On 16 October 2016, amending regulations came into operation which affect Nursery Assistants who signed up to a Collective Agreement that changed their terms and conditions of employment, the main change being an increase in the whole-time equivalent hours from 32.5 per week to 36 per week.
Although you may not have changed the number of hours you actually work, this change to your full-time hours could have had a direct effect on the calculation of the pension benefits you had built up before 28 March 2015, as these final salary benefits are calculated with reference to your full-time length of membership and full-time equivalent pensionable pay. There is no impact on the pension benefits that you will build up from 1 April 2015 as these are calculated on the pensionable pay that you actually receive under the Career Average Revalued Earnings (CARE) Scheme.
To ensure that your benefits are not affected by your decision to sign up to the Collective Agreement and the change in full-time hours, the Department for Communities has made regulations which allow us to continue to calculate your benefits for the period from 1 January 1995 to 27 March 2015 (the protected period) on a 32.5 hour full-time equivalent pay. This means that there will be no change to the calculation of your benefits for this period. Any final salary benefits built up outside the protected period will be calculated on a 36 hour full-time equivalent pay. By adjusting the pay to accommodate the change in full-time hours means there will also be no change to the benefits provided.
Example – calculation of a pension for a nursery assistant
To show you that the benefits are unaffected by the change to calculation, we have used an example for a Nursery Assistant who worked five years before the date of the Collective Agreement.
The purpose of this illustration is to show that the calculation results in the same final salary pension and lump sum (if applicable) for the protected period as would have been expected prior to the amending regulations.
For all part-time members, NILGOSC will scale membership down to its full-time length and scale pensionable pay up to its full-time equivalent.
The calculation below shows how we would work out full-time equivalents for a part-time employee who worked for 5 years at 15 hours per week earning £6,923 per annum when the full-time equivalent is 32.5 hours.
Pensionable pay is brought up to full-time equivalent of 32.5 hours
i.e. £6,923 x 32.5/15 = £15,000
Membership is brought down based on a full-time equivalent of 32.5 hours
i.e. 5 years x 15/32.5 = 2 years 112 days
Calculation of pension for membership up to 28 March 2015 (with full-time-equivalent of 32.5 hours) – Before signing up to the Collective Agreement
Pension in respect of membership before 28 March 2015 =
1/60 x full-time equivalent pensionable pay x full-time equivalent membership to 27 March 2015
Pension = 1/60 x £15,000 x 2 years 112 days = £576.71
Calculation of pension for membership up to 28 March 2015 (with protected full-time equivalent of 32.5 hours) – After signing up to the Collective Agreement
Pension in respect of protected membership before 28 March 2015 =
1/60 x protected full-time equivalent pensionable pay x full-time equivalent membership to 27 March 2015
Pension = 1/60 x £15,000 x 2 years 112 days = £576.71
Summary
In summary, Nursery Assistants who accepted the terms of the Collective Agreement will continue to have the same pension calculation used to work out their pension for the period from 1 January 1995 to 27 March 2015. They will then have a 36 hour pay used to calculate their benefits for the four days from 28 March to 31 March 2015 and the service for that period will be reduced according to the hours that they work. By adjusting the pay to accommodate the change in full-time hours there is no change to the benefits provided. There is no difference to the post 31 March 2015 benefits as these Career Average Revalued Earnings (CARE) benefits are calculated on the pay received and not on full-time equivalent pays.