Amendment to the Council's LGPS Discretions Policy to Implement a Shared Cost Additional Voluntary Contribution Scheme
This report requests approval for an amendment to the Council’s LGPS Discretionary Policy Statement in order to comply with The Local Government Pension Scheme Regulations 2013 (the “LGPS Regulations”), to implement a Shared Cost Additional Voluntary Contribution Scheme (SCAVC) for employees.
Officers introduced the report outlining the recommendation to amend the Local Government Pension Scheme Regulations 2013 (LGPS) to implement a Shared Cost Additional Voluntary Contribution Scheme (SCAVC) for employees. They outlined how the salary sacrifice scheme would work for employees and the Council. It was confirmed that the proposed supplier was the only one in the market offering this scheme. It was confirmed that the scheme would come with a 4.5% charge to the Council, which officers confirmed should be saved through lower National Insurance contributions.
Members enquired about whether the scheme was supported by HMRC and whether future problems could arise if HMRC challenged the Council to pay any money back. Officers confirmed that the PS Tax outlined that they were backed by HMRC and therefore, officers didn’t expect issues arising in the future. Members asked how many employees officers expected to take up the new scheme. Officers confirmed that 110 employees were currently taking up the Council’s Additional Voluntary Contributions scheme (AVC) and expected around 90% of those employees to transfer over or use both schemes. Members enquired why so few employees accessed the current AVC and whether the new scheme would largely just benefit the highest paid Council employees. Officers noted that the scheme would be promoted to all employees and as long as someone didn’t sacrifice their salary below the national minimum wage they would be able to participate in the scheme, however, it was confirmed that the scheme would benefit most those with the highest salaries.
The Committee discussed whether to support the scheme. Members noted the proposed savings to the Council which would cover the costs for participating in the scheme, they asked for further detail to be provided to the Committee about expected cost depending on the number of employees that take up the scheme. Members also agreed that they would wish for confirmation directly from HMRC that they supported the scheme. Therefore, Members discussed the prospect of delaying a decision until this information was available. Officers noted that a delay to the decision would lose the Council its current position to implement the scheme and would likely be delayed until October.
i. That a decision be deferred to the Committees 21 March 2022 meeting;
ii. That the financial breakdown of savings for the Council and the projected costs and savings depending on the number of employees that would take up the scheme be shared with the Committee;
iii. That a programme for how the scheme would be advertised to staff from across the workforce to be able to take advantage of the scheme. Also where possible a breakdown of employees under which pay grades currently take up the Council’s current AVC and what experience PS Tax have from implementing at other Councils to be shared with the Committee;
iv. That if approved at the 21 March 2022 then the Committee agreed to schedule an annual report for a meeting around a year after the scheme is implemented to review take up of the scheme and costs associated.
Reason: To provide the Committee with further information regarding the Shared Cost Additional Voluntary Contribution scheme for employees prior to deciding whether to implement.