Enrolling eligible employees to join Avon Pension Fund is a straightforward process for employers. By understanding eligibility criteria and your responsibilities, you can ensure that your employees receive the benefits of the LGPS.
Who is eligible to join the scheme?
The eligibility criteria is as follows:
- Mandatory Enrolment / Contractual Enrolment: Under contractual enrolment rules all employees with a contract of 3 months or more must be enrolled in the ‘main’ section of the LGPS from their first day of employment. This includes: full-time, part-time, variable-time and casual employees.
- Exclusions: Employees over the age of 75 cannot join the scheme.
- Short-Term Contracts: Employees with contracts of less than 3 months are not required to be contractually enrolled but can choose to opt in.
- Automatic Enrolment: If an employee’s contract is extended to 3 months or more, they must be contractually enrolled from the first pay period following the extension.
- Opting Out: Employees have the right to opt out of the scheme at any time.
Your Responsibilities as an Employer
As an employer, you have several key responsibilities when it comes to enrolling employees in the LGPS:
- Determine Eligibility: Assess which employees are eligible to join the scheme.
- Adjust Payroll: Make necessary changes to your payroll system to start pension contributions.
- Confirm Membership: Inform employees of their membership in the scheme.
- Submit Data: Provide new joiner information to the Fund using i-Connect. This includes:
- Employee’s name.
- National Insurance number.
- Date of birth.
- Date joined the LGPS.
- Employee contribution rate.
- Annual pensionable pay.
Your scheme responsibilities
- Decide who is eligible to join the scheme.
- Make the necessary adjustments on your payroll to commence pension contributions.
- Confirm membership of the scheme to the employee.
- Provide new joiner data to the Fund via i-Connect.
The following information needs to be provided on your next monthly i-Connect submission as soon as an employee joins and is entered into the scheme.
- Name, NI number, date of birth.
- Date joined the LGPS.
- Employee contribution rate.
- Annual pensionable pay.
Understanding Enrolment Types
Employers must assess their employees under contractual enrolment in the first instance. Employee’s must then be assessed under auto-enrolment every 3 years thereafter.
Contractual Enrolment:
Employers are categorised into different bodies regarding their obligations to the LGPS:
- Scheduled Bodies: Must offer the LGPS to all eligible employees.
- Designation Bodies: Can choose to offer the LGPS to some or all employees.
- Admission Bodies: Participate in the LGPS through specific agreements detailing eligible employees.
- Deemed Employers: A mix of employers where another body is considered the Scheme employer.
Auto-Enrolment:
Auto-enrolment provisions were introduced gradually from 2012 to 2018. Key points include:
- Employers have a staging date from which they must comply with auto-enrolment duties.
- Eligible employees are those who:
- Earn above the minimum threshold.
- Are aged between 22 and State Pension age.
- Work in the UK.
Employers must:
- Enrol eligible employees under contractual enrolment rules in the first instance.
- Inform them of their enrolment and their right to opt out.
- Maintain accurate records of all enrolment activities.
- Assess all employee’s every three years under auto-enrolment rules.
Contracts Under Three Months
For employees with contracts shorter than three months:
- They will not be automatically enrolled unless they become eligible employees.
- Employers may choose to bring these members into the scheme under auto-enrolment rules.
- Employers can issue a postponement notice for up to three months.
- Employees can opt in at any time, and if they do, they will be enrolled from the first day of the pay period following their decision.
Providing Information to New Starters
As an employer, you must share basic information about the Avon Pension Fund with new employees.
You can download a welcome pack for new employees from the Avon Pension Fund member website.
Sharing Scheme Information:
- Prospective Members: If someone is about to start working for you, provide them with information about the scheme.
- New Members: If they didn’t receive information before starting, send it automatically once they join.
- Existing Members: If current members request information and haven’t received it in the last 12 months, provide it upon request.
Employer Responsibilities:
- You must provide Scheme information to a new or existing employee in a timely manner, (within 2 months).
Collecting Employee Details:
- Gathering information about new members can be challenging. Avon Pension Fund require electronic submissions of data through i-Connect, allowing automatic updates to the employee’s pension records. However, we still need to collect details about any previous employment and transfer requests using the forms contained within the welcome pack.
You must send employee information to the Fund, via i-Connect, within six weeks of an employee becoming a member.
Changes to membership status
Information about how to deal with changes to your employee’s pension membership, and what you need to do.
Opting Out of the Scheme:
Employees can opt out of the scheme by submitting a written notice to their employer. Here’s what to know:
- Obtaining Opt-Out Forms: Employers cannot provide opt-out forms (LGPS 04). Employees can get these forms directly from Avon Pension Fund’s member website.
- Effective Date: The employee stops being an active member on the date they specify in their notice. If they don’t specify a date, they will cease membership at the end of the current pay period.
- Refunds:
- If they opt out within three months of joining and they can get a refund of their contributions. This should be actioned through your payroll.
- If they opt out after three months but before two years, they can also claim a refund unless disqualified. This would be assessed by the Fund who would also issue any refund due.
- After two years, they can opt out but will receive a deferred benefit instead of a refund.
- Restrictions: Employees who opt out after 11 April 2015, cannot combine their deferred benefits with any new LGPS employment.
Opting In to the Scheme:
Employees who are eligible but not currently active members, can apply to join the scheme. Here’s how it works:
- They will become active members on the first day of the pay period after their application.
- If a member wishes to join the 50/50 scheme they can do so after the have opted back in by completing a 50/50 election form. The 50/50 scheme allows them to pay half the normal contributions and build up half the pension.
- A member that has opted out of the scheme may opt back in by completing the LGPS 10B form from the Avon Pension Fund Member website.
Employees can opt out and rejoin the scheme as many times as they wish. However, if they rejoin after April 11, 2015, they can only combine their membership under specific conditions.
The 50/50 Section:
The 50/50 section allows eligible employees to pay half the normal contributions while still earning half the pension benefits. Here’s what to know:
- Joining: Employees can elect to join the 50/50 section during the next pay period after they apply.
- Benefits: Members earn half the pension benefits, but retain some other benefits in full such as death in service and ill health enhancements, while in the 50/50 section.
- Contribution Rates: When in the 50/50 section, the employee contribution rate is halved, and the pension accrual rate changes to 1/98th of their pensionable pay. Your employer contribution rate remains unchanged when an employee is in the 50/50 section.
Your employees can switch between the main section and the 50/50 section as often as they like. Employers must inform members about how this choice affects their benefits. At auto-enrolment date you must move 50/50 scheme members back into the main scheme, you must notify them of this change to give them time to elect back into the 50/50 scheme if they wish.
For information on contribution rates, please visit Employee Contributions and Additional Contributions. For general auto-enrolment guidance, visit the LGPS regulations website or the Pensions Regulator website.