Decision details
*Re-published: call-in no longer applies* Pensions Re-banding outside Pension Discretions Policy
Decision Maker: Chief Executive Officer
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: No
Decision:
To undertake pensions re-banding outside the
NYCC Discretions Policy, as of 1 June 2016, and implemented in the
August 2016 payroll with appropriate backdating.
Reasons for the decision:
*PLEASE NOTE This decision was originally
published on or near the date of the decision and so call in no
longer applies. It has been re-published as part of the change in
committee management system that we use.*
The pension changes introduced in April 2015 require re-banding for
staff who are members of the pension fund following any permanent
pay changes which tends to be the pay award and incremental
progression. NYCC’s LGPS Discretions Policy approved by full
Council states that re-banding will take place on 1st April. This
happened for the pay award in 2015 which although agreed in
December, was not implemented until April other than the lump sum
element for the majority of staff in January.
The issue this year is that the pay award was not agreed until late
May to be implemented locally in June’s payroll, backdated to
1st April. By this point re-banding had already taken place for 1st
April as per the Discretions Policy addressing incremental
progression and any other permanent pay changes but could not take
account of the pay award. If re-banding does not take place until
April 2017, staff who should contribute more into the pension fund
by being placed in the correct band will not do so for in effect a
year’s worth of pay.
The loss of pension contributions to NYCC, as the employer, by not
re-banding, after the 2016 pay award has been estimated as
£240k. LGPS member’s individual pension’s pots
will not be reduced by paying lower contributions, but rather it is
the contributions which go into the Pension fund which will be
reduced. As the employer picks up any shortfall in the funding of
pension benefits it is the employer that would be impacted by the
reduced pension contributions i.e. the contributions allocated to
NYCC as an employer will be lower in the year 2016/2017.
LGA guidance states that re-banding can take place during the year
should there be a change in pay and specifically mentions a pay
award. Specifically it states:
“10: Movements between contribution bands.
Once the initial pay band and contribution rate has been determined
by an employee (see sections 2A, 2B, 4 and 5) the employer is
required by the regulations to reassess the appropriate band and
rate each April (in the pay period in which 1st April falls) and is
permitted by the regulations to review the appropriate band and
rate on any material change in pay. In practice, the latter means
that the employer, can, for example, review the band and rate
during a Scheme year should the employee have a material change in
contractual pay (eg a change of job, a promotion ; demotion, a
regarding, a pay award or change in contractual hours). This can
result in a retrospective reallocation to a different contribution
rate with a consequential adjustment to the employee contributions
due (eg where there is a retrospective pay award or retrospective
re-grading) but the employer can decide to only apply the new rate
from the date the pay award or re-grading is actioned on the
payroll).”
Having reviewed the position it is clear that authorities vary in
their approach. Some have implemented from June/July with no
backdating and others have implemented with backdating and some
including Harrogate and Hambleton locally have decided not to
re-band until their normal date of April 17. For NYCC, 1095 staff
are affected across the following bands:
NYB01 62 NYB02 3
NYB03 97 NYB04 243
NYB05 177 NYB06 114
NYB07 83 NYB08 69
NYB09 64 NYB10 46
NYB11 42 NYB12 16
NYB13 18 NYB14 15
NYB15 9 NYB16 20
NYSM1 2 NYSM2 14
NYAD1 1
The recommendation for NYCC is to re-band back to the 1st June 2016
when the pay award was implemented into payroll, going back any
further will lead to inaccuracies due to any changes in
individual’s pay between April and June. This would be more
complex and potential lead to more challenge.
Legal advice has been sought which considers that given the impact
on the pension fund, there is scope within the Officers’
scheme of delegation and the wording in the Discretions Policy for
this to be considered of sufficient urgency/emergency for the Head
of Paid Service to make the decision, with input from Assistant
Chief Executive (Business Support) and Director of Strategic
Resources, to re-band outside the Discretions Policy.
Under the Council’s constitution, the Chief Executive is
delegated the authority to make urgent decisions in such
circumstances that could be taken by the Council or
Committee.
Alternative options considered:
As identified above by how other authorities
have approached this issue.
Publication date: 28/04/2021
Date of decision: 22/08/2016