Circular 1/2000
3 March 2000 CIRC 1/2000
The Salary Manager
Please ensure that copies of this Circular are forwarded to other interested parties in your organisation.
Items 2, 4 and 5 have budgetary implications and your Director of Finance/Finance Officer or other responsible officer should therefore be appraised.
Changes to Regulations
The draft Local Government Pension Scheme Regulations (NI) 2000 are expected to be issued for consultation by the Department of the Environment in the very near future. Most of the changes incorporated in these Regulations have been anticipated by NILGOSC for many years, but there are also new provisions which will require action on the part of employing authorities. This circular is therefore to give you advance warning of what you will have to implement within the next few months:
1. The Scheme will now be known as a Pension Scheme rather than a Superannuation Scheme (but NILGOSC will still be "the Superannuation Committee").
2. Scheme membership will be automatic for whole-time employees who work at least 30 hours per week from 1 April 1990 - unless they gave written notice of opting out or opting not to join. DOE gave employers power to anticipate this regulation from 1 April 1990 (see our circulars dated 31 August 1989, 29 September 1989 and 9 April 1990), but we are aware that not all employers may have done so. You will therefore need to check your records to ensure that you have a written notice of opting out or opting not to join from every whole-time employee who is not currently in the Scheme. Any whole-time employee who has not given written notice must be brought into the Scheme immediately. In future, contributions must be deducted from the first day of employment, unless the member has completed the Employee's Option form NM1 indicating that s(he) does not wish to join. In the event that form NM1 has not been returned by the employee, contributions must be deducted.
3. If an employee opts out within three months of joining the Scheme (s)he is treated as never having been a member. Contributions, less tax and the adjusted National Insurance contributions, are to be refunded by the employer, and the registration with NILGOSC cancelled.
4. From the date the Regulations come into operation, with the exception of casual employees and opters-out who must apply to join, Scheme membership is automatic for all whole-time and part-time employees regardless of the number of hours or weeks worked.
The Regulations require employers to bring into the Scheme from the commencement date all their current employees who are not Scheme members unless they have previously opted out, in writing, or choose now to opt out in writing.
Casual employees will have the right to join the Scheme and should therefore be given the option to join.
Employers should therefore ensure that all their employees and future employees are in the Scheme unless a written opting out confirmation is held. The Committee's Employee Option form NM1 should be used for this purpose. 5. From the commencement date of the Regulations, all part-time employees working less than 15 hours per week will automatically be in the Scheme unless they opt out in writing. In addition, they will be able to pay arrears of contributions to back date their date of joining to 1 January 1993 or date of commencing employment if later. Members who currently work more than 15 hours per week will also be able to pay arrears to cover any period since January 1993 when they worked less than 15 hours. Employing authorities are required to pay the employer's contributions when a member elects to back-date.
6. Minimum age of entry to the Scheme is now 16 rather than 18 (anticipated from 1 October 1989). An employee can only be a member after age 65 if membership does not exceed the Inland Revenue limits, and can only join after age 65 if a re-employed pensioner, received an ill-health grant or in receipt of a compensation pension.
7. Definition of whole-time will change to the contractual hours stipulated as whole-time in the contract of employment. Any employee working less than the contractual hours will be part-time. e.g. A member who works 32 hours per week will be part-time if the normal hours for the job are 37. Conversely a school patrol officer who works 10 hours per week is whole-time, if those are the contractual hours of the job.
8. From the date the Regulations come into operation the new definition of remuneration includes all salary, wages, fees and other payments and benefits specified in the contract of employment as a pensionable emolument. Payments for work of a casual or non-recurring nature are no longer excluded. This effectively means that acting-up payments are now pensionable. (Payments for non-contractual overtime continue to be non-pensionable).
9. Any period on or after the commencement date during which an employee is on unpaid sick leave will count as pensionable membership. It is therefore essential that employing authorities do not keep members on unpaid sick leave for excessive periods, but take appropriate steps to determine fitness to return to work or terminate their employment. As it is likely that the next set of Regulations (anticipating the GB 1997 Regulations) will provide for each employing authority's contribution rate to be assessed separately, it is in authorities' own interests to ensure that this is done, as a poor record in this respect will inevitably lead to a higher employer's contribution rate.
10. From the commencement date, the Committee will have an absolute discretion to decide who should receive a member's death grant (this is an Inland Revenue requirement to exempt the death grant from Inheritance Tax). Members will be able to complete an Expression of Wish form to nominate a beneficiary or beneficiaries to receive their death grant, and the Committee will take this into consideration, but is not necessarily bound by it. It should be stressed that, in the vast majority of cases where the member wishes the death grant to go to a spouse or next of kin, no expression of wish is necessary. However, certain members may wish to avail of the facility e.g. if they are separated from their spouse or have a common law or same sex partner. Forms are being prepared and will be distributed to employing authorities before the Regulation comes into force.
11. From the date of commencement, widowers' pensions will be calculated on all of their wives' post 1 April 1972 membership. Married women who were members prior to 1972 will be able to elect to pay additional contributions, or suffer a reduction to their lump sum retirement grant if they wish to have this period counted in calculating their widower's pension. In due course, we will be asking you to forward details of this provision to any women with pre 1972 membership in your authority.
12. "Permanently incapable" is now defined as meaning "incapable until, at the earliest, the member's 65th birthday". While the Committee's doctors have interpreted "permanently incapable" in this way for many years, this clarifies the situation.
13. The Regulations contain a two-stage internal disputes resolution procedure. If a member or a dependant has a complaint against a decision made by NILGOSC, it is referred in the first instance to the Secretary, who must give notice of his decision within two months. The complainant may then, within six months, appeal to the Committee which must issue a decision within two months.
Where the complaint is against a decision by an employing authority the disagreement is still to be decided by the County Court.
14. The foregoing catalogue of changes is not comprehensive and is intended only to alert employing authorities to the main areas where they will require to take action. A more comprehensive list provided by the DOE will accompany the consultation document.
A new Employer's Guide and revised forms and leaflets are currently being prepared and we hope to distribute these before the Regulations come into effect. In the meantime, please do not hesitate to contact the Committee's staff if you require further information or advice on any matter.
Yours faithfully
D W MORRICE
SECRETARY
E-Mail to NILGOSC@Compuserve.com
Tuesday, 6th March 2000