4.3.1 Pensioners who receive a pension under the CSP arrangements and who are re-employed by a CSP employer may not earn more, by way of re-employed salary and pension, than they were earning before they retired. Where re-employed salary and pension exceed previous earnings, the excess is deducted from their pension. This is known as ‘abatement’. Abatement may apply to members opting for partial retirement. See annex 4G for further information regarding partial retirement. alpha pensions in payment are not subject to any abatement.
4.3.2 For the purposes of abatement, an Annual Compensation Payment (ACP) is treated in the same way as a pension. All references to pensions or pensioners below also include members with ACPs.
4.3.3 Abatement, where applicable, only operates for the duration of the re- employment.
4.3.4 Members who are over age 75 are not affected by abatement.
4.3.5 Abatement of salary rather than pension can apply to those re-employed after having received a compensation payment under a Compulsory Early Severance (CES) package that included a reserved rights ‘top-up’ payment. This is because the ‘top-up’ payment includes an element of pension. Please see paragraph 4.3.14 for information on how to deal with this group. This does not apply to members who return after 30 July 2007 and join nuvos/alpha, however, they may be subject to a quarantine period.
4.3.6 Abatement applies whether or not the employment is pensionable. This does not apply, however, if a pensioner works less than a total of 15 days in any 91-day period.
4.3.7 You must use the Pensions Questionnaire in your recruitment process to determine eligibility for the pension arrangements (see Section 4.1). The information collected enables you to identify individuals who have a pension or ACP in payment from an employment covered by the CSP arrangements before they are appointed. The Joiner Tool will identify the correct choice of pension scheme(s) available to them.
4.3.8 If you are recruiting an individual who received compensation as a result of the termination of previous employment covered by the CSP arrangements (for example, as a result of Voluntary Exit), then their compensation could be affected. Again, the Pension Questionnaire will collect this information and the Joiner Tool will identify the correct choice of pension scheme(s). If the member returns within 28 days then the award is cancelled and the compensation payment must be repaid.
4.3.9 People who retired or left with a compensation payment/pension were told, as part of their pension notification that, if they become re-employed in employment covered by the CSP arrangements, they must tell the new employer about their previous service because of possible abatement. They are also responsible for telling the Scheme Administrator that they are taking up the new employment. However, you have a responsibility to notify the member about possible abatement where they tell you they are receiving a pension and you have the responsibility to tell the Scheme Administrator that the pensioner has started work with you. The Joiner Tool will prompt you to take abatement action, where appropriate.
Appointment actions
4.3.10 You must tell pensioners who are being offered re-employment about the effect of the re-employment provisions of the CSP arrangements on their pension, including abatement, before they take up the new post.
4.3.11 When offering a post to a CSP pensioner, you should obtain an abatement estimate from the Scheme Administrator, using CSP13 (Estimate) form. The information from the Scheme Administrator will help the pensioner to make an informed choice whether or not to accept the post.
4.3.12 Once the pensioner has accepted the post, you must tell the Scheme Administrator using form CSP13.
Please note: you must carry out the CSP13 (Estimate) procedure without delay as you must tell the member whether or not their pension (or pay if they have CES Reserved Rights) is going to be affected before they decide to accept the post. Not to do so could result in the member accepting the post where they may not have done had they been given the information at the outset.
Equally, you must carry out the CSP13 procedure without delay as there is a potential for large arrears of pension (or salary) abatement being deducted from one month’s pension or salary.
The Scheme Administrator will send an acknowledgement to let you know they have actioned the form.
4.3.14 In the case of those re-employed after receiving CES reserved rights, if the individual accepts the post, you must tell the Scheme Administrator using the CSP13, as above. However, the Scheme Administrator will then tell you whether or not the member’s pay is affected or if they are subject to a quarantine period and you must pass this information to your payroll so that they can impose the necessary deductions from pay.
Completing the CSP13 (Estimate) and CSP13 forms
4.3.15 To complete the CSP13 (Estimate), you will need to provide:
the member’s details,
the date of re-employment,
the re-employed salary (including the part-time rate if applicable),
any permanent pensionable allowances (including the part-time rate if applicable), and
the weekly hours.
4.3.16 All references to salary include where appropriate, London weighting, London Allowances and local pay additions, but exclude all other pensionable allowances and other additional payments.
4.3.17 If the member is being re-employed on a fee-paid basis you will need to provide details of the terms of employment and the applicable fees.
4.3.18 Once the form is complete, you will then need to send it to the Scheme Administrator for their action (see ‘Scheme Administrator action’ (paragraphs 4.3.24 to 4.3.26) below).
4.3.19 As soon as the pensioner acknowledges that they understand and accept the terms of abatement, you must complete box A of the CSP13 and send it to the Scheme Administrator for their action (see ‘Scheme Administrator action’ (paragraphs 4.3.24 to 4.3.26) below). You will need to replicate the information used to complete the CSP13 (Estimate).
Ongoing action
4.3.20 Once the level of abatement (or earnings margin) has been calculated for a re-employed pensioner, it will not normally change during the course of the re-employment, other than an annual increase in line with inflation. The normal annual increase in the person’s re-employed salary will not result in a recalculation of abatement.
4.3.21 However, you will need to complete box B or C of form CSP13 and send it to the Scheme Administrator if the person:
is promoted or demoted (either permanently or temporarily); or
increases or decreases their conditioned hours; or
starts (or stops) receiving a permanent pensionable allowance;
has a change in pay as a result of being on (or returning from) long term sick leave.
Note: If the member’s pay has substantially increased or decreased for any other reason than shown above you must complete a new CSP13 and send it to the Scheme Administrator.
Resignation
4.3.22 You must complete box D of form CSP13 to notify the Scheme Administrator. On resignation, you need to take prompt action to ensure that the abated pension is reinstated as soon as possible after the termination of employment date. You must ensure that you notify the Scheme Administrator as soon as you know the termination of employment date.
4.3.23 You will need to consider how you ensure that a CSP13 is completed for every change of circumstance. We suggest that you include a prompt for HR staff on their Staff Advice Notices/Change of Circumstances forms.
Scheme Administrator action
4.3.24 On receipt of the CSP13 (Estimate) the Scheme Administrator will calculate any abatement due as a result of taking up the post offered. They will advise you of the details within five working days of receiving the CSP13 (Estimate).
4.3.25 On receipt of the CSP13 on appointment, the Scheme Administrator formally assess whether abatement should apply and write to the pensioner with the details. They will copy the letter to you within five working days of receiving the CSP13 so that you know it has been done. They will also assess any changes to terms of employment notified by further CSP13s and advise the member of any consequences to their pension.
4.3.26 On receipt of the CSP13 on resignation, the Scheme Administrator will reinstate the pension in payment from the resignation date and confirm their action to the pensioner within five working days of receiving the CSP13.
