Pension News

 

 

 

 

 

 

 

 

     


The New Local Government Pension Scheme (England and Wales)
 – New Regulations Briefing

 

The new LGPS started on 1 April 2014 in line with an agreement between the unions, employers and the government. This briefing provides a summary of the benefits and protections that are now laid down in law.

The new Scheme is a Career Average Revalued Earning  Scheme (CARE). This is a type of defined benefit scheme that uses a members averaged pensionable earnings over the lifetime of their active scheme membership. All new benefits earned after the 1st April 2014 will be under the new CARE scheme
     

New Scheme Benefits

Main differences in benefits between the new 2014 scheme and the 2008 scheme:

 
     
Accrual Rate

New scheme will be 1/49th per year (just over 2%) instead of the previous 1/60th  (just over 1.66%)

(accrual rate is the fraction or % of earnings used to build up your pension for each year or part year of service you are in the scheme)

 
     
Revaluation Rate The Consumer Price Index (CPI) will be used for increases in pensions  
     
Pensionable
Pay

Includes non-contractual overtime for the first time

 
     
Contribution Flexibility Scheme members can now elect to reduce contributions to 50% and get 50% accrual rate 1/98th Members can elect at any time to pay full rate again when they can afford it  
  (This is aimed at new joiners, or those facing financial challenges)  
     
Higher Normal This will now be the government’s State Pension Age Retirement Age rather than 65  
     
Can retire from age 55

Employer consent for those in service at 1 April over the age of 55 no longer required, but there are likely to be high early retirement reductions

 
     
 

Benefits earned before the 1 April 2014 will be based on a members Final Salary with a 1/60th accrual rate and benefits earned before 1 April 2008 will remain on Final Salary with a 1/80th accrual plus additional 3/80th lump sum

 
     

Main Protections

   
 

The salary link on benefits earned before April 2014 remains the same as in the 2008 Scheme that is  ‘final salary’. There are the existing protections in the 2008 scheme if the employer reduces your pay  for ‘final salary’ benefits earned up to April 2014.

A member who has opted out of the LGPS will retain the salary link if they rejoin within five  years of opting out.  If they do opt out they will have 12 months to decide whether  to combine their previous period of service. If their pay has gone down they may decide to keep it deferred, which will see it going up in line with prices.

Scheme members will have underpin protection if they were within 10 years of their normal retirement  age in April 2012 and were contributing to the LGPS at 31 March.2014.  In the unlikely event that the pension would have been better if they had retired between 60 and 65 under the 2008 scheme members would get the higher amount.

Those with ‘Rule of 85’ protection will continue to have the same protection as they had before the new scheme was introduced.

Those with ‘Rule of 85’ protection who voluntarily retire between 55 and 60 will have early retirement reduction limited to age 60 or the date they satisfy the rule of 85 if later (instead of 65 as originally drafted in the regulations) UNISON argued successfully for this improvement.

If a member retires after April 2014 they must take all their benefits at the same time unless the employer agrees to flexible retirement when they will have a choice on  whether to draw pension they earned after April 2008.

 
     

Want to find out more?

More information about the LGPS can be found on the scheme website: www.lgps.gov.uk

For detailed questions about your own circumstances, you should first contact your employers pension department. To find out who to contact at your Administering Authority go to: www.lgps.org.uk/lge/age/page.do?page.do?pagedd=9925

UNISON has additional Pension information for members on our website:

https://secure.unison.org.uk

Additionally, If you are a UNISON member and have a pensions query you can raise this with your UNISON branch who may refer it to your region. If appropriate the region will send it to UNISON’s Pensions Unit.

NOT A MEMBER OF UNISON?

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or join online at https://join.unison.org.uk