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 6237tony.williams@lpfa.org.uk

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 2688jacqui.lawrence@lpfa.org.uk