Overview of the new LGPS scheme 2014

 Retirement benefits based on a Career Average Revalued Earnings (CARE) scheme for all membership from 1 April 2014

Retirement benefits based on “final salary”

Your own pension account with pension bought each year as 1/49th of that year’s salary, with previous years pension re-valued each year

Accrual rate –

1/60 for membership from 1 April 2008

1/80 for membership pre 1 April 2008 + an automatic lump sum of 3/80 X membership

Each member’s Normal Pension Age (NPA) will be the same as their State Pensions Age (SPA) for pensions built up from 1 April 2014.

Check your State Pension Age.

Age 65, or in accordance with any “rule of 85” protection

Salary bandings extended with contributions deducted on all pensionable pay received,

including part and term timers – see table overleaf

Salary bandings but with contributions based on whole

time equivalent pay for part and term timers

50/50 option:

for those wishing to be a member of the scheme, but do not wish to pay the full contribution rate, you pay 50% of the contributions and so receive 50% of the pension package, and so your salary buys pension at the rate of 1/98th each year. You still retain full value of other benefits, such as ill health pension, death in service, and redundancy

No equivalent

 Benefits for service prior to 1 April 2014 are protected, including "Rule of 85" protection put in place in 2006. Past service also to be based on Final salary when you eventually retire. Further protections are to be put in place for those members within 10 years of age 65 as at April 2012

Further information on protections will be included in future notifications

“Rule of 85" protection in place at 2006.

Where scheme members are out sourced to a non council contractor under a TUPE arrangement, they will be able to stay in the scheme on the first and any subsequent transfers.

 The new employer chooses whether or not to ask for Admitted Body status in the pension scheme

Ability to buy additional pension via Additional Pension Contributions (APCs) plus, any previous contracts taken out to pay ARCS or Added Membership are still honoured and continue until either the contract is complete or the member decides to cease making payment.

ARCs, and prior to April 2018, Added Membership

AVCs – now possible to pay 100% of your pay for that month (following the deduction of National Insurance) that you are paying an AVC

AVCs limited to 50% of your pay for each month that you pay an AVC

Actual Pensionable Pay

Gross % Rate

50/50 contribution

£0  - £13,500

5.5%

2.75%

£13,501 - £21,000

5.8%

2.90%

£21,001 - £34,000

6.5%

3.25%

£34,001 - £43,000

6.8%

3.40%

£43,001 - £60,000

8.5%

4.25%

£60,001 - £85,000

9.9%

4.95%

£85,001 - £100,000

10.5%

5.25%

£100,001 - £150,000

11.4%

5.70%

more than £150,000

12.5%

6.25%

Pensionable pay to include all non contractual overtime plus additional hours for part time staff, with Employers contributions being payable on these additional elements also.

Pensionable pay excludes non-contractual overtime and non pensionable additional hours

 commuting (converting) pension to lump sum, at the rate of 1:12 to give additional lump sum.

So for every £1 of pension given up, you receive

£12 lump sum

commuting (converting) pension to lump sum, = 1:12 to give additional lump sum So for every £1 of pension given up, you receive £12 lump sum

death in service = 3 times pensionable pay

death in service = 3 times pensionable pay

death in service survivor benefits = 1/160 based on Tier 1 ill health pension enhancement

death in service survivor benefits = 1/160 based on Tier 1 ill health pension enhancement

Ill health Provision – 3 Tiers

•    Tier 1 - immediate payment with service enhancement to Normal Pension Age
• Tier 2 - immediate payment with 25% service enhancement to Normal Pension age
• Tier 3 – Temporary payment of pension for up to a max of 3 years, no enhancement

Ill health Provision – 3 Tiers

•    Tier 1 - immediate payment with service enhancement to age 65
• Tier 2 - immediate payment with 25% service enhancement to age 65
• Tier 3 – Temporary payment of pension for up to a max of 3 years, no enhancement

The rate at which benefits increase will be in line with Treasury Orders, which is currently CPI. This affects both pensions in deferment as well as those in payment

The rate at which benefits increase is in line with CPI, previously RPI prior to 2011 increases. This affects both pensions in deferment as well as those in payment

Vesting period – 2 years membership

This is the minimum time you need to be a member of the scheme to qualify for a retirement benefit. It is also the time limit to have a refund of contributions.

Vesting period – 3 months membership

This is the minimum time you need to be a member of the scheme to qualify for a retirement benefit. It is also the time  limit to have a refund of contributions.

The rate at which benefits increase will be in line with Treasury Orders, which is currently CPI

50/50 option

The ability for contributing members of the LGPS 2014 scheme to pay half their employee contribution rate in return for half accrual rate.

Accrual rate

The proportion of Pensionable pay that each year of membership adds

to your pension – effectively the speed at which your pension builds up

Assumed Pensionable Pay

The figure used to calculate any “pension lost” due to any authorised unpaid leave, or industrial action absence.

CARE

Career Average of Revalued Earnings

CPI

Consumer Price Index – used to increase benefits in payment or deferment since April 2011

Deferred Pension

Pension built up by members who leave before retirement

Final Salary

The figure used to calculate benefits in a “final salary “ pension

scheme. Usually the pensionable pay received in the last 12 months of active membership, or the best of the last 3 years.

Final Salary scheme

A type of defined benefit pension scheme in which your pension is largely determined by your salary at retirement

HMRC

Her Majesty’s Revenue and Customs (formerly the Inland Revenue)

LGPS 1997

The Local Government Pension Scheme in operation prior to April

2008

Indexation of benefits

The increase applied to pension in payment (and deferment) each year in order to retain its value, - From April 2011,  index used is CPI

LGPS 2008

The Local Government Pension Scheme in operation from April 2008

to 31 March 2014

LGPS 2014

The Local Government Pension Scheme being introduced from April 2014

Normal Pension

Age (NPA)

The age at which the scheme will pay your benefits will become

payable without actuarial reduction or enhancement

Pensionable pay

The pay used to calculate employee contributions and benefits, which from 1 April 2014 will include additional hours and non contractual overtime

RPI

Retail Prices Index. This is the measure that was used prior to 1 April

2011 for increases to pensions in payment and deferment.

Rule of 85

A provision in the LGPS 1997 that enabled some members with long service who retire before age 65 to have their pension unreduced. This has been phased out, but some members have protected service

under the transitional protection arrangements made in 2006

State Pension Age (SPA)

The age at which your state pension becomes payable

Tax relief

Pension contributions are deducted from your earnings before tax is

calculated. This is known as pension tax relief

Treasury Orders

The increase orders that are issued by H M Treasury