LPFA Pensions UpdateA newsletter for LPFA employers

London Pensions Fund Authority

Issue Highlights:

► 2014 Annual Benefit Statements

► Annual & Lifetime Allowance

► 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.lpfa.org.uk/employers www.yourfund.org.uk

July 2014

2014 Annual Benefi t StatementsStatements will be available online via Member Self-Service

The fi rst batch of 2014 Annual Benefi t Statements for active members are due to be available by 8th August 2014 via Member Self-Service.

Our Pension Services Manager, John Crowhurst, has been collecting e-mail addresses from each organisation to ensure that when this information is available, all members will receive an e-mail instructing them to login to the http://axise.yourpension.org.uk website to view their Annual Benefi t Statement.

Those members who we do not hold an e-mail address for will be receiving a letter from ourselves asking for them to sign up to Member Self-Service so that they can view their statement.

Annual Benefi t Statements will only be sent by post if a fund member has specifi cally requested this option.

Should you have any questions on this matter, please do not hesitate to contact me.

I hope you will support this approach which will also help to address postal costs going forward and help offset the cost on employer contributions.

Tony WilliamsEmployer Services Team Manager020 7369 6237tony.williams@lpfa.org.uk

Contact Team: <<ContactTeam>>

Contact Phone: <<ContactPhone>>

Contact Email: <<ContactEmail>>

Website: <<ContactWebsite>>

Contact Address: <<ContactAddress>>

<<Moving>>

Dear <<Name>>,

Local Government Pension Scheme - (LGPS)

Private & Confidential<<Name>><<Address1>><<Address2>><<Address3>><<Address4>><<Address5>><<Postcode>>

Employer <<Location>>

NI Number <<NiNumber>>

Date of Birth <<DOB>>

Annual Benefit Statement 2014

This Annual Benefit Statement illustrates the current value of your benefits in the LGPS.

The LGPS has been amended as of the 1 April 2014, however this statement is the value of your benefits as at 31 March 2014 and is calculated on the scheme rules in force at that date. Further information on the LGPS 2014 scheme is available on our website <<ContactWebsite>>

You can view your pension details online, via our secure member self-service system. To login or register for member self-service please visit <<MemberSelf>>

Further information regarding scheme benefits, including options to increase your retirement benefits, are available on our website <<ContactWebsite>> Access to our newsletters, guides and factsheets are also available on the website.

Yours sincerely,

Janice Watts - Director of Operations, London Pensions Fund Authortiy (LPFA) Prepared by LPFA - working in partnership with <<Council>>

Nominated Beneficiaries for Death GrantThe administering authority has total discretion regarding which eligible beneficiaries should be paid a death grant. By nominating one or more persons or organisations, you can make it clear who you wish to benefit from your lump sum life cover. This will normally allow a more prompt release of monies.

If you have not made a nomination or wish to change your nomination, the form is available on our website: <<ContactWebsite>>

<<HertsNominations>><<SP-NAME>><<DE-NAME [01]>><<DE-NAME [02]>><<DE-NAME [03]>><<DE-NAME [04]>><<CH-NAME [01]>><<CH-NAME [02]>><<CH-NAME [03]>><<CH-NAME [04]>>

Your Life Cover Nominees

For further details on how your benefits are calculated please visit <<ContactWebsiteABS>>

Disclaimer: Your Annual Benefit Statement is an estimated guide to your benefits only and cannot cover every personal circumstance or future changes to the legislation governing the scheme. Nothing contained in this statement can override the legislation governing the LGPS at the time of your retirement.

You should not make any decision regarding your pension benefits on the basis of the figures quoted. If you are likely to retire in the near future, you should ask for a specific retirement quotation.

LPFA Benefit Statement ACTIVE v4.indd 1-2 14/07/2014 15:54:43

Annual & Lifetime Allowance2013/14 letters to be sent

Scheme members who are close to either the Annual Allowance for 2013/14 (£50,000 of growth in the value of the pension benefi ts) or the Lifetime Allowance (£1.25m) will be written to shortly explaining what this means to them. Some employers may have been contacted to clarify some salary details and I thank you all for your assistance. If any of your members of staff have any questions relating to this complex issue please encourage them to contact me direct.

Neil LewinsTechnical Specialist020 7369 6066neil.lewins@lpfa.org.uk

LGPS 2014Keeping employers updated on scheme changes

Employer GuidanceThe www.yourfund.org.uk employer website now includes a link to the Payroll Guide and the HR Guide written by the LGA. These documents may be of assistance if you require background information or examples to explain decisions made relating to the new scheme. If you have any questions that are not covered within these documents please feel free to contact me.

DiscretionsThank you to the employers who have submitted their discretions. These will be registered for future valuations to make sure you benefi t from the implied savings with the actuary.

I would like to further encourage employers who have not yet completed their discretions policies to pass these to my colleague Jacqui Lawrence as previously requested. I am aware that a number of employers have raised concerns about what to include and what the discretions could mean. With this in mind I will be running a workshop to assist employers with their discretions and indeed any concerns regarding the 2014 scheme changes. This will occur on 12th September, 2pm at Dexter House. More information and invites will be sent in the coming weeks.

‘Benefi ts of the LGPS’ Promotional Leafl etWe have now added a new leafl et to the website called ‘Benefi ts of the LGPS’ which is designed to promote the positive aspects of the scheme. As employers you may fi nd this useful in advertising the benefi ts of the scheme without becoming a salesman. You can fi nd the leafl et here www.yourpension.org.uk/LPFA/Joining-the-Scheme

Neil LewinsTechnical Specialist020 7369 6066neil.lewins@lpfa.org.uk

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

legislationat the

consultationwith

cannot coverprevail.

in the scheme before 1

out, you can get more

Remember . . .Apension isn’t only

of the LGPSyou still get valuable life cover

cover for your family, with pensions

more to buy extra pension.

a scheme offering secure benefits

contributions and your employer pays too

out each year with inflation added so it keeps

choose when to take your pension between age

your pension on retirement for a tax-free lump

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.

tiered ill-health retirement package - ifif you have to leave work at anyscheme provides you with a pension,paid

increased rate if you are unlikely to beyears of leaving.

are made redundant or retired onaged 55 or over.

55 if you reduce your hours, or moveemployer agrees, you can draw some oryour retirement.Protection against inflation when you’ve drawn your pension - you canwith the cost of living.

scheme. Deferred benefitsautomatically transferred,LGPS to keep them separate.able to transfer and youtransfer.

member by giving yourtake independent financialforget you can, as anscheme, building upcontributions for half your normal

be treated asyou, throughopt out witha refund ofyour pension tobenefits in thescheme.If you opt-opt back into

with theemployer

employer mustLGPS.

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

AgeislinkedtoyourSt

atePensionAgebutyo

udonotneedtohaver

eached

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

tiered ill-health retirement package -

if you’re worried you can’t afford it - think again

f you’re worried you can’t afford it - think again

If you pay tax you get tax relief on your pension contributions, as your

contributions are deduc

ted from your pay before you pay

tax.You also (up to

State Pension Age) pay reduced national insurance contributions (although

this reduction is expecte

d to be removed from April 2016 -

full details on how this

will work have yet to be

finalised).Your employer currently a

utomaticallypays

the balance of the cost of providin

g your pension benefits

.

you also have flexibility to pay less - with the option to pay

half your normal contrib

utions in return for half

your normal

pension, known as 50/50. This is des

igned to help members

stay

in the scheme when time

s are financially tough.

you have flexibility to pay more - you can boost your pe

nsion by paying more

contributions which you

would get tax relief on.

Options include Addition

al Pension

Contributions (APCs) an

d AdditionalVoluntary C

ontributions(AVCs).

Benefits at Retirement

TheThe LGPS isa great way

to save for your future.

You build upa pension fr

om the

day you jointhe scheme

and once you’ve been p

aying in for2 years you

r benefits

include:

a secure pension - every scheme year (1

April to 31 March) an am

ount equal

to a 49th ofyour pay in

that year isadded to yo

ur pension account. At t

he end

of every scheme year th

e total pension in your a

ccount is adjusted to ta

ke into

account thecost of living

(as currently measured

by the Consumer Prices

Index

(CPI)).

Tax-free cash - you havethe option,

when you draw your pe

nsion, to exchange

part of it forsome tax-fr

ee cash.

The freedom to choose when to take your pension - your Normal Pension

Age is linked to your St

ate PensionAge but you

do not needto have reac

hed

your Normal Pension Ag

e in order totake your pe

nsion. You can choose t

o

retire and draw your pe

nsion at anytime betwee

n age 55 and 75. Your N

ormal

Pension Ageis simply th

e age you can retire an

d take the pension you’v

e built

up in full. Ifyou choose

to take yourpension bef

ore your Normal Pensio

n Age it

will normally be reduce

d, as it’s being paid ear

lier. If you take it later

than your

Normal Pension Age it’s

increased because it’s b

eing paid later.

To find out your State Pe

nsion Age please visit:

www.gov.uk/calculate-s

tate-pension

www.gov.uk/calculate-s

tate-pension

www.gov.uk/calculate-s

tate-pension

50/5050/50

Each monthYour

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)July Bulletin number 116

The Local Government Association has released its July bulletin, number 116 which can be found here www.local.gov.uk/documents/10180/5895241/Summary+116+June+2014.pdf/728aa6d2-5e77-4c69-9f3a-07bdb98e5422 . The bulletin covers a number of different items, including details of consultations affecting the LGPS.

LGPS (Amendment) Regulations Consultation – GovernanceDCLG has started a consultation on amendment regulations to the LGPS which will cover the creation and operation of local pension boards as required by the Public Service Pension Scheme Act 2013. Full details of the consultation, which ends on 15th August, can be found here www.gov.uk/government/consultations/the-local-government-pension-scheme-amendment-regulations-2014-draft-regulations-on-scheme-governance

Additional Voluntary Contributions (AVCs)The LGA have updated their HR and Payroll guides to clarify that, where a member has elected to AVCs as a percentage of their pay, that percentage must be based on the pre-2014 definition of pensionable pay.

Recovery of Public Sector Exit PaymentsA consultation paper has been issued on provisions to ensure that exit payments are recovered when high earners return to the same part of the public sector scheme within 12 months of leaving. This ability was announced in May 2014 as part of the provisions of the Small Business, Enterprise and Employment Bill. Responses are requested from sections of the public sector by 17th September. Full details can be found here www.gov.uk/government/consultations/recovery-of-public-sector-exit-payments

New State Pension Communication ForumThe LGA has been invited to take part in a forum for regarding assisting the DWP in developing the communications and products for the introduction of the new State Pension Scheme and associated changes. The LGA is keen to make sure that the views of everyone are taken into account and therefore request that if there are any ideas or comments from scheme members regarding the abolition of contracting-out are forwarded to them.

Jacqui LawrenceTechnical Officer020 7369 2688jacqui.lawrence@lpfa.org.uk