095/2013: North Yorkshire Police Employees’ Benefits Scheme – 17 March 2014

Executive Summary and recommendation:

This report follows the earlier Decision Notice Number 082 introducing a voluntary benefits system, provided in a partnership arrangement with North Yorkshire County Council (NYCC), to include local and national offers, Salary Sacrifice offers and some aspects of Scheme management.

North Yorkshire Police (NYP) has sealed the Access Agreements for Lots1 (voluntary benefits scheme i.e. the discounts platform), 2 (childcare) and 4 (cycle to work) and thus now has access to the contract details and is completing the detailed planning. Decision Notice 082 stated “The establishment and running of this Scheme requires a full understanding of its mechanics and their implications for NYP, both staff and organisation. Input into the legal, information security, financial and administrative aspects will precede adoption and provide guidance as to the roll out of the various Lots.” Accordingly this paper provides further details and seeks decisions on:

• The policy and potential implications when introducing Lot 1
• Treatment of potential savings from pension contributions for the Salary Sacrifice Scheme Lot 4.

Further detail to be provided on Salary Sacrifice Schemes Lots 2, 3 and 5 (Childcare, Green Car, Employee Computers) when the appropriate detail is available.

Lot 1 – Voluntary Benefits System:

Adoption of the Voluntary Benefits System could achieved in two ways:

• Allow browsing only of the System when accessed through the NYP intranet site. Purchase of goods would then need to take place from, and be restricted to, a personal computer.
• Allow both browsing and purchasing through the System when accessed via the NYP intranet.

Option 2 would require a change to the current NYP Procedure.

Lot 4 – Cycle To Work Salary Sacrifice:

Lot 4 is a Salary Sacrifice Scheme that can produce savings for staff in tax, National Insurance and pension contributions and for the Chief Constable and Commissioner against Employers’ National Insurance and pension contributions. Employers may determine whether contributions to occupation pension schemes remain – for both employer and employee – at the original substantive or post salary sacrifice revised level. Appendices A and B show the potential set up costs of the Employee Benefits Scheme and the range of savings attributable to each Cycle to Work application, both with and without the range of employer’s potential pension savings. Taking into account the information in this illustration the Executive Board is asked to decide, in addition to the savings available for both staff and employee in tax and National Insurance, whether or not to take the employer’s pension contribution savings. If choosing not to do so then both employer and employees would continue to make contributions at the original rate, thus leaving occupational pensions unaffected. This would also mirror the host (North Yorkshire County Council (NYCC)) organisation’s approach.

In terms of process this Salary Sacrifice scheme requires staff to meet certain criteria relating to levels of pay once deductions have been taken. If these criteria are met NYP purchases the cycle (and equipment if desired) and hires it back to the member of staff for a minimum period of 12 months through a reduction to gross pay. At the end of the Agreement period the ownership transfers to Cyclescheme Ltd and NYP’s involvement finishes. This process is described at Appendix C.

The Executive Board is asked to decide that:

• Eligible NYP members may access the Voluntary Benefits System via the NYP intranet.
• NYP members may confirm orders for goods i.e. make purchases through the Voluntary Benefits System when accessed via the NYP intranet.
• The NYP Internet, Email and Mobile Telephone Procedure is amended to permit the purchase of goods through the Voluntary Benefits Scheme portal.
• Members may access the Voluntary Benefits System via the NYP intranet before and after work and during lunch breaks.
• For Lot 4, NYP does not take the employer’s pension contribution savings and both NYP and employees continue to make contributions at the original rate. This will leave occupational pensions unaffected.

Decisions on Lots 2, 3 and 5 (Childcare, Green Car and Employee Computers) are taken when the details are available.

Police and Crime Commissioner decision:

Approved

Signature Date 17 March 2014
Title Police & Crime Commissioner for North Yorkshire

Part 1 – Unrestricted facts and advice to the PCC

1. Introduction and background
   1. In Decision Notice 082 the Executive approved recommendations that a benefits scheme is offered to staff and that this is provided in partnership with NYCC. The scheme is to be rolled out incrementally, commencing with the Voluntary Benefits System (Lot 1). This will be available to all permanent employees and volunteers and reviewed by the ACC (People) after three months for possible wider membership.
   2. In terms of access and usage, The Internet, Email and Mobile Telephone Procedure gives guidance to officers and staff on the safe and appropriate use of the internet to protect from potential misuse by qualifying the difference between work and personal use and how NYP systems may and may not be used. Under qualified circumstances officers and staff may use the internet for personal use and authorisation for policing purchases currently comes through the Head of Professional Standards. Arguably therefore, wider permissions may increase the risk of abuse of the system, increasing the scrutiny and investigative burden as well as the potential risk to NYP’s reputation.
   3. Accordingly adoption of the Voluntary Benefits System could be achieved in two ways:
      • Allow browsing only of the System when accessed through the NYP intranet site. Purchase of goods would then need to take place from, and be restricted to, a personal computer.
      • Allow both browsing and purchasing through the System when accessed via the NYP intranet.

      Both options will require that the Procedure is reviewed and for Option 2 that it is amended to allow enhanced permissions to staff.

   4. Next is to be the Lot 4 Cycle to Work, a Salary Sacrifice Scheme that is governed by Her Majesty’s Revenue and Customs rules. Whilst salary sacrifice schemes attract the benefits of reduced payment of National Insurance and income tax, they can adversely impact on occupational pension schemes. Under legislation employers have the right to determine whether contributions to occupational pension schemes remain (for both employer and employee) at the original substantive or post Salary Sacrifice revised level.
   5. As staff circumstances vary considerably it is difficult to make precise predictions as to costs and savings. The attached Appendices A and B illustrate various employee scenarios and the financial implications arising from varying circumstances, with and without the reduction in pension contributions. In order to maximise the benefit to staff and promote the environmental aspects of the Lot, it is proposed that NYP does not take the pension contribution savings and employers and employees continue to make contributions at the original rate.
2. Matters for consideration
   Implementing the Voluntary Benefits System and Salary Sacrifice Lot 4 will require establishing an appropriate process and, for Lot 4, the completion of the actions as described in Appendix C. Work is being finalised on these arrangements.
3. Other options considered, if any
   Other options were brought forward in earlier papers, NYP has since agreed to proceed with the NYCC scheme.
4. Contribution to Police and Crime Plan outcomes
   This scheme contributes to organisational goals at different levels but specifically:
   • Goal 3: More With Less – take up of the salary sacrifice schemes will reduce the staff and NYP tax and National Insurance obligations so creating savings as staff benefit.
   • Goal 4: Fit for the future – embedding “people first” culture amongst the whole workforce by providing a comprehensive, voluntary benefits system. Similarly there will be clear criteria to meet for staff wishing to join salary sacrifice schemes which will protect both them and the organisation.
   • Reduced carbon footprint by offering Lot 4 (Cycle to Work).
   • Also to Police and Crime Plan Delivery Board objectives under the People Work-stream to: Deliver a Leadership, Engagement, Wellbeing and Culture Change Programme.

   Finally the System offers staff the opportunity to make cost-effective purchases from local retailers thus supporting the local economy.

5. Consultations carried out
   A first discussion paper and a Decision Notice have been presented and agreed by the Executive Board. Consultation on proposals has taken place with each of the staff associations as well as with Finance, HR, Corporate Communications, ISD and Legal Services colleagues, who have been instrumental in building the implementation process. Lengthy consultations have also been conducted with NYCC as well as the overall host company Xexec and Cyclescheme Ltd; and both PSNI and Avon and Somerset Police has provided information on how their Salary Sacrifice Scheme operates.
6. Financial Implications/Value for money
   1. the attached Appendices A and B illustrate various employee scenarios and the financial implications arising from varying circumstances, with and without the reduction in pension contributions. These need to be treated with caution as each application is likely to be different. Appendix C describes where the set up and management costs will be generated
   2. Costs will be incurred from annual access fees for each Lot (Voluntary Benefits System and Cycle to Work are each £300 pa) and staff costs to manage the overall scheme, its administration and marketing. Savings will be generated for employees in tax and National Insurance and for NYP’s National Insurance contributions. Further savings may, but not recommended to be made from pension contributions.
   3. Chief Constable’s Chief Finance Officer Comments:
      1. I am not clear from this document which department will be providing the resources required to implement these schemes, nor whether the resource costs quoted in Appendix A are in addition to the current establishment, or can be absorbed by the department. The DN does not indicate whether the relevant Head of Department has been consulted and has confirmed that the resources are available.

         My financial comments are made on the basis that this is an omission in the DN, rather than a failure to consult, and that the relevant Department Head is prepared to confirm that the resources can be found without additional direct cost to NYP.

      2. the Executive Board has previously indicated that it would not be within the spirit of the decision to implement an Employee Benefits Scheme for benefits taken to impact on employees pension entitlements, and the Executive Board do not wish to be seen to be making savings on employers pension contributions as a result of implementing an Employee Benefits scheme. My financial comments are made on the basis that the Pension Contribution savings quoted will not be taken.
      3. Financial Comments:
         On the basis outlined above, the direct costs of implementing the scheme as quoted in Appendix A are approximately £3.3k pa, plus a small set up fee. There is no current budget provision for this, but it is anticipated that this will be covered by the Employers NI savings, which will depend on the number of staff and officers who participate in the schemes.

         Based on the estimates provided in Appendix A breakeven would be achieved in the first year if 39 staff and officers are member of the cycle to work scheme for the whole year. In practice, some of the scheme cost recovery is likely to come from later Lots, and there may be a residual cost in 2014/15.
7. Legal Implications
   1. NYCC has undertaken Scheme procurement through an Official Journal of the European Union restricted tender for a framework agreement that is open to all public sector organisations in the United Kingdom. Currently 14 other organisations have a service level agreement with NYCC for their employees to access services via the Council’s “Everybody Benefits” scheme that forms part of their Pay and Reward policy framework.
   2. Cyclescheme Ltd produces a Hire Agreement regulated by the Consumer Credit Act 1974 and advises staff to seek advice on any aspect of the Agreement they are unsure of. Both HMRC and Cyclescheme Ltd produce Frequently Asked Questions for reference.
   3. After the Hire Period is completed, Cyclescheme Ltd will contact employees to discuss options for extended use and ownership and NYP’s involvement finishes.
   4. Having read this report and having considered such information as has been provided at the time of being asked to express this view, the Head of Legal Services and orce Solicitor is satisfied that this report does not ask the PCC for North Yorkshire to make a decision which would (or would be likely to) give rise to a contravention of the law.
8. Equality Implications
   1. NYP wishes to offer the Scheme as widely as possible. A better understanding of the detailed implications is required however and thus the Lots are being rolled out in a managed and informed way.
   2. Whilst the HMRC eligibility criteria have to be met, this does not preclude staff from making applications.
   3. NYCC has specified that the successful provider must deliver an annual, and on-going ad hoc, promotions in media specific to customer requirements for all staff. This will take account of staff working in remote locations and/or without ready access to personal computers at work.

Public Access to Information

The Police and Crime Commissioner wishes to be as open and transparent as possible about the decisions he/she takes or are taken in his/her name. All decisions taken by the Commissioner will be subject to the Freedom of Information Act 2000 (FOIA).

As a general principle, the Commissioner expects to be able to publish all decisions taken and all matters taken into account and all advice received when reaching the decision. Part 1 of this Notice will detail all information which the Commissioner will disclose into the public domain. The decision and information in Part 1 will be made available on the NYPCC web site within 2 working days of approval.

Only where material is properly classified as restricted under the GPMS or if that material falls within the description at 2(2) of The Elected Local Policing Bodies (Specified Information) Order 2011 will the Commissioner not disclose decisions and/or information provided to enable that decision to be made. In these instances, Part 2 of the Form will be used to detail those matters considered to be restricted. Information in Part 2 will not be published.

Is there a Part 2 to this Notice – NO