Public Sector Compensation Scheme
The Public Sector Pensions Authority (PSPA) has on the 13 January 2014 made the Public Sector Compensation Scheme 2013. This Scheme puts in place new arrangements for employees within a large proportion of the Public Service whose service terminates as a consequence of the loss of office or redundancy.
The previous arrangements under the Interim Compensation Scheme 2012 no longer apply and have been revoked. Therefore, any element of automatic pension enhancement applicable under the former arrangements have been removed and replaced by the payment of a lump sum based upon a more traditional formula of pay and length of service.
However, the new arrangements do provide the opportunity for affected employees over the age of 50 to voluntarily exchange all or part of their redundancy payment in order to buy additional pensionable service in the Unified Scheme, in order to increase their pension benefits.
Further details, including a formal response to the consultation on the Scheme, a document setting out some of the Frequently Asked Questions around the introduction of the Scheme and a copy of the Scheme itself can be found below.
For the purposes of calculating an employees lump sum under this scheme, the Deemed Minimum of £25,000 as at 13 January 2014 will increase in April each year (bythe IOM RPI published in March), in order to keep pace with inflation.
Deemed Minimum 1 April 2014 is £25,725 (IOM RPI Feb 2014 2.9%)
Deemed Minimum 1 April 2015 is £26,085 (IOM RPI Feb 2015 1.4%)