Left on or after 1/4/14
From 1 April 2014, the Local Government Pension Scheme (LGPS) 2013 was introduced in England and Wales, which brought about changes to the way in which benefits will be calculated.
If you left the scheme on or after 1 April 2014, the introduction of this Scheme will have affected the calculation of your deferred benefits if you became a member on or before 31 March 2014. For more information on how your deferred benefits will have been calculated, please see the Calculating your Benefits tab below.
When Can I Retire?
The scheme's Normal Pension Age (NPA) is linked to your State Pension Age (SPA), but you can elect, in writing to the Fund, to receive your LGPS benefits at any time from age 55 onwards (subject to reduction before your SPA).
In cases of ill health, there is NO age limit.
Will my benefits be reduced?
If you retire before your NPA, your pension may be reduced. The reduction is calculated in accordance with guidance issued by the Government Actuary Department (GAD).
For further information on the possible reduction to your deferred benefits, please contact us.
Calculating your Benefits
If you left the scheme on or after 1 April 2014, your deferred benefits will be calculated on a Career Average Revalued Earnings (CARE) basis from 1 April 2014. However, if you became a member of the scheme before this date, the benefits that you have built up until 31 March 2014 will continue to be calculated on a Final Salary basis, using your pensionable pay at your date of leaving the scheme.
The combined value of your Final Salary and CARE benefits will then yield the total value of your deferred benefits. You will also have the option to give up part of your pension to receive tax free cash (in addition to any automatic lump sum entitlement that you may have in respect of your pre 2008 scheme membership). This is known as Commutation. (Exchanging your Pension).
What if I started in the Scheme on or after 1 April 2014?
The 'Final Salary' references made within this section will NOT apply, therefore reference should only be made to the CARE Benefits and Exchanging your Pension sections.
Final Salary Benefits
If you left the Local Government Pension Scheme (LGPS) on or after 1 April 2014 and you started in the scheme on or before 31 March 2014, your membership up until 31 March 2014 will have been calculated with reference to your whole-time equivalent pensionable pay at your date of opting out or date of leaving.
Your Scheme Membership
Your membership up until 31 March 2014 will have been measured in years and days and includes any membership awarded for the transfer of previous pension rights into the scheme.
If you worked part time during these periods, your membership will have been proportioned in accordance with the part time hours.
Your Final Pay
This is the amount of pensionable pay that you have received during your final year of employment i.e. 365 days back from your date of leaving. However, there is scope for it to be based on one of the previous two years, if higher.
If you work part time, your final pay will be calculated as a whole-time equivalent.
Note that 'non-contractual' overtime will NOT be included in the calculation of your final pay.
Calculating your Deferred Benefits
For membership up to 31 March 2008, benefits will be calculated at an 80th, with an automatic lump sum entitlement, equal to three times your annual pension:
Membership ÷ 80 x Final Pay = Annual Pension
For membership from 1 April 2008 to 31 March 2014, the rate is set as a 60th, but with NO right to an automatic lump sum.
Membership ÷ 60 x Final Pay = Annual Pension
The combined total of your 80th and 60th pension will equal your total Deferred LGPS Annual pension, plus you will have the automatic lump sum element in respect of your membership before 31 March 2008.
However, you will also have the option when you retire, to give up some of your pension to increase your automatic lump sum or to gain some tax free cash if you started in the scheme on or after 1 April 2008. To find out more, see the Exchanging your Pension section.
For your membership from 1 April 2014, your deferred benefits will be calculated on a Career Average Revalued Earnings (CARE) basis.
Whilst an active member, you will have had a Pension Account for each of your pensionable employments, which would have been credited every year with the amount of pension that you built up from 1 April to 31 March.
The amount of pension to be awarded would have been based on your actual pensionable pay, as adjusted by the 1/49th accrual rate. Your account(s) would then have accumulated and would have been revalued each April in line with the appropriate cost of living index.
Calculating the CARE Element of your Deferred Benefits
The amount of pension credited to your account every year would have been calculated as follows:
Actual Pensionable Pay from 1 April to 31 March ÷ 49 = Pension awarded
Any non-contractual overtime payments would have been included in the assessment of your pensionable pay.
Exchanging your Pensions
At the point of retirement, you will have the option to give up some of your pension to gain a tax free lump sum; known as Commutation. For every £1 of pension you decide to give up you will receive £12 of lump sum, subject to a maximum of 25% of the Capital Value of your benefits. (In addition to any automatic lump sum entitlement that you may have in respect of your membership up to and including 31 March 2008).
However, this is NOT compulsory and you may even wish to exchange a lesser amount than the maximum option.
Upon your retirement, you will be given this information within your retirement pack, which will include your base pension values and the maximum commutation amounts. Only then will you have to make an election, or alternatively choose to commute a lesser amount.
If you have been contributing to an in-house AVC arrangement and you wish to consider using this fund to boost your LGPS benefits; your AVC fund will form part of your 'Capital Value' calculation. For further information, please contact us.
Any reduction to your annual pension to provide for a tax free lump sum will NOT reduce any subsequent Survivor's benefits which may become payable upon your death.