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Qs and As of retirement

What is the process?

If you are still paying into the LGPS you must have an estimate of your benefits. Regardless of the reason for retiring, the request for an estimate must come from your employer. They tell us your up to date pensionable pay figures to calculate your pension.

Once you make your decision to retire, you must complete a Retirement declaration form. Your employer gives you this form.

If you no longer pay into the LGPS and your deferred pension benefits are due into payment, we send you an estimate and the Retirement declaration form.

How are my benefits paid?

Shortly before you are due to retire you will be given a Retirement declaration form by your employer requesting confirmation of where and how you want your pension payments to be made. If your deferred pension benefits are coming into payment we will send the form to you.

Any lump sum can be paid via a direct credit to either a bank or building society account.

Your pension is paid monthly in arrears on the last working day of the month. It can be paid by direct credit either to a bank or building society account.

You will only receive a payslip when:

  • the amount of monthly pension paid differs by £3 or more
  • your tax code changes
  • you change your bank account.

What are my options if I have paid Additional Voluntary Contributions (AVCs)?

If you have been paying in-house AVCs to

  • Prudential
  • Standard Life
  • Utmost Life and Pensions (previously Equitable Life),

where the contributions have been deducted direct from your pay, there are a number of options available to you at retirement. You will be provided with full details as part of the estimate of benefits.

If however you have been paying to a Free Standing AVC (FSAVC) where you are paying the contributions by direct debit or standing order, then you will need to contact your AVC provider for details of your options.

Do I pay income tax?

The lump sum payable to you is tax-free, but your pension forms part of your income and, together with your State benefits, will be assessed for PAYE tax by HM Revenue & Customs (HMRC) in exactly the same way as your salary/wages.

When you leave your employment, your P45 will be sent to us and the tax code is used to assess whether any tax should be payable on your pension. No rebate of tax, if any is due, will be made until authorisation is received from the tax office.

Any queries concerning your tax code should be addressed to the tax office at:-

HMRC
Pay As You Earn
PO Box 1790
Liverpool
L75 1WX
Telephone: 0300 200 3300
Tax reference: 663/KP

You will need to quote the tax reference and your National Insurance number.

Is my pension affected if I take another job?

There will be no impact on your LGPS pension. The exceptions to this are if you have been awarded compensatory added years by your employer or you are awarded an ill health pension of the type that is stopped if you are in any gainful employment. You should contact us for more information.

What about my State pension?

The benefits from the LGPS are in addition to any pension from the State pension scheme. Any query that you have relating to your state benefit entitlement must be addressed to The Pensions Service (part of the Department  for Work and Pensions). For queries about the State pension call 0800 731 7898 or visit the Pension Service website.

Although the State scheme is a completely different scheme from the LGPS, there is a relationship between the two schemes by way of any Guaranteed Minimum pension (GMP) built up to 5 April 1997.

The GMP represents the minimum amount of pension which must be provided by the LGPS and is paid as part of your local government pension, not in addition to it. When you reach State Pension age (SPa) you will receive notification from the Department for Work and Pensions (DWP) of the amount of GMP. Please note that the DWP call the GMP a contracted out deduction (COD) in their letter.

Does my pension increase?

Local government pension increases are set by HM Treasury. They are determined by the rate of price inflation in the previous 12 months to September.

Provided you are at least 55 years of age, or have retired on ill-health grounds, this rate of price inflation is then applied to your LGPS benefits as a percentage increase with effect from the following April.

Normally the amount of the percentage increase is made public a few months before it is due to be paid, but you will receive details of the amount applied to your pension in April each year.

The GMP forms part of your local government pension. Some of the pension increase on the GMP are paid by the Department for Work and Pensions as part of your State pension.

Is my spouse/civil partner entitled to benefits when I die?

Spouse and civil partner pension

Your spouse or civil partner would be entitled to a pension calculated as:

1/160 x your scheme membership up to 31 March 2014 x final pay
PLUS
1/160 x pensionable pay in each scheme year from 1 April 2014.

The pension is payable for life.

Male pensioners

If you should marry or remarry after your retirement the pension would be calculated using your scheme membership after 5 April 1978.

Female pensioners

If you should marry or remarry after your retirement, the pension would be calculated using your scheme membership after 5 April 1988.

Is my eligible cohabiting partner entitled to benefits when I die?

If you paid into the scheme after 1 April 2008, your eligible cohabiting partner would be entitled to a pension based on your scheme membership from 5 April 1988. They would be entitled to a pension as long as you both meet the following criteria for at least 2 years at the date of your death:

  • free to marry or enter into a civil partnership
  • lived together as husband and wife or civil partners
  • be financially interdependent on each other or your partner be financially dependent on you
  • have not been living with someone else as if you were husband, wife or civil partners.

Is a lump sum death grant due when I die?

If you should die within 10 years of retirement and you are under the age of 75, a lump sum death grant may be payable. The lump sum death grant is equal to 10 times your annual pension reduced by:

  • any pension already received, and
  • any lump sum that you created by converting pension at the time you retired.

If you die on or after age 75, no lump sum death grant can be paid.

As the administering authority, we have absolute discretion concerning the payment of the death grant.

If you have nominated someone to receive the death grant then we will normally try to meet with your wishes. However, in exceptional circumstances claims may be considered when made by a third party not included in your nomination, e.g. in cases of extreme financial hardship.

If you have not made a nomination, payment will be made in line with the established policy.

If you now wish to make a nomination, or amend one that you have already made, complete an Expression of wish for payment of death grant form.

If you have a deferred pension or pension in payment and you are re-employed and rejoin the LGPS after 1 April 2014, a lump sum death grant will be due from your new pension account. Only one lump sum death grant can be paid from all your pension accounts in the LGPS, whichever is the highest.

Are benefits due to my children when I die?

If you have any eligible children at the date of your death they will be entitled to the payment of a pension. The amount of the pension will depend on the number of eligible children at that time.

An eligible child is a natural or adopted child, a step-child or child accepted by you as being part of the family who is dependent on you and is:

  • under age 18, or
  • under age 23 in full-time education or undertaking vocational training, or
  • cannot work in gainful employment* because of physical or mental impairment and either:

The pension is payable as long as they remain as an eligible child.

* Gainful employment is paid employment for more than 30 hours for more than a year.

How are my benefits calculated?

For periods of scheme membership to 31 March 2008

Pension = 1/80 x membership* x final pay **
Lump sum = 3 x annual pension

For periods of scheme membership between 1 April 2008 and 31 March 2014

Pension = 1/60 x membership* x final pay **
Lump sum = No automatic lump sum

* Membership is made up of:

  • service for which you have paid pension contributions
  • service transferred from another employer’s pension scheme or personal pension plan
  • additional service purchased by extra contributions or a lump sum.

Any period of part time service counts as proportionately reduced full time service, e.g. 2
years service at 18½ hours out of a possible 37 counts as 1 year (2 x 18½/37).

** Final pay is normally made up of the earnings on which you have paid pension contributions in your  last 12 months of membership. If you have had a period of sickness, the pay figure used will be  what you would have earned. If a pay figure was higher in the previous 2 years it can be used  instead.

For part time employees the whole time equivalent final pay figure is used in the
calculation.

In addition, any pension that you had purchased by paying additional contributions will also be included.

For periods of scheme membership from 1 April 2014

Pension = 1/49 x *pensionable pay in each year ** scheme year
Added together in your pension account
Lump sum = No automatic lump sum

* Pensionable pay is the pay on which you paid contributions. If you had a period of sickness it will be the pay you would have earned had you been working normally.
** A scheme year runs from 1 April to 31 March.

The amounts calculated for the different periods of membership are added together and paid as one pension.

You can choose to increase your lump sum or create a lump sum up to a maximum of 25% of the capital value of your pension pot. You can give up some of your annual pension to increase your lump sum at a rate of 1:12. Each £1 annual pension you give up will provide an additional £12 lump sum.

If you are retiring voluntarily before normal pension age your benefits may suffer a percentage reduction due to early payment. Your normal pension age in the LGPS is your State Pension age (SPa) or age 65 if that is later. Check your SPa.

If you are retiring on

no percentage reduction will apply for early retirement. However, if you paid additional pension contributions (APCs) for extra or lost LGPS pension, reductions may apply on the extra pension purchased.

Help if you have a query or complaint

If you are in any doubt about your LGPS benefit entitlements, or have a problem or question about your membership or benefits, please contact us. We will seek to clarify or put right any misunderstandings or inaccuracies as quickly and efficiently as possible.

If you are still dissatisfied with any decision made in relation to the scheme you have the right to have your complaint independently reviewed under the scheme’s Internal Dispute Resolution Procedure. There are also a number of other regulatory bodies that may be able to assist you.

Internal Dispute Resolution Procedure

In the first instance you should write to the adjudicator. Your employer will tell you who this is. You must do this within 6 months of the date of the notification of the decision or the act or omission about which you are complaining (or such longer period as the nominated person considers reasonable). This is a formal review of the initial decision and is an opportunity for the matter to be reconsidered.

If you are dissatisfied with the adjudicator’s decision, you may, within 6 months of the date of the decision, apply to us to have it reconsidered.

View the leaflet explaining the Internal Dispute Resolution Procedure (PDF, 529.4 KB) in detail.

Money and Pension Service (MaPS)

MaPS provide independent and impartial information about pensions, free of charge, to members of the public. MaPS is available to assist members and beneficiaries of the scheme with any pension query they have or any general requests for information or guidance concerning their pension benefits.  Visit the Money Helper website

Pensions Ombudsman

In cases where a complaint or dispute cannot be resolved after the intervention of TPAS, an application can be made, within 3 years of the event, to the Pensions Ombudsman for an adjudication. The Ombudsman can investigate and determine any complaint or dispute involving maladministration of the scheme or matters of fact or law and his or her decision is final and binding. Matters where legal proceedings have already started cannot be investigated by the Pensions Ombudsman (unless the case is taken to the appropriate Court on a point of law). The Pensions Ombudsman can be contacted at:

11 Belgrave Road
London
SW1V 1RB
Telephone: 0207 630 2200

The Pensions Regulator

This is the regulator of work-based pension schemes. The Pensions Regulator has powers to protect members of work-based pension schemes and a wide range of powers to help put matters right, where needed. In extreme cases, the regulator is able to fine trustees or employers, and remove trustees from a scheme. You can contact the Pensions Regulator at:

Napier House
Trafalgar Place
Brighton
BN1 4DW
Telephone: 0870 6063636