As part of the 2014 Scheme Valuation, the following two ‘listed’ changes to the defined benefit (DB) sections will take effect from 1 April 2016:
- an increase in the Normal Retirement Age (NRA) from age 65 to age 67; and
- a change to the cap for revaluation of deferred benefits and increases to pensions in payment (reducing from 5.0% per annum to 2.5% per annum).
Other listed changes that employers may consider as a result of the Scheme Valuation and the end of contracting out of the State second pension (which also takes effect in April 2016) include:
- Changing the Scheme structure on offer to new or existing members, thereby changing the accrual rate.
- Closing the defined benefit (DB) sections to future accrual.
- Increasing member contributions.
- Reducing employer contributions to the defined contribution (DC) section.
When seeking to introduce a listed change there is a legal obligation for an employer with at least 50 staff to consult with employees. However, the SHPS Committee would always advise an employer to consult with their employees even if not obligated to, as a matter of good practice.
Employer Guidance Notes and a consultation template are available on this website. The consultation template is available in word format for you to adapt to your own circumstances. For any changes to structures or contribution rates to be in place from April 2016, the completed Employer Form of Authority must be returned by 31 January 2016 or the default position as stated in the Employer Guidance Notes will be adopted.