Teachers' Superannuation (Miscellaneous Amendments) (Jersey) Order 2016

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A decision made 9 December 2016:

Ministerial decision reference MD-C-2016-0125
Decision summary title Teachers’ Superannuation (Miscellaneous Amendments) (Jersey) Order 2016
Decision summary author	Project Director - Pensions	Is the decision summary public or exempt?		Public
Report title Teachers’ Superannuation (Miscellaneous Amendments) (Jersey) Order 201-
Report author or name of person giving report	Project Director - Pensions	Is the report public or exempt?		Public
Decision and reason for the decision The Chief Minister made the Teachers’ Superannuation (Miscellaneous Amendments) (Jersey) Order 2016, the purpose of which was to amend the Teachers’ Superannuation (Existing Members) (Jersey) Order 1986, the Teachers’ Superannuation (New Members) (Jersey) Order 2007 and the Teachers’ Superannuation (Administration) (Jersey) Order 2007. The Chief Minister has agreed amendments which will: Update the Additional Voluntary Contribution legislation Update, in line with Income Tax legislation, the various options for leavers Allow, in line with Income Tax legislation, a deferred pension lump sum to be payable up to a limit of £18,000 or £30,000 (as the case may be). Remove the current age restrictions on joining the Scheme. Bring the Scheme legislation in line with the UK Qualified Recognised Overseas Pension Scheme (“QROPS”) legislation. Articles 2 to 6 contained in Part 1 of this Order set out various amendments to the Teachers’ Superannuation (Existing Members) (Jersey) Order 1986 (the “1986” Order” as defined in Article 1). Article 2 allows for a new Article 19A of the 1986 Order which discontinues the current method of purchasing added years. This change does not affect any teacher currently purchasing added years and allows any such teacher to also purchase added years under the new arrangements. This brings the legislation up to date and in line with arrangements that apply for AVCs under the JTSF New Members Order. Article 3 inserts some new headings within Part 2 of the 1986 Order which introduces new Section B1 and a new Article 32A and provides a new method for additional voluntary contributions for the purchase of added years. Article 4 replaces Article 44 of the 1986 Order will reflect the requirements of Article 131(12) of the Income Tax Jersey Law. A teacher who ceases employment (but not on retirement) is only entitled to claim a full refund of his/her pension contributions if he/she has been a member of the JTSF for less than 5 years. Article 5 revokes Articles 45 to 49 of the 1986 Order. Some of the provisions in those Articles are now included within Article 44 and others are lapsed or no longer required. Article 6 replaces Articles 59A and 59B of the 1986 Order. This, in line with the Income Tax Law, and Article 59A will enable a teacher (or former teacher) who has only accrued a small amount of retirement benefits, to apply to exchange the whole of that amount for a lump sum payment not exceeding £30,000. The exchange is subject to the member being at least age 60 and his/her retirement benefits not being in payment. This option is not permitted if the capital value includes any amount transferred in from another pension scheme. Article 59B of the 1986 Order also mirrors the provisions of the Income Tax Law and allows a former teacher (under age 60) to exchange the whole of those benefits for a lump sum payment not exceeding £18,000. Articles 8 to 14 contained in Part 2 of this Order set out various amendments to the Teachers’ Superannuation (New Members) (Jersey) Order 2007 (the “2007 Order” as defined in Article 7). Article 8 amends Article 7 of the 2007 Order and removes the age restrictions to becoming a member of the Scheme. Presently, teachers under age 20 or within 5 years of normal retirement age are not eligible to become members of the Scheme. Article 9 makes minor consequential amendments to Article 8 of the 2007 Order regarding Article 22 of that Order which relates to entitlement to refund of contributions. Article 10 replaces Article 12 of the 2007 Order regarding additional voluntary contributions by teachers and includes a saving and transitional provision to deal with AVCs paid prior to this Order coming into force and is similar to new Article 19A of the 1986 Order. Article 11 replaces Article 20 and 21 of the 2007 Order. These Articles are recast to make clearer separate provision regarding the benefits to which a teacher is entitled after leaving employment as a teacher (other than on retirement). Replaced Article 20 is now only concerned with a teacher’s entitlement to a deferred pension where he/she leaves employment with more than 2 years’ service. Replaced Article 21 is only concerned with a teacher’s entitlement to a transfer value payment which is now no longer subject to a minimum qualifying service period or subject to a transfer being made within 12 months of leaving employment. Article 12 amends Article 22 of the 2007 Order so that this provision is now only concerned with a teacher’s entitlement to a full refund of his/her contributions if leaving employment having completed less than 5 years’ service. Contributions in relation to another pension received through a transfer payment into the Scheme are no longer included within the calculation of the refund payment. Article 13 amends Article 33 of the 2007 Order so that up to 30% of a member’s pension may be converted into a lump sum payment on retirement. This increase, from 25% is in line with the conversion amount presently permitted under Article 131CF of the Income Tax Law. Article 14 replaces Article 34 and 34A of the 2007 Order concerning the conversion of retirement benefits into lump sum payments not exceeding £30,000 or £18,000 (as the case may be) the effect of those analogous with Article 59A and 59B of the 1986 Order as substituted by Article 6. Articles 16 to 18 contained in Part 3 of this Order set out various amendments to the Teachers’ Superannuation (Administration) (Jersey) Order 2007 (the “Administration Order” as defined in Article 15). Article 16 amends Article 1 of the 2007 Order and introduces some new definitions for the purposes of some new expressions appearing in Article 20 and 21 of that Order. Article 17 amends Article 20 of the Administration Order the effect of which is to bring references to annuities and pension schemes into line with current references contained in Article 19 of Income Tax Law, and to ensure that the Scheme complies with the requirements of UK tax legislation regarding the transfer of individual pension benefits from UK pensions Schemes, and meets Her Majesty’s Revenue and Customs reporting requirements in order to retain Qualified Recognised Overseas Pension Scheme (“QROPS”) status. The main requirements which must be satisfied are that – a) At the time of the transfer, the rules of the receiving scheme provide that at least 70% of the transferred sum representing the value of the member’s accrued pension benefits in the ceding pension fund will be designated by the receiving scheme manager for the purpose of providing the member with an income for life; and b) The pension benefits in respect of the designated sum transferred cannot be paid until the member:– Is at least 55 years old, or Has left employment and retired early because of ill-health. Article 18 makes consequential amendments to Article 21 of the Administration Order (concerning the transfer out of retirement benefits). The opportunity is also taken to make some minor clarificatory amendments. Article 19 provides for the title of this Order and for it to come into force 7 days after it is made.
Resource implications There are no resource implications.
Action required For the Chief Minister to sign the Ministerial Decision and the Order as soon as may be possible and for the Order to be conveyed to the Greffier of the States, with a request that the making of the Order be notified to the States
Signature			Position Senator I J Gorst Chief Minister

Date signed			Effective date of the decision