EPN571 - Resource Accounts 2018-19: disclosure of salary, pension and compensation information

Date posted: 07/03/2019

Audience

• Finance Directors and Managers; and 
• Pension Leads 

Actions

• Note the guidance on disclosure of salary, pension and compensation information in Section 13 of the Employer Pension Guide (this EPN highlights what information is new and encloses copies of relevant annexes)
   
• Complete Annex 13A of the Employer Pension Guide and send it to the Scheme Administrator (MyCSP) to obtain pension information on staff covered by the Remuneration Report
   
• Complete Annex 13B of the Employer Pension Guide and send it to RPMI (the administrator of the Parliamentary Contributory Pension Fund) to obtain pension information on ministers covered by the Remuneration Report
   
• Note the example Remuneration Report in Annex 13C of the Employer Pension Guide
   
• Send the notice in Annex 13D of the Employer Pension Guideto all staff covered by the Remuneration Report
   
• Note the explanation in Annex 13E of why the difference between the start and end of CETVs are in some cases considerably higher than the ‘real increases in the CETV’.

Timing

• Immediate - you must carry out the actions above as soon as possible. 

Detail 

1. Resource accounts of organisations covered by Civil Service pension arrangements must include a Remuneration Report which contains information about the salary and pension packages of Ministers and the senior management team.

2. EPN562 gave advance warning of the information that you will need to supply to the Scheme Administrator (MyCSP) to enable them to provide pension information for your Remuneration Report. This EPN provides further details of what you need to do.

What to do with the section and annexes of the Employer Pension Guide, enclosed in this EPN

Guidance on disclosure of salary, pension and compensation information (Section 13)

3. Section 13 of the Employer Pension Guide, explains what should be included in the Remuneration Report, and also provides guidance on:

• What disclosure is and who is subject to it.
• The different elements of remuneration which are reported.
• Partial retirement.
• Compensation and compromise agreements.
• Individuals who have been in post a whole year.
• Partnership pension accounts.
• Reporting on departmental staff generally.
• Ill health retirements.

4. Please note that the Section 13 guidance includes guidance on alpha.

Requests to MyCSP for pension information on senior officials (Annex 13A)

5. You are responsible for identifying the individuals to be included in your Remuneration Report and for requesting pension information. You should complete Annex 13A and return it to MyCSP as soon as possible. You will need to contact your payroll provider to obtain some of the information that you will need to give to MyCSP. (You will not need to include figures from last year’s exercise). MyCSP will not be able to provide you with pension information unless you have completed Annex 13A fully and accurately.

6. Please email your completed Annex 13A to: resourceaccounts2019@mycsp.co.uk

7. Please note that MyCSP cannot provide any pension information until they have received and processed the interface from your March payroll. MyCSP will provide you with the pension information within 20 days of your interface being processed, unless you have provided MyCSP with details of the timetable for producing your accounts and a different date has been agreed. Please be aware that the turnaround for processing the interface is 10 working days.

8. MyCSP will not insert the pension information in Annex 13A and return it to you. To reduce the risk of transcribing errors, they will instead send you the results (both inputs and outputs) from the calculator they use to produce the information. This includes all the pension figures you need for the Remuneration Report.

9. Please send all questions and update requests to the above email address unless the issue is particularly complex, MyCSP will answer all these within 7 days. If you have an urgent enquiry and you need to speak to the MyCSP team directly, you can contact:

Julie McComish (01903 760068)
Nadine Isaacs (01903 760324)

Request to RPMI for pension information on Ministers (Annex 13B)

10. Civil Service departments that need information about their Ministers should complete Annex 13B and send it to RPMI (the administrators of the Parliamentary Contributory Pension Fund).

Example Remuneration Report (Annex 13C)

11. The example Remuneration Report shows how pay, pension and compensation information is presented. Apart from figures and dates being updated, the only changes are that severance payments made to former Ministers are now disclosed.

Note to senior staff covered by Remuneration Report (Annex 13D)

12. Please issue the note in Annex 13D to all staff who will be included in the Remuneration Report to give them advance warning of the exercise. Once you have obtained all the necessary figures you should provide the staff in question with details of what you propose to publish and invite them to correct any factual errors.

Figures that will be used by MyCSP this year

13. When calculating the real increase in CETV and the pension benefits accrued during the year 2018-19 for the single total figure of remuneration, MyCSP takes account of inflation. The CPI increase for September 2018 was 2.4%. Consequently, the Pensions Increase factor for April 2019 will be 2.4%. The in-service revaluation factor for alpha will also be 3%.

14. The earnings that count towards the calculation of pensions is limited for some staff to a figure referred to as the “earnings cap” or “permitted maximum”. Where this is relevant, MyCSP will calculate pensions based on the earnings cap for 2018-19 of £160,800.

Negative results

15. In some cases, the real increase in CETV and the pension benefits accrued for the single total figure of remuneration can be negative – that is, there can be a real decrease. This is particularly likely to happen during periods of pay restraint and /or where inflation is higher than pay increases.

16. The final salary pension of a person in employment is calculated by reference to their pay and length of service. The pension will increase from one year to the next by virtue of them having an extra year’s service and by virtue of any pay rise during the year.  Where there is no pay rise, the increase in pension due to extra service may not be sufficient to offset the inflation increase – that is, in real terms, the pension value can reduce, hence the negative values.

For example, this is particularly likely to happen for members in classic plus where no service after 30 September 2002 counts towards the calculation of the lump sum.

Another scenario where there can be negative results is where a member is over their normal pension age. The factors used to calculate the CETV are such that the value of pension that could have been taken at normal pension age decreases as the member gets older.

17. When MyCSP supplies you with the requested pension information, they will explain the reasons for any real decrease in CETV or pension element of the single figure of remuneration. They will also provide you with the combined information required for your reports with the relevant rounding applied.