Local Government Pension Scheme

Annual Benefit Statement Guidance Notes 2017

peninsulapensions

Peninsula Pensions is provided by Devon County Council and is a shared service with Somerset County Council.

Looking forward to your retirement

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How We Calculate your Pension BenefitsFor membership built up to 31 March 2008: You receive a pension of 1/80th of your final salary pensionable pay, plus – under current legislation – an automatic tax-free lump sum of three times your pension.

For membership built up from 1 April 2008 to 31 March 2014: You will receive a pension of 1/60th of your final salary pensionable pay.

If you joined the scheme for the first time on or after 1 April 2008 then you are not automatically paid a lump sum. However, at retirement all scheme members have the choice of giving up part of their pension and converting this into a lump sum. The current rate of conversion is £12 lump sum for £1 of annual pension, subject to certain restrictions (we are able to provide you with full details when you retire).

For membership built up from 1 April 2014 (Career Average Revalued Earnings – CARE). CARE replaced the Final Salary scheme in 2014. Under the new scheme:• every year you build up a pension at a rate of 1/49th of the amount

of the pensionable pay you received in that scheme year (if you are in the main section of the scheme), or

• every year you build up a pension at a rate equal to 1/98th for any period you have elected to be in the 50/50 section of the scheme. This pension is then added to your pension account and revalued at the end of each scheme year.

Your post-2014 pension is revalued in line with HM Treasury Revaluation Orders which currently use the rate of the Consumer Prices Index (CPI), which can go down as well as up.

The projected benefits at Normal Pension Age are based on your pensionable pay for the year ending 31 March 2017. These projections assume your pay will remain constant and do not include any future revaluation of benefits built up in the CARE scheme.

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Your projected CARE benefits will include the full amount of any Additional Pension or Shared Cost Additional Pension you purchased but will exclude any deductions due to Scheme Pays for Annual Allowance tax, or any Pension Sharing Order as a result of divorce. The projection of benefits is also based on the section of the scheme you were in as at 31 March 2017.

Service History It is up to your employer to tell us about any changes in your employment – if you reduce or increase the number of hours you work, for example. If you believe any of these details are incorrect, please ask your employer to check them and let us know about any changes. This section also shows any pension membership that you have transferred into the scheme from another pension provider. These transfers do not necessarily provide the same amount of membership as you had in the original scheme.

Partnership Status We have used the partnership status that we hold on your record. Where this is not known we have assumed you are married, so that we can include the amount of a survivor’s pension for your information.

If you were married as at 31 March 2017 the survivor’s pension payable to a surviving spouse or civil partner is based on all of your service. If you were single as at 31 March 2017 there is no survivor’s pension (other than to eligible children), or if you are in an eligible cohabiting partnership, the benefits payable to the partner may be less than those shown.

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Post-Retirement Marriages Please note that partner benefits will differ where a post-retirement marriage/civil partnership occurs. A pension for a widow of a post-retirement marriage will not include any pre-6 April 1978 membership. A pension for a widower of a post-retirement marriage, a survivor of a same sex post-retirement marriage, or a civil partner of a post-retirement civil partnership will not include any pre-6 April 1988 membership.

CARE Pensionable PayThis should be the amount of pensionable pay paid to you in the year 2016/17 plus the Assumed Pensionable Pay for any periods of:• reduced contractual pay or no pay due to sickness or injury• ordinary maternity, paternity or adoption leave• paid shared parental leave or reserve forces service leave.

Assumed Pensionable Pay attempts to estimate what a member would have been earning if they had been working as normal for a period of time. The same applies if you contribute to the 50/50 section of the scheme.

Final Salary Pensionable Pay This should be your full-time equivalent annual salary as at 31 March 2017. Wherever possible this will include any additional pensionable allowances, but does not include payments for non-contractual overtime or additional hours. If you work term-time for an employer in the Somerset Fund, then the term-time weeks will be reflected in your pensionable pay.

Where you have had a drop in your full-time equivalent rate of pay within 10 years of your leave date, you can elect for an earlier year’s pay to be used to calculate your pre-2014 benefits and you should contact Peninsula Pensions for more information about this. Please note that if you want to use an earlier year’s pay you must ask for this in writing at least a month before your chosen retirement/leave date.

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Death in Service Lump Sum This will usually be three times your Assumed Pensionable Pay. Assumed Pensionable Pay is calculated by taking the pay earned over the last 12 weeks or 3 months that you were working normally (so, excluding periods where you were not receiving full pay due to absence) and converting that to an annual figure. If you have membership in another LGPS fund in England or Wales, or you have a deferred pension, a suspended Tier Three ill health pension or a pension in payment, then the lump sum death grant will be the greater of:

i) the death in service lump sum shown on this statement (or, if you have more than one active employment, the total of the death in service lump sum death grants shown on each of your Annual Benefit Statements), or

ii) the lump sum death grant due from those earlier benefits.

If the death in service lump sum (or lump sums) is the greater, then no lump sum death grant will be payable from the scheme for those earlier benefits. Conversely, if the lump sum death grant from those earlier benefits is greater, then no death in service lump sum (or lump sums) will be due from the current period of membership.

Normal Pension Age (NPA)The date quoted as your NPA may change in the future if your State Pension Age changes. You can choose to take your benefits before your NPA, at any time between ages 55 and 75, but if you do they will normally be paid at an actuarially reduced rate. Similarly, if you choose to take them after your NPA they will be paid at an increased rate.

If your NPA under the 2014 scheme is later than your NPA under the 2008 scheme, the figures quoted at your NPA will include any late retirement increases applicable to your pre-2014 final salary benefits. These increases are based on current actuarial factors and may change in the future.

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Increasing your LGPS Benefits As a member of the LGPS there are two main ways in which you can increase the amount you are saving:

Additional Pension Contributions (APCs)Since 1 April 2014, if you wish to buy extra LGPS pension for your retirement you have the option of paying APCs. You can pay in a set amount either monthly or as a one-off lump sum. This buys you a set amount of extra annual LGPS pension, up to a maximum of £6755 (from April 2017).

In some circumstances you can also buy back lost pension, for example, where you have had a period of authorised unpaid leave. Your employer must also pay towards the cost, as long as you decide to buy back any lost pension within 30 days of returning to work (or longer at the discretion of your employer).

You can find out more information on APCs and get a quote by either using the online calculator available at www.lgpsmember.org or by contacting us using the details at the back of the statement.

Additional Voluntary Contributions (AVCs)Another way to build up extra savings for retirement is by paying separate contributions into our ‘in-house’ AVC scheme.

You can choose how much to pay in AVCs and how they are invested. The money will come straight out of your pay and go to Prudential which invests it for you.

Your AVC fund is designed to grow as it is invested. You can use your AVC to take some lump sum and/or additional pension from the Pension Fund when you retire or you can buy an annuity.

If you are interested in paying AVCs, please contact us using the details at the back of the statement.

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Additional Membership Purchased(pre-2014 contracts only)

If you have paid or are paying additional contributions to buy extra membership then the additional membership that you have purchased to-date has been included in the figures shown in your statement.

Additional Pension PurchasedIf you have paid or are paying additional contributions to buy extra pension then the additional pension that you have purchased to-date has been included in the figures shown in your statement.

Restriction of Pensions Tax ReliefYour Annual Allowance. There is a limit on the amount of pension you can build up each year without paying tax. For 2016/17 this was £40,000 and for most people it will remain at that figure for 2017/18. However, if you earn over £110,000 a year (from any source) then your annual allowance could be reduced and you should contact us for more information. If you exceed the annual allowance there could be a tax charge due. Please visit www.peninsulapensions.org.uk for further information about Annual Allowance. Alternatively, you can see the latest guidance on HMRC’s website at www.hmrc.gov.uk/pensionschemes.

Protection Close to RetirementStatutory Underpin. There is a ‘statutory underpin’ for scheme members who retire at age 65 and were within 10 years of that age on 1 April 2012. This protection ensures that these members receive a pension no less than had they continued in the old scheme. Eligible members must:

• have been paying into the scheme on 31 March 2012• not have had a break in service of more than 5 years• not have drawn any LGPS benefits• not opt out of the scheme.

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A comparison will be made at retirement between the benefits due under the new scheme and the benefits eligible members would have expected to receive had the scheme not changed from 1 April 2014.

If the benefits under the old scheme would have been greater, the difference will be added to their pension. Please note: no underpin protection is included in the benefits quoted in this statement.

Pension Liberation FraudYou may have heard about an activity called Pension Liberation Fraud. This is where scheme members are approached by unscrupulous companies promising instant cash sums and/or early access to their pension, as long as they transfer their pension savings to them.

The number of these cases thankfully remains small; however they are on the increase. The Pensions Regulator has more information on this and other pension scams at www.pension-scams.com. Deciding to transfer your benefits is an important decision and we recommend you seek independent financial advice.

Frequently Asked Questions (FAQs)There are a number of FAQs on the Peninsula Pensions website that provide answers to questions covering a wide range of topics www.peninsulapensions.org.uk/lgps-member/faqs