Paying contributions and sending returns
Employee Contribution Bands information and implementation advice
All employers must review the band to which they assign members each year when the new bands are published (prior to April 1).
It is at the discretion of the Employer to decide what their policy is in terms of changing bands during the year where there are changes to the pensionable pay of employees. Some common situations to be considered are set out below:
A normal pay rise during the year (i.e no contractual change):
Employers could choose to revise the band for each employee, as required, following confirmation of a pay rise. The implication of this decision would be that the adjustment to the contribution rate payable by the employee would need to be effective from the date of the pay rise, even if it is backdated.
Scenario - In August 2009 a pay rise is introduced which moves an employee's salary from £18,800 to £19,300, which will be backdated to May 2009, with the underpayment paid in arrears.
Solution 1 - The Employer could decide to maintain the rate at 5.9%, as determined in April 2009, until April 2010 at which point they must make any changes due.
Solution 2 - The Employer could decide to backdate the higher contribution rate of 6.5% to May 2009 by making the appropriate adjustment to the arrears.
A contractual change is made to an employee affecting their pensionable pay
As above, the employers could either decide to make the band change with effect from the same date as the contractual change is effective, where relevant, or they could leave it unchanged until the following April.
It is worth noting that if someone is kept on their old band after their pensionable pay has changed, this could result on two employees on the same pay scale paying different contribution rates from one another. Also, failure to move people up the bandings as their pay rises arguably places a funding strain on the Employer's Sub-Fund as a lower level of employees contributions is collected than is strictly correct.
Employer contribution rates and monetary amounts
Employers are notified of their employer contribution rates following each Actuarial Valuation. These valuations take place every 3 years (i.e 2010, 2013 and 2016). These are calculated by the Actuary taking into account many different factors, including investment assets allocated to the employer, the profile of their membership and a number of financial and demographic assumptions.
The contribution rate is split between the Future Service Rate (FSR) and Past Service Deficit (PSD). The FSR represents the cost of service being accrued at present and is expressed as a percentage of pensionable pay, while the PSD represents the employer's funding deficit (as determined at the last valuation), which is repaid over a pre-agreed timescale.
To ensure the correct recovery of the PSD, this is typically paid as a monetary amount i.e. lump sum split into 12 monthly instalments, otherwise under or over recovery may occur due to fluctuations in payroll. However, if this is particularly difficult to administer (e.g. for schools), employers can request that the PSD be expressed as a percentage of pensionable pay as well.
For example:
Employer A has an annual payroll of £1,000,000. The actuary calculates an employers contribution rate of 18% split as follows:
Future Service Rate - 15%
Monthly contribution = £1,000,000 x 15%/12 = £12,500
Past Service Deficit - £30,000 monetary amount (i.e £2,500 per month).
OR
Future Service Rate: 15%
Monthly contribution = £1,000,000 x 15/12 = £12,500
Past Service Deficit: 3%
Monthly contribution = £1,000,000 x 3%/12 = £2,500
Your current and future employer contribution rate and any monetary amount due can be found on the Wiltshire Pension Fund website under the Employer section.
Paying contributions
In line with the Local Government Pension Scheme (Administration) Regulations 2008, the Wiltshire Pension Fund requires all employers to pay contributions to the fund by 19th of the following month (i.e. January contributions due by 19 February).
The Fund has no discretion over this deadline and failure to achieve it can, in line with Section 44 of the above regulations, result in an interest charge from the Fund on the late payment, at a rate of 1% above the base rate.
Payments can be made:
By BACS
Sort code: 40-44-33
Account Number: 01853333
Account Name: Wiltshire Council - Wiltshire Pension Fund
or
By cheque
Made payable to:
"Wiltshire Council - Wiltshire Pension Fund".
Please send these to:
Wiltshire Pension Fund
County Hall
Bythesea Road
Trowbridge
Wiltshire BA14 8JN
Contributions must be accompanied by the monthly return. Note: this has changed with effect from April 2011
Monthly employer returns
Every employer must provide and send a Monthly Employer Return to pensionfinance@wiltshire.gov.uk by the 19th of each month, to accompany the contribution payments.
These can be found on the forms section of the website.
Note this information is required for audit, fund valuation, benefit statement and data cleansing purposes. It is also a requirement of the LGPS Regulations, so it is an employer obligation which the Fund cannot negotiate on.
Wiltshire Pension Fund, Wiltshire Council - Bythesea Road,Trowbridge, Wiltshire, BA14 8JN.
© 2009 Wiltshire Pension Fund.