the ill health period is worked out as the last three months the member was paid their full wage (i.e. February, March and April) averaged out and then applied into the nil pay period. Therefore, the monthly APP figure will be ((£337.84 + £337.84 + £337.84) / 3) = £337.84

So, for the Main Section Cumulative Pensionable Pay, this is worked out as:

Current tax year - (£337.84 x 1) + (£337.84 x 6) = £2364.88 (One month on full pay and six months on APP)

Tax Year 2014/2015 - £337.84 x 12 = £4,054.08 (member on full pay for the full year)

The Assumed Pensionable Pay for Ill Health retirements is worked out using the monthly APP figure just worked out and increasing that to a full year - £337.84 x 12 = £4,054.08


The one year’s full time equivalent final pay will be £15,000 as there were no pay changes in the 12 months and the Actual rate of full-time equivalent pay on final day of membership will also be £15,000.



Employer:


Full name: Aurora Mrs

Address:The Castle

Sleepsville Postcode:

Job title: Night Security Officer Payroll No: 73915

Department: Warehousing NI No: LL461379D










WAIVE REDUCTIONS





Please state TIER: 1





WAIVE REDUCTIONS






Employee’s full name: Aurora NI Number: LL461379D




Tax Year 2014/2015 £4054.08


Tax Year 2014/2015 £

Assumed Pensionable Pay for Ill Health retirements £4054.08








FTE Hours

01/11/2014 31/10/2015 10 37









Example 6 – Elsa (Normal Retirement (Age 55-60)

Elsa is retiring 15 November 2015. She works 30 hours a week and is on a pay figure of £26,000 – no increases in pay but she worked non-contractual overtime and was paid the following amounts:

November 2013 - £200 January 2014 - £80 April 2014 - £50 June 2014 - £200

September 2014 - £805 December 2014 - £70 March 2015 - £100 May 2015 - £50

As the member is voluntarily retiring, there are no strain costs, so for section two, you just need tick “Member Benefit Only”. For part three, simply tick “Voluntary Leaver – Over age 55”.

For part five, the member’s monthly pay before the overtime is worked out as:

(£26,000 x 30.00/37.00) / 12 = £1,756.76


Current Tax Year - (£1,756.76 x 7) + (£1,756.76 x 15/30) = £13,175.70 plus overtime of £50 = £13,225.70

Tax Year 2014/2015 – £1,756.76 x 12 = £21081.12 plus overtime of £1,175.00 = £22,256.12

Why did you not include April 2014’s Overtime? As the scheme regulations changed on 01 April 2014 to make overtime pensionable, only work done from this date will be pensionable. Therefore, for most payroll systems, overtime paid at the end of April will be for work done in March – when it was not pensionable.


The one year’s full time equivalent final pay will be £26,000 as there were no pay changes in the 12 months and the Actual rate of full-time equivalent pay on final day of membership will also be £26,000.

Remember – do not include the non contractual overtime in the 2008 Final Pay figures.



Employer:


Full name: Elsa Mrs

Address:Ice Castle

Arendelle Postcode:

Job title: Ice Staking Receptionist Payroll No: 197

Department: Customer Services NI No: HH813729A










WAIVE REDUCTIONS





Please state TIER:





WAIVE REDUCTIONS






Employee’s full name: Elsa NI Number: HH813729A




Tax Year 2014/2015 £22256.12


Tax Year 2014/2015 £









FTE Hours

16/11/2014 15/11/2015 30 37







Frequently Asked Questions

1. Do you always include any extras in the projected forward pay?

It depends on what the extra is. If it is a set amount that the member receives every month and there is no suggestion that this will cease, then you can use this in your calculation of the pay. If the amount varies month by month, you have a couple of options:

You could do an average of the previous months and use this in the projected forward pay.

You could just include the extras that have already been paid and not include anything projected forward.

The advantage of the first option is that it may give a more accurate estimate however the potential for over-estimating the members pay is quite high. The advantage of the second estimate is that you will never over-quote the pay (and therefore over-quote the benefits).

2. Do I need to submit an estimate request every time a member asks me for one?

No. Dependant on what the member is asking and what your policy is on that discretion, you only need submit an estimate request form where you are considering approving release of their benefits. For example, if a member asks you for a redundancy estimate but you have no intentions of releasing her on redundancy grounds, you do not need to ask for an estimate.

Also, if the member is simply considering resigning and having access to their benefits (i.e. a request that does not need your approval), you can simply direct them to the ERPF who will liaise with them in providing an estimate. You as an employer do not need to be involved in the process.

3. You state that the ERPF has a “one estimate per 12 month” policy – but I need a new estimate doing.

In the end, this is just an ESTIMATE – it is not designed to be totally accurate in what the member is due to receive. If you are requiring an estimate simply because somebody’s retirement date has moved by a month, the estimate done previously will still be accurate enough.

In the past, the ERPF used to receive estimate requests for members asking them to provide estimates on Redundancy, Flexible Retirement and Resignation – all at the same time. All three are very different types of requests. As an employer, you need to be sure what route you are considering for that member before requesting an estimate.

If you are requesting a revised estimate because the reason for retirement has changed (for example, a previous estimate was done on redundancy grounds but now the member is resigning), then contact the ERPF as it may be possible to provide a second estimate.

Ill health estimates are not provided until the IRMP has provided a medical certificate confirming which tier to proceed on. The reason for this is due to the huge differences in benefits between the tiers that the potential for over-estimating is quite huge.


Documents

Home - East Riding of Yorkshire Council · Web viewRapunzel is leaving on 31 August 201 5. She works 18.50 hours a week and is on a pay figure of £18,0000 (FTE) - no pay increases