Redundancy at 61

ed67812

Hi,

My mum is 61 in a few weeks and works as a special needs assistant in a state school. She has had the bombshell dropped on her, as have her colleagues, that all support staff are facing changes to their contracts or can take redundancy. Her contract would see her drop from 19K to 14K (which comes as a result of a lower pay band, a reconsideration of what makes full time hours - meaning that she would now be treated as part time and the removal of school holiday pay).

My personal thought is that 14k is an insult for how hard she works, what she gives the children she looks after. She also feels completely unvalued now. Fortunately, she doesn't need to work as she and dad have always saved, paid off the mortgage and built a little retirement pot. However, she is worried about ending on the scrap heap as she loves working.

I'm after help with the wording of her redundancy information. It says;

i. The county council will exercise its discretion to base the redundancy payment on the employee's contractual pay rather than the statuory limit.

ii. Where the employee is a member of the LGPS, pension benefits will be based on reckonable pension service for those aged 55 (subject to criteria in the LGPS regs) and the county council will also award;
1. lump sum compensation of twice the amount of the redundancy payment subject to a max of 70 weeks pay (when aggregated with the redundancy benefit).
OR
2. A period of augmented service within the LGPS that can be purchased by an amount of the value of the lump sum compensation that would otherwise be payable, subject to limits defined in the LPGS.

Part (i) makes sense. There is a matrix which shows my mum would get 18 weeks pay based on her current service length.

Part (ii 1 and 2) I don't understand. Why does she get extra for being over 55? Does she have to retire to get this? Point 1 indicates that in total she would get 54 weeks pay - 18 week redundancy and then 2x18 week pay lump sum.

Can anybody explain?

kidmugsy

(ii) implies to me that it is first offering to start paying her LGPS pension on the terms mentioned. (Presumably LGPS can't pay pensions earlier than age 55, except for ill-health retirement pension).

Then ADDITIONALLY it offers her a choice of EITHER taking her compensation payment (at least part of which will be tax-free, I suppose) OR alternatively not accepting that money cash-in-hand but instead using it to buy herself a bigger LGPS pension. The size of the extra will be calculated in terms of extra years of membership of the scheme.

That's what I make of it as a Reading Comprehension exercise. I now wait to see what people familiar with the scheme make of it.

atush

If she is a member of the LGPS, I would take the redundancy, and she can work elsewhere- even as a volunteer to keep her job satisfaction. LS or larger pension would be based on what we dont know (ie their level of savings and plans for the short term such as new car, house maintenance etc).

I would not work on, in a lower band as that would affect her eventual pension payments.

xylophone

Would it be open to your mother to draw her pension and continue to work on a part time basis?

Poppy9

I work LA and age 55 plus if you take voluntary or compulsory redundancy you can access your pension at point of redundancy (classed as retirement).

Can't offer advice on whether to take added years or lump sum sorry.

She needs to know her councl's policy on those taking redundancy.

i.e. if it's classed as voluntary she may never be able to work for the Local Authority (including any of it's schools) ever again, not even in a casual capacity.

If it's classed as compulsory (I doubt it from what you said as they are asking for volunteers to go) then she might be only precluded for working for them for a fixed number of years.

There will also be restrictions on working for Other Local Authorities.

I take it your mother has had her pay adjusted under a Job Evaluation scheme which all councils have to undertake (most have).

She may be entitled to a period of pay protection - though it's a greyer area when they adjust your working week. i.e. school support staff who were classed as 52 week employees now classed as term time only and their actual hourly rate has not dropped. i.e say hourly rate was £10 per hour for 27 hours for 52 weeks and her hourly rate is now £10 per hour for 25 hours for 38 weeks (plus extra weeks for annual leave) then she may not be entitled to pay protection as it may only protect hourly rate.

If she has pay protection she should ask if she can nominate a date in the future to retire so give her another year working if job is available.

She can work outside the Local Authority if she accepts her pension.

Her pension will be based on her highest salary in last 3 years.

She should be able to access a full pension calculation showing how much she will get. Check it to ensure her employment dates are correct. If she is in Union get their advice.

I would say having been through a Job Evaluation process she is lucky she has choice of retiring with pension as many are not old enough for this option and just have to either accept reduce pay or find another job.

Poppy9

atush wrote: »

I would not work on, in a lower band as that would affect her eventual pension payments.

Her pension should be on her highest pay for last 3 years but there is also something to with electing salary of last 13 years. So if she earned £19k today and £14k in 2 years time she would have pension based on £19k though under the new scheme it would be on her average of membership (so if new scheme came in April 14 then it will be average of April 14 to date for that period of service and for previous service under old scheme £19k)

xylophone wrote: »

Would it be open to your mother to draw her pension and continue to work on a part time basis?

The employer should have option for flexible retirement and it's usually for a fixed period of 6 or 12 months.

kidmugsy

atush wrote: »

I would not work on, in a lower band as that would affect her eventual pension payments.

Strong point, atush.

Poppy9

kidmugsy wrote: »

Strong point, atush.

but not strictly true at her age given the 3 year rule for the majority of her pension.

The biggest p!sser off is the working for less for doing same job and it's taken them 20/30 years to decide they are overpaid!

hyubh

ed67812 wrote: »

i. The county council will exercise its discretion to base the redundancy payment on the employee's contractual pay rather than the statuory limit.

That one's nothing to do with the pension per se, however...

ii. Where the employee is a member of the LGPS, pension benefits will be based on reckonable pension service for those aged 55 (subject to criteria in the LGPS regs)

As Poppy says, that's referring to the scheme rule that says being made redundant between age 55 and your normal retirement age is usually an automatic early retirement; if an actuarial reduction would normally be applicable, then it will be cancelled by the employer having to pay a capital amount ('strain charge') to the pension fund. This possibility will have been taken account of before the redundancy offer was made.

and the county council will also award;
1. lump sum compensation of twice the amount of the redundancy payment subject to a max of 70 weeks pay (when aggregated with the redundancy benefit).

This refers to the standard LA 'bonus' redundancy payment above the statutory minimum.

OR
2. A period of augmented service within the LGPS that can be purchased by an amount of the value of the lump sum compensation that would otherwise be payable, subject to limits defined in the LPGS.

This is 'Augmentation' in the technical LGPS sense: under the last two final salary versions of the scheme, an employer has a discretionary power to buy extra service for a member. Historically there was actually two versions of this; Augmentation with a capital 'A' is when the cost is charged by the pension fund upfront (i.e., it's another capital cost). For historical reasons a local authority employer cannot both do Augmentation and grant the more generous redundancy payment referred to in (1); as such, a council (as it seems here) may adopt the policy to only grant augmentation in cases of redundancy, and do so as an alternative to the normal, more generous redundancy payment. This has the effect of granting of augmented service only in cases where it doesn't actually cost the employer (and therefore the local taxpayer).

That said, your mum should check that the mention of Augmentation isn't actually out of date - my impression was that the power to award augmented service to active members disappeared in England and Wales in April with the new CARE scheme (if you're mum's working for a Scottish school then forget this, because the Scottish LGPS doesn't go CARE until next year). Instead, the employer can (if they have a policy saying they might) do a shared cost APC, which will in effect come to the same thing - talk of 'augmented service' was always really a technicality given the final pay that the service concerned earned pension for was known. Nevertheless, since active members in the CARE scheme are now able to buy extra pension with a capital amount of their own at any time, it is possible the council has simply deleted reference to Augmentation in their 2014 scheme discretionary policy and not replaced it with anything.

Part (ii 1 and 2) I don't understand. Why does she get extra for being over 55?

No, being 55 or over means a pension will be due.

Does she have to retire to get this?

If she's made redundant, yes, however 'retire' here just means 'draw her LGPS pension'. She'd be free to get another job with an employer that values her.

kidmugsy

Poppy9 wrote: »

The biggest p!sser off is the working for less for doing same job and it's taken them 20/30 years to decide they are overpaid!

I think I might be quite pleased to think that some idiot has been over-paying me for years. Takes all sorts.

ed67812

Poppy9 wrote: »

I work LA and age 55 plus if you take voluntary or compulsory redundancy you can access your pension at point of redundancy (classed as retirement).

Can't offer advice on whether to take added years or lump sum sorry.

She needs to know her councl's policy on those taking redundancy.

i.e. if it's classed as voluntary she may never be able to work for the Local Authority (including any of it's schools) ever again, not even in a casual capacity.

If it's classed as compulsory (I doubt it from what you said as they are asking for volunteers to go) then she might be only precluded for working for them for a fixed number of years.

There will also be restrictions on working for Other Local Authorities.

Surely it would be compulsory redundancy? All support staff are either being made redundant or if they wish to stay working for the LA then they have the option of a new job (it is a new job, with different title, lower pay scale - it isn't just the same job with conditions changed).
She is going to find out the restriction period to working for the LA again. But if she took redundancy and started drawing her pension, what would happen if she came out retirement and went back to work for the LA in a year or so (assuming she had 'served' the restricted period doing something else).

That said, your mum should check that the mention of Augmentation isn't actually out of date - my impression was that the power to award augmented service to active members disappeared in England and Wales in April with the new CARE scheme (if you're mum's working for a Scottish school then forget this, because the Scottish LGPS doesn't go CARE until next year). Instead, the employer can (if they have a policy saying they might) do a shared cost APC, which will in effect come to the same thing - talk of 'augmented service' was always really a technicality given the final pay that the service concerned earned pension for was known. Nevertheless, since active members in the CARE scheme are now able to buy extra pension with a capital amount of their own at any time, it is possible the council has simply deleted reference to Augmentation in their 2014 scheme discretionary policy and not replaced it with anything.

I will get her to check. She should apparently get more detailed information this week.


Thanks for all your help.
Ed