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STATISTICS |
Administration of the Pension Scheme
The scheme is funded by contributions made by both employees and
employers who have been admitted to the Scheme. Employee contribution rates have been fixed at either 5% or 6% of
their pensionable remuneration, while employer contribution rates are
determined by the Scheme’s actuary every three years. A prior surplus position had allowed employer contribution rates
to remain at 4.6% up to 31 March 2005, with any employers admitted to the
Scheme after 1 April 1999 paying a higher rate dependant on the prevailing
employer contribution rate at the time of admission.
Following the results of the 2004 actuarial valuation, the
Committee introduced a series of stepped employer contribution increases with
effect from 1 April 2005.
|
Employers Admitted |
1 April 05 – 31 March 06 |
1 April 06 – 31 march 07 |
1 April 07 – March 08 |
|
Before 1 April 1999 |
8.5% |
11% |
13% |
|
After 1 April 1999 and before 31 March 2002 |
12% |
13% |
13% |
|
After 31 March 2002 |
13% |
13% |
13% |
Status
The Scheme is a statutory
public service pension scheme as defined by the Pensions Schemes Act (Northern
Ireland) 1993 and is regulated by the Local Government Pension Scheme (Northern
Ireland) Regulations 2002.
As a public service pension
scheme, the Scheme is contracted out of the State Second Pension (S2P) and is a
registered public service scheme under Chapter 2 of Part 4 of the Finance Act
2004. Full tax relief is granted on
members’ and employers’ contributions paid to the Fund on all United Kingdom
investment income other than dividends arising from UK equities.
Membership
The scheme continued to grow during 2006/07 both in terms of
admitted bodies and individual employees.
At 31 March 2007, there were 212 employing authorities
contributing to the NILGOSC Scheme. A
full list of these organisations can be found on pages 48 to 50. Four new bodies were approved for admission
to the Scheme during the year ended 31 March 2007:
|
Employing Authority |
Effective Date |
|
Ilex
URC Ltd |
1
April 2006 |
|
Drumlins
Integrated Primary School |
1
October 2006 |
|
Portadown
Integrated Primary School |
1
February 2006 |
|
Roe
Valley Integrated Primary School |
1
February 2006 |
Membership of the scheme also increased during the year and at 31 March
2007 the Scheme consisted of 42,742 contributing members, 22,737 pensioners and
13,032 deferred pensioners.
The chart below shows the increase in each category of member over
the past 8 years:
Pension Increase
During the year, NILGOSC pensions were increased by 2.7%, with effect from 10 April 2006. All pensions (including spouses’ pensions, children’s pensions, age pensions, ill-health pensions, redundancy pensions provided the pensioner is aged 55 or over and preserved benefits) are index-linked and increased each year in line with inflation, as measured by the Retail Price Index.
The Government determines this increase each year by way of the Pensions Increase (Review) Order and this year’s figure reflected the annual increase in the Retail Prices Index for the year ending 30 September 2005.
New
Regulations
The following new
regulations came into effect during 2006/07.
The local Government
Pension Scheme (Amendment No. 2) Regulations (Northern Ireland) 2006
The above regulations came
into operation on 1 April 2006 and provided for financial statements prepared
by NILGOSC to be in accordance with guidance issued by the Department of
Finance and Personnel.
The
local Government Pension Scheme (Management and Investment of Funds)
(Amendment) Regulations (Northern Ireland) 2006
The second set of regulations came into
operation on 6 November 2006 and permits the Committee to increase the limit on
their investments in securities transferred under stock lending arrangements
from 25% to 35% of the total of their pension fund investments.
The Local Government Pension Scheme (Amendment)
Regulations (Northern Ireland) 2007
The third and most significant set of
regulations were made on 9 March 2007.
These regulations removed the 85 year rule from the Scheme from 1
October 2006 and introduced retrospectively from 6 April 2006 Her Majesty’s
Revenue and Customs (HMRC) amendments as a consequence of the Finance Act
2004. NILGOSC had the powers to
anticipate these regulations from 6 April 2006. In summary these Amendment Regulations provided that:
·
The 85 year rule
will be removed from the Scheme for new members from 1 October 2006 and for
existing members in respect of benefits accruing after 31 March 2008
·
Protection is for
all current members at 30 September 2006 who will satisfy the 85 year rule and
will be aged 60 or over by 31 March 2016;
·
Those existing
members at 30 September 2006 who will be 60 or over and meet the 85 year rule
between 1 April 2016 and 31 March 2020 will have tapering reductions applied to
their benefits i.e. zero reduction will apply at 31 March 2016 and full
reduction will apply at 1 April 2020;
·
Members will be
able to join and remain in the scheme until the day before their 75th
birthday;
·
The current 15%
contribution limit on employees’ contributions is removed and thus up to 100%
of taxable pay can be paid into the Scheme with full tax relief (no
restrictions on the amount payable to the AVC Fund has been made but a further
amendment is expected in due course).
This applies from 6 April 2006;
·
Benefits will
have to be paid before a Scheme member’s 75th birthday;
·
Where Scheme
members defer drawing benefits beyond the age of 65 their benefits will be
actuarially increased i.e. just as benefits drawn before the age of 65 will be
subject to an actuarial reduction to reflect the fact that they will be paid
for longer, benefits drawn after the age of 65 will be actuarially increased to
reflect the fact that they will be paid for a lesser period of time;
·
Flexible
retirement is now permitted at or after the age of 50 (55 from 6 April 2010),
linked to reduction in hours or grade agreed by the employer and the employer
will (at its cost) be able to waive, in whole or in part, any actuarial
reduction that will apply to the early payment of those benefits. The benefits paid will not be subject to any
abatement policy that may apply to other re-employed pensioners. (The committee has currently agreed to have
a no abatement policy for the two years to 31 March 2008);
·
The option for
members to take up to 25% of the capital value of their pension fund (including
any AVC fund) as a tax-free lump sum is introduced. Any amount taken above the current three times the annual pension
limit will be paid for by the scheme member commuting part of his/ her final
pension at a commutation rate of £12 lump sum for £1 of pension;
·
In addition to
commuting pension by the 12:1 factor, members are able to take up to 100% of
the value of their accrued AVC/ SCAVC fund as tax free cash, subject to this
sum, when aggregated with the lump sum retirement grant payable under the LGPS,
not exceeding 25% of the capital value of the member’s accrued rights;
·
The ability for
retirees to convert some or all of their scheme lump sum into additional
pension is removed;
·
The facility for
employers to be able to reduce or waive the contributions of employees who have
been in pensionable local government employment for at least 40 years is
removed (Regulation 14) and so from 6 April 2006, any members who have their
contributions reduced or waived will pay full contributions again.
·
The ability for a
member to provide a survivor benefit over and above the standard spouse’s,
civil partner’s or children’s pensions by surrendering part of his/ her pension
in favour of a spouse, civil partner or dependant (payable should they survive
the member) is removed;
·
Children’s
pensions coming into payment after 5 April 2006 will cease by age 23;
·
The maximum
number of added years that a scheme member will be able to purchase is limited
to 6 2/3rd years;
·
The earnings cap
of £105,600 for those who joined on or after 1 June 1989 is removed. From 6 April 2006 such members pay pension
contributions on their uncapped pensionable pay. A service adjustment is performed in respect of their local
government membership between 1 June 1989 and 5 April 2006;
·
The committee is
required to prepare, maintain and publish a statement by 1 April 2008, setting
out its policy on communicating with members, members’ representatives, prospective
members and employers participating in the fund.
·
The committee is
required after consulting with such persons as it considers appropriate, to
prepare, maintain and publish by 1 April 2008, a governance policy setting out
whether it delegates any function in relation to the maintenance of the pension
fund to a committee, sub-committee or an officer.
Local Government (Early Termination of
Employment) (Discretionary Compensation) Regulations (Northern Ireland) 2007
These regulations came into operation on 12
March 2007 and revoked the Local Government (Early Termination of Employment)
(Discretionary Compensation) Regulations (NI) 2003 (removing the facility to
award compensatory added years under these regulations) but did not affect
anyone whose termination date was before 1 October 2006. Transitional arrangements enabled payment of
compensatory added years to those in employment before 1 October 2006 and whose
termination date was between 1 October and 31 March 2007. These new regulations give all scheme
employers the discretion to increase statutory redundancy payments and award
compensation as a lump sum, which may not exceed 104 weeks pay. Employing authorities must formulate,
publish and keep under review the policies which they apply when exercising
these discretionary powers.
Satisfaction Survey
A stakeholder satisfaction survey was carried
out in February 2007. This year 1,225
questionnaires were issued to a random sample of employers, pensioners,
deferred pensioners and members of the scheme.
The survey focused on quality of performance in several key areas,
quality of publications, preferred methods of communication and the response to
queries. Despite a low response rate of
only 27%, satisfaction levels ranged from 85% of deferred members to 98% of
pensioners being satisfied or very satisfied with the service they
received. Overall, the survey returned
an average satisfaction rating of 95% (2005/2006 95%). The Committee was pleased with the results
of the survey, which demonstrated that a high level of satisfaction continued
to be maintained throughout 2006/07.
Performance Standards
In May 1997 the Management Committee approved a set of service standards for the activities carried out by the Committee. These standards are reviewed annually and monitored by the Committee. Compliance with the performance standards for 2006/07 was tested by the internal auditor, McClure Watters, on a random sample basis.
Below is a summary of the standards achieved during 2006/07.
|
Task |
Standard |
Within |
|
|
|
|
Standard % |
|
|
Lump sum retirement
payments |
5 days |
65% |
|
|
Death grant payments |
5 days |
78% |
|
|
Leaver options
notifications |
20 days |
40% |
|
|
Refund payments |
10 days |
99% |
|
|
Provisional transfer out
quotations |
20 days |
44% |
|
|
Transfer out payments |
10 days |
62% |
|
|
Inward transfer
quotation requests |
10 days |
63% |
|
|
Inward transfer credit
notifications |
20 days |
100% |
|
|
New entrants
certificates |
20 days |
88% |
|
|
Letters answered or
acknowledged |
10 days |
82% |
|
|
Issue members' annual
report |
by 30 November |
100% |
|
|
Issue members' annual
benefit statement |
by 31 October |
62% |
|
|
Benefit quotation
requests |
10 days |
60% |
|
|
Pensions paid each month |
Last banking day of month |
100% |
|
|
P60s issued to all
pensioners |
By 31 May |
100% |
|
Cost per Member
Despite a continuing increase in scheme membership, NILGSOC has managed to keep a constant cost per member in real terms. The table below shows administration expenses per scheme member, together with the ratio of members to staff.
|
Year ended |
Total |
Number |
Members/ |
Admin Expenses |
Cost/ Member |
Cost adjusted for |
|
31 March |
Members |
Of Staff |
Staff |
£’000 |
£ |
Inflation £ |
|
1998 |
52,934 |
26 |
2036 |
993 |
18.75 |
23.83 |
|
1999 |
54,315 |
28 |
1940 |
977 |
17.98 |
22.40 |
|
2000 |
55,983 |
28 |
2000 |
993 |
17.74 |
21.53 |
|
2001 |
63,872 |
30 |
2129 |
1,227 |
19.21 |
22.80 |
|
2002 |
66,643 |
33 |
2019 |
1,288 |
19.32 |
22.63 |
|
2003 |
68,936 |
36 |
1915 |
1,495 |
21.69 |
24.64 |
|
2004 |
71,399 |
40.5 |
1763 |
1,685 |
23.60 |
26.13 |
|
2005 |
73,995 |
41 |
1805 |
1,835 |
24.80 |
26.61 |
|
2006 |
74,688 |
43 |
1737 |
1,771 |
23.71 |
24.85 |
|
2007 |
78,511 |
41 |
1915 |
2,032 |
25.87 |
25.87 |