Pensions UpdateKeeping employers updated on scheme changes
London Pensions Fund Authority
Issue Highlights:► Charities Employer Covenant Checks
► LGPS 2014
► LGPC Bulletin
Contact usIf you would like more information regarding the services we offer or would like to discuss your requirements with us in more detail then please contact us on: 020 7369 6000 www.yourfund.org.uk www.yourpension.org.uk
June 2014
Charities Employer Covenant ChecksArticle published by the Charity Commission Regulator
As most agencies have charities within their fund, this information seemed useful to share with you all and I am happy to discuss this further if you require further details.
There was recently an article published by the Charity Commission Regulator explaining that charities should be using their Trustees Annual Report (TAR) to outline how they are dealing with Pension deficits and within the LPFA fund we will be asking for charities to supply a copy of the Trustees Annual Report when we launch a new charity specific covenant check later this year.
The report outlined that all charities had provided details of their pension scheme deficits in their accounts but only a small number of charities explained the financial implications of the deficits and how they planned to deal with them in their annual reports.
The article can be viewed in full by clicking on the link below:http://www.charitycommission.gov.uk/news/charity-accounts-review-examines-responses-to-pension-scheme-deficits/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CharityCommissionUpdates+%28Charity+Commission+updates%29
Tony WilliamsEmployer Services Team Manager020 7369 [email protected]
LGPS 2014 Keeping employers updated on scheme changes
DiscretionsThank you to the employers who have submitted their discretions. These will be registered for future valuations to make sure you benefit from the implied savings with the actuary.
To submit your discretions please follow the instructions in the April Newsletter. These discretions are due by the 30 June 2014 however we will accept later submissions.
Member commencing a period of unpaid leave.We recently circulated a separate note on the purchase of additional pension contributions in respect of authorised unpaid leave. When a member of the LGPS goes on a period of unpaid leave the member has the right to purchase the lost pension. Under the Regulations the member needs to make a positive election to purchase the lost pension within 30 days of their return to work to benefit from employer contributions.
To view the note click here and if you have any concern please contact us for further explanation.
‘Benefits of the LGPS’ Promotional LeafletWe have now added a new leaflet to the website called ‘Benefits of the LGPS’ which is designed to promote the positive aspects of the scheme. As employers you may find this useful in advertising the benefits of the scheme without becoming a salesman.You can find the leaflet here
ThisleafletisforemployeesinEnglandorWalesandreflectstheprovisionsoftheLGPSandoverridinglegislationatthe
timeofpublicationinApril2014.TheGovernmentmaymakechangestooverridinglegislationand,afterconsultationwith
interestedparties,maymakechangesinthefuturetotheLGPS.Thisleafletisabriefguidetotheschemeandcannotcover
everypersonalcircumstance.Intheeventofanydisputeoveryourpensionbenefits,theappropriatelegislationwillprevail.
Thisleafletdoesnotconferanycontractualorstatutoryrightsandisprovidedforinformationpurposesonly.
Forfurtherinformationvisitwww.yourpension.org.uk
PublishedbyLPFA,DexterHouse,2RoyalMintCourt,London,EC3N4LP
Wanttoknowmore?
Ifyouwanttoknowmoreaboutthescheme,orifyouhavemembershipintheschemebefore1
April2014andwanttoknowhowbenefitsbuiltupbeforethenareworkedout,youcangetmore
informationatwww.yourpension.org.uk
Remember...Apensionisn’tonlyaboutyourfuture.
AsamemberoftheLGPSyoustillgetvaluable life cover,withalumpsumof3yearspayifyou
dieinservice,cover for your family,withpensionsforyourdependentsifyoudie,andill health
cover for you.
Andyoucanalsopaymoretobuy extra pension.
Torecap...
•Youhaveaccesstoaschemeofferingsecurebenefits
•Youpaypensioncontributionsandyouremployerpaystoo
•Yourpensionisworkedouteachyearwithinflationaddedsoitkeepsupwiththecostof
living•Youhavethefreedomtochoosewhentotakeyourpensionbetweenage55and75
•Youcanexchangepartofyourpensiononretirementforatax-freelumpsum
a tiered ill-health retirement package -ifyouhavetoleaveworkatany
ageduetopermanentillhealththeschemeprovidesyouwithapension,paid
straightaway,whichcouldbepaidatanincreasedrateifyouareunlikelytobe
capableofgainfulemploymentwithin3yearsofleaving.early payment of your benefits - ifyouaremaderedundantorretiredon
businessefficiencygroundsandyouareaged55orover.flexible retirement - availablefromage55ifyoureduceyourhours,ormove
toalessseniorposition.Providedyouremployeragrees,youcandrawsomeor
allofyourbenefits,helpingyoueaseintoyourretirement.Protection against inflation when you’ve drawn your pension -youcan
lookforwardtoapensionforlifethatincreaseswiththecostofliving.TransferringintotheLGPSYoucanalsotransferpreviouspensionrightsintothescheme.Deferredbenefits
heldintheLGPSinEnglandandWalesarenormallyautomaticallytransferred,
unlessyoudecidewithin12monthsofjoiningtheLGPStokeepthemseparate.
Fortransfersfromotherpensionschemesyoumaybeabletotransferandyou
normallyhave12monthsfromjoiningtoopttomakeatransfer.
OptingoutoftheLGPSYoucanleavetheLGPSatanytimeonceyouareamemberbygivingyour
employernoticeinwriting.Youmight,however,wanttotakeindependentfinancial
advicebeforemakingthefinaldecisiontooptout.Anddon’tforgetyoucan,asan
alternative,optfor50/50whichallowsyoutoremaininthescheme,buildingup
valuablepensionrights,butpayhalfyournormalcontributionsforhalfyournormal
pension.
Ifyouoptoutbeforecompleting3monthsmembershipyouwillbetreatedas
neverhavingbeenamemberandyouremployerwillrefundtoyou,through
yourpay,anycontributionsyouhavepaidduringthattime.Ifyouoptoutwith
3ormoremonthsmembershipbutlessthan2yearsyoucantakearefundof
yourcontributions(lessanystatutorydeductions)ortransferoutyourpensionto
anotherscheme.Ifyouoptoutafter2yearsyouwillhavedeferredbenefitsinthe
schemewhichcan,ifyouwant,betransferredouttoanotherscheme.Ifyouopt-
out,youcan,providedyouareotherwiseeligibletojointhescheme,optbackinto
theschemeatanytimebeforeage75.IfyouoptoutoftheLGPSandyouremployerisrequiredtocomplywiththe
automatic enrolmentprovisionsunderthePensionsAct2008,youremployer
mayautomaticallyenrolyouintotheLGPSatcertaintimes.Youremployermust
notifyyouifthishappens.YouwouldthenhavetherighttooptoutoftheLGPS.
if you’re worried you can’t afford it - think again
Ifyoupaytaxyougett
ax relief on your pension contributions,asyour
contributionsarededuc
tedfromyourpaybefor
eyoupaytax.Youalso
(upto
StatePensionAge)pay reduced national insurance contributions(although
thisreductionisexpecte
dtoberemovedfromA
pril2016-fulldetailso
nhowthis
willworkhaveyettobe
finalised).Youremployer currentlya
utomaticallypays
the balanceofthecostofprovidin
gyourpensionbenefits
.
you also have flexibility to pay less - withtheoptiontopay
halfyournormalcontrib
utionsinreturnforhalf
yournormal
pension,knownas50/50.Thisisdes
ignedtohelpmembers
stay
intheschemewhentime
sarefinanciallytough.
you have flexibility to pay more -youcanboostyourpe
nsionbypayingmore
contributionswhichyou
wouldgettaxreliefon.
OptionsincludeAdditio
nalPension
Contributions(APCs)an
dAdditionalVoluntaryC
ontributions(AVCs).
BenefitsatRetirement
TheLGPSisagreatway
tosaveforyourfuture.
Youbuildupapension
fromthe
dayyoujointhescheme
andonceyou’vebeen
payinginfor2yearsyo
urbenefits
include:
a secure pension -everyschemeyear(1
Aprilto31March)ana
mountequal
toa49thofyourpayin
thatyearisaddedtoyo
urpensionaccount.Att
heend
ofeveryschemeyearth
etotalpensioninyoura
ccountisadjustedtota
keinto
accountthecostoflivin
g(ascurrentlymeasure
dbytheConsumerPric
esIndex
(CPI)).
Tax-free cash -youhavetheoption,
whenyoudrawyourpe
nsion,toexchange
partofitforsometax-f
reecash.
The freedom to choose when to take your pension -yourNormalPension
AgeislinkedtoyourSta
tePensionAgebutyoud
onotneedtohavereac
hed
yourNormalPensionAg
einordertotakeyourp
ension.Youcanchoose
to
retireanddrawyourpe
nsionatanytimebetwe
enage55and75.Your
Normal
PensionAgeissimplyth
eageyoucanretirean
dtakethepensionyou’v
ebuilt
upinfull.Ifyouchoose
totakeyourpensionbe
foreyourNormalPensio
nAgeit
willnormallybereduce
d,asit’sbeingpaidear
lier.Ifyoutakeitlater
thanyour
NormalPensionAgeit’s
increasedbecauseit’sb
eingpaidlater.
TofindoutyourStatePe
nsionAgepleasevisit:
www.gov.uk/calculate-s
tate-pension
50/50
EachmonthYour
pension account
Did you know:
•TheLGPSisan
importa
ntpartofyouremploymentpackageandprovidesanexcellentrangeof
benefits
•Youpayyourcontributionsandyour e
mployer pays t
oo
•Theschem
eisflexible
-youcanchoosetopaylessormore,andyoucandrawyourbenefits
anytimefrom
age55to75
•Thebenefits
yougetincludeapensionwhenyouretireaswellasim
mediatelifecoverandill-
healthprotection
•Therearealsobenefitsforyourlo
ved oneswithpensionsfordependantsifyoudie.
Hereishowtheschemeworks
Cost
Theamountyoupaydependsonhow
muchyouarepaidinyourjob.Theratesvaryfrom
5.5%to
12.5%
,andyourcontributionratedependsonthebandyoufallintointhetablebelow.
Member Contri
bution Table 2014/15
PayBands
ContributionRates
Upto£13,500
5.5%
£13,501-£21,000
5.8%
£21,001-£34,000
6.5%
£34,001-£43,000
6.8%
£43,001-£60,000
8.5%
£60,001-£85,000
9.9%
£85,001-£100,000
10.5%
£100,001-£150,000
11.4%
Over£150,000
12.5%
Whenyoujoin,andeveryAprilafterwards,youremployerwilldecideyourappropriatecontribution
ratefrom
thecontributionstable.Alsoifyourpaychangesthroughouttheyearyouremployermay
decidetoreviewyourcontributionrate.Thecontributionratesand/orpaybandsinthistablewill
bereviewedperiodicallyandmaychangeinthefuture.
LocalG
overnm
entPensionScheme(LGPS)
Areyousavingenoughforyourfuture?Canyouaffordtoliveonyour
basicstatepension?Themaximumbasicstatepensionis£113.10per
week(2014/15unmarriedrate)Youcouldstartsavingforyourfuture
nowwiththeLGPS
benefiTs of The lgps -
May 2014
for you, fo
r now, fo
r the fu
ture
Local Government Pensions Committee (LGPC)
The Local Government Association (LGA) released their latest newsletter, Bulletin 115, and two new circulars, 282 and 283, all of which can be found here:www.local.gov.uk/web/workforcelibrary/lgpc-bulletins
Bulletin 115The Pensions Bill 2013/14 received Royal Assent on 14th May 2014 and makes a number of changes to overriding pension legislation. It ensures that the state pension will change to the new, single-tier pension with effect from 6th April 2016. It sets out the abolition of contracting-out for defined benefit schemes from April 2016. LGA are continuing to lobby the government regarding how the cost of the loss of contracting-out can be mitigated in the LGPS and will be meeting with DCLG to discuss how this can best be accomplished.
The Pensions Policy Institute has released a further paper covering the impact of the introduction of the state pension reform and this can be found here:www.pensionspolicyinstitute.org.uk/publications/reports/ppi-single-tier-series-the-impact-of-the-governments-single-tier-state-pension-reform
The Act also confirms the acceleration of State Pension Age (SPA) for men and women from age 66 to age 67 between April 2026 and April 2028 with a requirement that SPA must be reviewed every six years. Tables showing the current, legislated SPA for both men and women can be found here:www.gov.uk/government/uploads/system/uploads/attachment_data/file/310231/spa-timetable.pdf
Circular 282This circular contains some minor amendments that have been made to the ill-health certificates that must be completed by an independent registered medical practitioner before benefits can be released to a member on health grounds. These will be reviewed by us and placed on our website as soon as possible.
Circular 283GMB, UNISON and UNITE have announced that their local government and school support staff shall be taking a day of industrial action on 10th July in support of better pay following the rejection of the National Employers’ full and final pay offer. The 2014 LGPS regulations that cover industrial action are very different to those under the 2008 regulations and this circular covers all the differences, detailing the procedure that should be followed if the member who goes on strike wishes to “buy-back” the pension that has been lost following the loss of a day’s pay.
Jacqui LawrenceTechnical Officer020 7369 [email protected]