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Mid Career

MC V.7 Sept 2018. Mid Career. By Sheryl Clapham Pension Fund Representative. MC V.7 Sept 2018. Your Pension Scheme. You are part of the Local Government Pension Scheme (LGPS)

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Mid Career

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  1. MC V.7 Sept 2018 Mid Career By Sheryl Clapham Pension Fund Representative

  2. MC V.7 Sept 2018 Your Pension Scheme • You are part of the Local Government Pension Scheme (LGPS) • LGPS is a nationwide scheme which 99 local authorities help administer, including West Yorkshire Pension Fund (WYPF) • Rules issued by parliament (after consultation) • Statutory basis giving security and guarantees

  3. The Current Scheme

  4. CARE • Career Average Revalued Earnings scheme (CARE) • Defined benefit scheme • 1/49 accrual rate • Revalued in line with Treasury Order • Normal pension age linked to individual state pension age • Earliest age to claim benefits by choice is 55

  5. Contributions

  6. Basis of contributions • Based on actualpensionable pay • Includes non-contractual overtime and additional hours for part-time workers • Contributions attract tax relief

  7. Contribution rates • Employer pays what is needed to fund members’ benefits 01/04/2018 – Leeds Trinity University - 17.7% • Member as per table on next slide

  8. Contributions 2018/19

  9. 50/50 • Choose to pay half your contributions and get half your normal pension • Re-enrolled back into main scheme after 3 years • Used as a short term option

  10. 50/50 • Allows members to stay in the LGPS when pay is low or when in financial difficulty • But full death benefits • Death in service • Survivors’ pension • Apply in writing to your employer

  11. Contribution rates 2018/19

  12. How to calculate your pension

  13. Calculation of CARE pension • Factors used to calculate CARE pension: • Pensionable pay earned in scheme year • Scheme year = 1 April to 31 March • Revaluation = Treasury Order • Currently Consumer Price Index (CPI) • CARE = Pay in scheme year / 49th or 98th • Revalued the following year by CPI

  14. Example of CARE • Using the following assumptions: • 3% CPI each year • 1% pay increase each year • £25,000 pay in first scheme year

  15. After 10 years • Annual pension of £6104.46 • Payable for life • Indexed linked • Option to covert pension to lump sum • Limits apply

  16. Lump Sum Swapping pension for lump sum • £1 pension = £12 lump sum • Maximum lump sum set by HMRC • 25% of capital value of accrued rights • No affect on spouse’s pension This only has to be decided when claiming your benefits

  17. Been in the LGPS before 1 April 2014?

  18. Calculating Benefits

  19. Final pay Final Salary • Your pay in the 12 months up to leaving • Or one of the previous 2 years salary (to date of leaving) plus pensions increase • If your pay is reduced because of sickness, the final pay is the pay you would have received had you not been sick

  20. Pay protection • Reduction to your pay due to job evaluation or regarding • 10 years protection • Plus best of the last 3 years • Protection on final salary benefits only • Pay protection expires 10 years after drop in pay

  21. Additional benefits of the scheme • Death grant • Survivor pensions • Dependants Pension • Paying extra Explained fully on next slides

  22. Death benefits • Active member Death grant – Minimum of 3 years pay • Deferred member Death grant – 5 x deferred pension • Pensioner Death grant - 10 year pension guarantee minus any pension already paid

  23. Survivor/Dependants benefits • Spouse • Civil partner • Co-habiting partner • Narrowly defined • Nomination form available • Eligible Children • Under age 18 • Over 18 up to age 23 in full time education or training • Older disabled children may get pensions too

  24. Paying Extra • Additional Pension Contributions (APC’s) • Additional Voluntary Contributions (AVC’s) • All payments are deducted directly from your salary attracting tax relief and maximums apply

  25. APC’s • Buy extra pension directly with WYPF by regular or lump sum amounts • Buy up to a yearly pension of £6,822 • Not allowed if you are in 50/50 section • Pension bought is inflation-proofed before and after retirement • You can give up some of your extra pension for more lump sum

  26. APC’s • Costs vary depending on your age, gender, how much you buy and the payment period • Regular contributions must be at least £10 a month for a 12 month period • You can stop the contract at any time and will be credited with what you have already paid for • Medical form needs completing by your GP

  27. APC’s • Awarded ill health tier 1 or 2, receive the entire pension you have chosen to buy without reduction (reason for the medical) • Claim your pension before your state pension age, it will be reduced for early payment (except ill health tier 1 & 2) • Get a quote using the APC calculator available on our website

  28. AVC’s • Pay extra contributions to Prudential or Scottish Widows (WYPF members only) by a regular amount or % deduction • Build a fund value to buy benefits at retirement • You choose how much you want to pay • Contributions are flexible • How much you pay and your investment choice affects the build up in your pot

  29. AVC’s • Take the whole amount as a lump sum at the same time as your main scheme benefits – subject to maximums • Administration charges apply • Your fund value can go down as well as up • If you retire on ill health, your AVC fund is not enhanced

  30. AVC providers • Prudential • Freephone 0800 032 6674 • www.pru.co.uk • Scottish Widows (WYPF members only) • Phone 0345 733 0805 (new applications) • Phone 0345 716 6777 (existing policy) • www.scottishwidows.co.uk/westyorkshire/

  31. Retirement

  32. When can I retire? Age 55 for both men and women

  33. Leaving before retirement • Opt out/Leave before 2 years = Refund • Member contributions returned less tax • Opt out/leave after 2 years = Deferred benefits • Frozen pension increased each year by consumer price indexed • Transfer Out available in either case • Approved schemes only case

  34. Retirement • Pension benefits are linked to your normal pension age (NPA) • In the current scheme the NPA matches your individual state pension age

  35. Accessing benefits before NPA • Retire before NPA pensions are reduced • Retire after NPA pensions are increased • Certain protections can apply • Complicated 85 year rule • Age plus calendar length of service = 85

  36. Normal Pension Age • Benefits built up to 31st March 2008 Age 65 (if 85 year rule satisfied earliest age is 60) • Benefits between 1st April 2008 – 31st March 2014 Age 65 • Benefits from 1st April 2014 State Pension Age

  37. Adjustment Factors

  38. Retirement options • Age 55 - 75 without employer consent • Flexible 55+ with employer consent • Redundancy/ efficiency age 55+ • Ill health at any age

  39. Age 55 - 75 • Retiring from age 55 but before NPA would see adjustments to benefits unless the employer chooses to waive the reductions • Retire after NPA pensions are increased • Different adjustments depending on dates of accrued pension

  40. Flexible • 55+ Employers consent needed • Reduction in hours or grade • Remain in pension scheme building up another pension (can opt out) • Claim pension without leaving employment • Adjustments may apply unless employer waivers the reductions

  41. Redundancy/Efficiency • Age 55 or over at time of redundancy • Immediate payment of unreduced benefits (Except any APC’s) • Under 55 at time of redundancy • Awarded deferred benefits

  42. Ill Health Pension • Need to be in the pension scheme for at least 2 years to qualify • One of 3 Tiers can be awarded at any age with no reductions • Independent Registered Medical Practitioner recommendation required

  43. Ill health • Tier 1(not able to work again before state pension age) – Accrued pension plus100% of assumed pension to NPA • Tier 2(not able to work within 3 years but can before state pension age) – Accrued pension plus25% of assumed pension to NPA • Tier 3(likely to work again within the next 3 years) – Accrued pension paid temporary for 3 years reviewed after 18 months

  44. Communication

  45. Methods of Communication • Annual pension statement • Newsletters (twice a year) • Website • Contact Centre • Annual Meeting • Pension Days

  46. West Yorkshire Pension Fund • WYPF, PO Box 67, Bradford, BD1 1UP. • Phone: 01274 434999 • E-mail: pensions@wypf.org.uk • Website: www.wypf.org.uk • Minicomtextphone 01274 724472 (text only)

  47. www.facebook.com/WestYorkshirePensionFund www.twitter.com/WYPF_LGPS

  48. QR Codes Website Twitter Facebook

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