Decision Maker: Chief Executive Officer
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: No
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.
*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
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.
As identified above by how other authorities
have approached this issue.
Publication date: 28/04/2021
Date of decision: 22/08/2016