Local Government Pension Scheme

1. A Selection of Slides As per April 2011 Local Government Pension Scheme

2. How much can I expect? When can I expect it?

3. From SExSY over 80to SExSY over 60 ServicE x SalarY / 80 08 yrs x £20,000.00 = £2000.00 80 ServicE x SalarY / 60 06 yrs x £20,000.00 = £2000.00 60

4. Survivors pension 1/160ths accrual ServicE x SalarY 14 x 20,000 = £1750.00160 160 To married partner To civil partner To nominated cohabiting partner Living together for at least 2 years Able to marry / civil partnership Living together as if married (?)

5. A pension may be payable to an eligible child after your death. EG: Legitimate, Adopted or Dependant. Under 18. 18-23 (in full time education from pre 17). Dependant by reason of incapacity. Up to a maximum of 2 children. Child Pensions

6. Normal :- 65 Earliest :- 60 * ( * benefits are paid at a reduced rate, ) Unless, you are protected under the “Rule of 85”. 85 year rule = Age + Membership Aged 60 = 60 + Membership of 25 yrs. J Aged 60 = 60 + Membership of 24 yrs. L Aged 61 = 61 + Membership of 24 yrs. J Retirement Age

7. *85-year rule revoked 01 OCT 2006* Protection for existing members: - Protection to 31 MAR 2008 Full protection if 60 by 31 MAR 2016 Partial protection if 60 between 01 APR 2016 and 31 MAR 2020

8. Percentage Reduction on Retirement Benefits Years early Reduction to Pension (%) Lump sum (%) Male Female Both (65) 0 0 0 0 (64) 1 6 5 3 (63) 2 11 11 6 (62) 3 16 15 8 (61) 4 20 20 11 (60) 5 25 24 14

9. Old Scheme:- Benefits paid from age 50: New Scheme:- Benefits paid from age 55: On the grounds of: Redundancy With employer consent “Flexible Retirement”

10. Ill-Health Retirement at Any Age • Tier 1 = • Service to date PLUS • 100% of prospective service to 65 • If you have no reasonable prospect of being capable of obtaining gainful employment before age 65, ill health benefits are based on the membership you would have had if you had stayed in the Scheme until age 65.

11. Tier 2 = Service to date. PLUS 25% of prospective service to 65 If you are unlikely to be capable of obtaining gainful employment within 3 years of leaving, but you may be capable of doing so before 65 then ill health benefits are based on your membership built up to leaving plus 25% of your prospective membership from leaving to age 65.

12. Tier 3 = Service to date, NO enhancement. If you are likely to be capable of obtaining gainful employment within 3 years of leaving,ill health benefits are based on your membership at leaving. Payment of these benefits will be stopped after 3 years, or earlier if you are in gainful employment or become capable of undertaking such employment. 

13. ULTIMATE ILL HEALTH Death In Service:- Active 3 x Salary Deferred 5 x Annual Pension On Pension:- Balance of 10 yrs. (Under 75’s) Old scheme:- Balance of 5 yrs.

14. Entry Levels • 02 May 1995 • Everyone brought in All existing employees, including those whose appointment was for a period of 3 months or less and those part timers whose contractual weeks were less than 35 pa, other than casual employees, who were not already in the scheme and had not previously opted out of membership of the scheme were automatically brought into the scheme with the right to opt out. Casual employees could opt to join the Scheme. • All new employees, other than casual employees, were automatically brought into the Scheme with the right to opt out. Casual employees could opt to join the Scheme. • The right to debar access to the Scheme on medical grounds removed. • An optant out who rejoined the Scheme and then again opted out could only subsequently rejoin with employer consent or the person joined a new Scheme employer and opted in within 3 months of joining the new employer.

16. HOW2 GUESSTIMATE YOUR PENSION VALUE The scheme changed on 01/04/2008 so we deal with the sums in parts and add them together to get a whole. PRE 01/04/2008 is SExSY 80 For SE you take the amount in years and days, EG: 02/345(Convert to a decimal value). Divide the days by 365 and add the years. 345/365 = 0.945205 plus 2 years 2.945205 is the SE bit of the sum. At this point we divide it by 80. 2.945205/80 = 0.036815. If we used 20 years that would be too easy, (20/80 = 0.25, 25% or one quarter). This % value we derive applies equally to the 60th service, and if added together represent the potential % of your final years salary that may be paid as a pension. The SY is unknown as the Scheme is a Final Salary Scheme and your final salary won’t be determined until you Retire/Leave, so we use a current value for the Guesstimation. Having done the divide by 80 our sum can be represented like this 0.036815 x SY. Or the easy example 0.25 x SY. Salary is the FTE (Full Time Equivalent), the amount paid for Full Time in their post, Part Timers need to calculate their own FTE. So for this example we use £12,345.67. 0.036815 x 12345.67 = £454.50 Easy salary to use is £20,000 0.25 x 20000 = £5000.00 NB: 06 years in the 60ths scheme @ £20000 will give 06/60 x 20000 = £2000.00 Which is a faster accrual rate and therefore more pension more quickly. Do the same using your 60th scheme value SExSY 60

17. The lump sum, in this example, is assured for 80th scheme but is optional in 60th and is excluded. The Lump Sum calculation is a long one. A shortcut is 3 x 80th pension. 3 x 454.50 = 1363.50 Therefore your benefit is £454.50 plus £606.00 = £1060.50 per annum. Lump sum = £1363.50 How much will my benefits be reduced if I retire before age 65 and do not satisfy the Rule of 85? No. of years paid early Reductions Male Pension Female Pension Both Lump-sum 0 (Aged 65) 0% 0% 0% 1 (Aged 64) 6% 5% 3% 2 (Aged 63) 11% 11% 6% 3 (Aged 62) 16% 15% 8% 4 (Aged 61) 20% 20% 11% 5 (Aged 60) 25% 24% 14% The above figures if applied to a 60 yr old male reduce to (1060.00 x 0.75) £795.00 and (1363.50 x 0.86) £1172.61

18. The best 3 year average in the last 10 is only of benefit if you retire within 10 years of your salary being reduced. It is therefore of little value if you are under 50 and your earliest possible retirement date (age 60) is more than 10 years away. (The exceptions to this would be if you retired through ill-health or were allowed by your employer to take early retirement from age 55 within 10 years of your salary reduction, or you left work and were entitled to deferred benefits.) As a younger scheme member taking a reduced salary, you may benefit more from choosing separate benefits. These protect your scheme membership up to the time of the reduction and make sure that it is related to your previous level of pay. As well as the option to use the pay in the best of the last 3 years, the scheme also offers further protection if your pay is reduced as a result of continuing in local government employment at a lower grade or pay scale. In such circumstances you may choose to have your final pay calculated as the average of any 3 consecutive years running from 1 April to the 31 March, within the previous 10 years. NB: Death Grant Reduction. When using the ‘best of the last three years’ the final pay periods always end with the anniversary of the date of leaving. This rule will protect you fully if you retire within two years of a reduction in pay. However, after this two-year period it begins to lose its effect, and after three years it has no advantage. REDUCTION IN SALARY ANY AGE AGED 52 + AGED 62 + OPT OUT & RE-JOIN ASK FOR HELPNO ACTION EEDED