Joining, Leaving and Benefits

A Simple Guide to the Local Government Pension Scheme

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A simple guide to the Local Government Pension Scheme

Special terms

Actuary

The Scheme’s actuary is an independent expert appointed by the administering authority. He/she carries out regular checks to help ensure that there are enough funds for the Scheme to pay pensions and other benefits to you and any of your eligible dependants.

Administering Authority

The administering authority is responsible for paying your pension and for looking after the Scheme. 

Admitted Body

The regulations allow employers who are carrying out work in the public sector or similar to local government, to contract with the administering authority to allow its employees to join the Local Government Pension Scheme. An admitted body must agree to its employees becoming members before they are allowed to join the Scheme.

Scheduled Body

There are a number of employers who are required to provide membership of the Local Government Pension Scheme to all their employees. These employers are listed in a schedule that appears at the back of the Local Government Pension Scheme Regulations. Unlike admitted bodies, scheduled bodies cannot refuse membership of the Scheme to their employees.

Contracting-out and SERPS

The LGPS is a contracted-out pension scheme. This means the Scheme has guaranteed that your pension will be at least as good as or better than SERPS, for membership between April 1978 and April 1997.This is known as a guaranteed minimum pension (GMP).

SERPS is the State Earnings-Related Pension Scheme and was set up to provide a basic level of pension and benefits related to pay, but run by the State.

On 6 April 2002 SERPS was replaced by the State Second Pension. This provides a more generous pension for low and moderate earners and will, for the first time, cover certain carers and people with a long-term illness or disability. However, any entitlement built up under SERPS will be protected.

Normal Retirement Age

Your normal retirement age is 65. You may be able to retire before 65. You will not usually be allowed to retire later than 65, regardless of how long you have been a member of the Scheme.

Pensionable Pay

This is your normal salary plus:

• any shift allowance
• bonus
• contractual overtime (overtime which you must work as part of your terms of employment)
• Statutory Sick Pay
• Statutory Maternity Pay.

Pensionable pay does not include overtime you choose to work, travelling or subsistence allowance (a portion of wages paid in advance to cover immediate needs), pay instead of notice, pay instead of holidays, the value of a car or pay received instead of a car.

If you joined the Scheme after 31 May 1989, the Inland Revenue restricts the amount of pay for calculating contributions and benefits. The Government sets this figure each year and it should increase in line with inflation as measured by the Retail Prices Index. At April 2004 the figure was £102,000.

Final Pay

This is the highest pensionable pay you earn in the last three years before you retire.

If you work part time, the figure used to work out your pension and other benefits is the pensionable pay you would have received if you had worked full time.

If your pay has been reduced through circumstances beyond your control within the last 10 years and you have received a certificate from your employer confirming this, your final pay will be the best year’s pensionable pay from the last five years, or the best three-year average from the last 13 years.

Contents

Don’t turn off! 
Think about it! 
How do I join the Scheme? 
Leaving the Scheme 
What does it cost? 
What happens when I retire? 
Other retirement benefits 
Can I retire early? 
Working out your retirement benefits 
Options on leaving the Scheme 
Death benefits 
Ready reckoner
Boosting your retirement income 
Pensions and Divorce
Further information 
State Second Pension (S2P)
Guaranteed Minimum Pension (GMP)

Back to top

Don’t turn off!

There are so many reasons why people ignore pensions…

• Granted, it’s detailed and sometimes complicated.
• If you’re young, free and single, it’s probably the last thing on your mind.
• Some people believe that the State takes care of it all…
• You may even think it’s too late to do anything constructive…

Whatever you do, read the details below before you turn off! You don’t have to read everything inside to make a start – but we have made sure all information is there for those who want it.

Finally, each section makes it easy – with a brief introduction, a summary at the bottom and the detail in between, and examples to explain how the benefits work out.

You have the comfort of knowing that although you are amongst millions of members, you are still uniquely catered for by the Scheme. Here’s what you have:

• A guaranteed pension for life…
• Which increases in line with inflation once you retire
• It’s based on your earnings and your time as a member – so reflecting your standard of living at the time you retire
• A tax-free lump sum of three times your yearly pension
• Pensions for your husband/wife and children too
• If you become ill and have to stop work permanently, you can retire early
• And an early retirement option (if your employer agrees) from age 50
• Life assurance from the day you join the Scheme.

This Booklet is only a guide and not a full explanation of the Scheme regulations, which will be used to decide any dispute or disagreement about Scheme benefits.

Think about it!

We don’t want to be gloomy, but have you got a good answer to these questions?

• How will you manage financially when you retire?
• Will your State pension be enough to live on comfortably?
• How would your family cope if you couldn’t work or if you died?
• If you are planning on retiring early, will you have enough pension?
• Do you hope to pay extra to boost your pension just before you retire?

The answers aren’t straightforward and the decision is ultimately yours. We would recommend that you make sure you have some firm plans in place – and that includes joining the Local Government Pension Scheme.

Finding out more...

You can get a forecast of your basic State pension from The Department for Work and Pensions. Write to:

The State Forecasting Team
The Pension Service
Room TB001
Tyneview Park, Whiltley Road
Newcastle upon Tyne
NE98 1BA.

You can request a forecast by phoning 0845 3000 168 (textphone 0845 3000 169) or you can complete an online application form at The Pension Service website.

The sooner you start the better

...you will have time to save the most for retirement

...you have the best chance of being able to afford to retire early

...and you can deal with time away from work – for instance for maternity or long periods of family leave or if you change jobs frequently and have periods when you are not building up pension.

The cost is lower than you think

Look at the example below to see how…

How do I join the Scheme?

THE BASICS

It’s simple – you can join as long as:

• You work for a scheduled body or for an admitted body who agrees to you joining the Scheme.
• You are under 65.

It doesn’t matter how long you work, or if you only work occasionally.

THE DETAILS

In most cases membership of the Scheme is automatic when you start work. You do not have to do anything to join.

However, if you do not want to become a member of the Scheme, you must formally write to your employer. Remember, leaving the Scheme is an important decision – see below for more information.

Part-Timers/Occasional work patterns

As long as you are under 65 and work for a local authority (or your employer is in the Scheme and your type of employment is admitted) you will be able to join – irrespective of the number of hours you work, or if you only work occasionally but your pay depends on your duties rather than your hours.

However, if you are a casual worker or you work for an admitted body you must elect to join.

Restrictions

You cannot join the Scheme if you are eligible for another public service scheme like, for example, teachers, the police or fire brigades.

TO SUM UP

• In most cases you become a member automatically if you are eligible.
• It is your choice whether you join.

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Leaving the Scheme

THE BASICS

Leaving the Scheme is your choice – you do not have to be a member.

• You must let your employer know in writing.
• Tell them the date you want to stop being a member, otherwise your membership will end on the last day of your current pay period.
• If you have built up pension in the Scheme your options are explained 
• If you are thinking of leaving the Scheme it may help you to read the section on ‘Options on leaving the Scheme’ 

ARE YOU SURE?

Leaving the Scheme is an important decision. Are you aware that:

• You would not necessarily be able to provide the same benefits for the same low cost if you arranged a personal pension.
• You do not have an automatic right to rejoin the Scheme if you opt out.
• You will not be covered for life assurance or other pension benefits once you leave.
• You will automatically be placed in S2P (a State scheme) unless you make your own pension arrangements.
• You will not have the benefit of contributions paid towards your pension by your employer.

What does it cost?

THE BASICS

The cost of your pension is not as high as you might imagine – you get tax relief and pay lower National Insurance contributions.

Your employer pays around double what the member pays.

If you tried to provide the same benefits through your own personal pension, it would cost far more and not have the same guarantee of provision.

THE DETAILS

All you are required to pay is:

• 6% of your pensionable pay
• Which is deducted automatically from your pay.

Lower costs

Because you get tax relief and pay reduced National Insurance contributions, you actually pay less than this. The example below should help explain how this works and you can use the blank boxes to work out your own figures.

How is the cost worked out?

You pay a fixed contribution towards your pension. Your employer promises to pay the balance of the cost of providing the benefits and running the Scheme.

The Scheme’s actuary decides the amount your employer must pay. He/she does this by checking the level of the Scheme’s funds and the expected payments the Scheme will have to make. This independent check is known as an actuarial valuation and must be done at least every three years.

Over 40 years?

You may be allowed to stop paying if you have been in the Scheme for more than 40 years. (That does not include any transferred-in membership from schemes outside of local government employment.) Your employer will decide about this and let you know if you do not have to pay.

TO SUM UP

• The Scheme costs less than you might think.
• Your employer pays a significant amount towards your pension.

What does it cost?

WHAT IF YOU’RE OFF WORK?

Obviously, any time away from work could affect your total membership and therefore your pension. Here are the details:

Sick

If you get sick pay then your employer will carry on taking contributions from your pay. This means you remain a member of the Scheme. If you have run out of sick pay, then you are still a member of the Scheme during the time you are off work but you do not have to pay contributions.

Unpaid leave

You can count any period you were absent on unpaid leave as pensionable service but you must pay your contributions based on the pay you would normally receive. You should talk to your employer about the pensions implications before you decide to take unpaid leave.

Industrial dispute

If you have a period of unauthorised absence because of industrial dispute you can count this towards your membership as long as you pay. The cost is higher – 16% of the pay you would normally receive over this time – to take into account your employer’s contribution as well.

Maternity leave

As long as you receive occupational maternity pay or SMP (Statutory Maternity Pay) then your contributions are taken from the pay you actually get.

You will gain pensionable service for the whole of the 26 weeks Ordinary Maternity Leave even if you are not paying contributions during this period.

If you take unpaid maternity leave you can choose whether to pay or not, as long as you inform your employer within 30 days of returning to work (or the date you decide to leave if you are not returning to work). Otherwise, if you do not pay contributions, this period will not count towards your membership.

Paternity leave

If you are considering taking paternity leave please contact your administrator for specific details.

Any other unauthorised absence does not count towards your membership.

What happens when I retire?

THE BASICS

• Depending on your situation, you can retire with an immediate pension.
• Normal retirement age is 65.
• But you can retire earlier 

THE DETAILS

When can you retire?

Whatever your circumstances, you must have at least two years’ total membership of the Scheme or have brought a transfer value into the Scheme from another scheme. If you satisfy that condition then you can retire with immediate benefits if any of the following apply:

• You are 65
• You are over 60 and take early retirement
• You are too ill to work and your employer decides you can retire early
• You are over 50 and take early retirement on the grounds of redundancy or efficiency
• You are over 50 and take voluntary early retirement with your employer’s agreement.

What do you get?

You get an annual pension and a one-off tax-free lump sum retirement grant. These are worked out like this:

Your pension

Multiply final pay by your years as a member and divide by 80.

Your retirement grant

Multiply your final pay by three then by your years as a member and divide by 80.

There is an example of how to work out your pension and retirement grant shown below

TO SUM UP

• There are many circumstances that allow you to retire with immediate benefits.

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Other retirement benefits

THE BASICS

There are a few other options and conditions that apply to your retirement benefits. This page explains further about:

• Converting retirement grant into additional pension.
• Converting pension into additional retirement grant.
• Pension increases.
• Starting work again after you have retired with a pension.

THE DETAILS

Converting Retirement Grant into Additional Pension

You will receive the retirement grant lump sum automatically. However, if you want you can convert some or all of that lump sum into additional pension.

The way this is worked out is based on figures from the Government Actuary. Your administering authority holds copies of these figures.

We strongly suggest that you ask for independent financial advice before taking up this option.

Converting Pension into Additional Retirement Grant

You may be able to increase your retirement grant by converting part of your pension. You will be sent further details near to retirement. Remember, this will reduce your annual pension.

Pension Increases

Once you start taking pension from the Scheme, it is automatically increased each year. This helps you maintain your standard of living in relation to your final pay.

The increase is in line with inflation – which is measured by the Retail Prices Index.

All members retiring after age 55 or at any age because of illness will qualify to receive increases.

Restarting Work After Retiring With A Pension

If you have retired already and are receiving a pension and then start a new job with an employer who provides membership of the Local Government Pension Scheme, your pension may be reduced. Your administering authority will be able to tell you how much any reduction will be.

So, if you are thinking about starting work again contact your administering authority to find out whether these rules apply to you and what the effect might be. 

TO SUM UP

• Your pension is protected against inflation once you retire.
• You have flexibility with your pension and cash sum.

Can I retire early?

THE BASICS

Simply put, "Yes". However, early retirement can involve some reduction in the amount of your pension.

THE DETAILS

Retiring after 60 but before 65

Anyone who was a member on 1 April 1998 can retire from age 60.

If your years of membership and your age at leaving add up to at least 85 then you will not lose any benefits. If you have less than 85 years in total then your pension will be reduced. If you want to know how much the reduction will be, contact your administering authority.

Early retirement through illness

If you have at least three months’ membership (or have transferred-in membership from another scheme) and you become too ill to work either at your own job or any available comparable employment with that employer, then you can retire immediately and take your benefits. However, an independent medical practitioner must certify you as permanently unable to continue in your job.

If you have been in the Scheme for at least five years then your membership period will be increased to make up for early retirement before age 65. The increases are explained in the table below.

Any increase to your membership period cannot be more than the period from the date you actually leave to your 65th birthday. 

A part-timer with less than 13 1/3 years’ equivalent full-time total membership will get lower increases.

If the medical advisor appointed by your administering authority thinks you have less than one year to live, the Scheme can pay your pension as a lump sum instead. The amount will be five times the pension you would have received but does not include any GMP (Guaranteed Minimum Pension) part of your pension. This will not change any pension paid to your husband/wife or children (if you require more details about GMP an information leaflet can be obtained from us).

Retiring after 50

You can also stop working once you reach age 50, but you will need your employer’s agreement. Because you are retiring earlier than age 65, your pension will be paid for longer. Your pension and lump sum will be reduced to take account of this.

Your increased membership, however, must not exceed the total membership you would have accrued had you continued in employment until age 65 (or, in the case of Coroners, until age 70)

Can I retire early?

THE DETAILS

The 85-Year Rule

When you retire – whether it is early or at normal retirement age – your pension and other benefits will not be reduced if you meet the "85-year rule". Simply add together:

If this is 85 or more than 85, then your benefits will not be reduced. For example, if you joined at age 24 and want to retire at 55 (after 31 years’ membership):

and so you can retire at 55 without any loss of benefits (if your employer agrees).

Once you reach age 60, the 85-year rule applies automatically, whether or not your employer agrees to you retiring early.

Early retirement over 50 through redundancy or efficiency reasons

If you are over 50 and are made redundant, or your employer lets you go for efficiency reasons, then you can take your pension and lump sum immediately, without any loss of benefits. In certain circumstances your employer may choose to award you some extra years.

Augmentation for over 50s

If you are over 50 then your employer will tell you whether your membership period can be increased. The most it can be increased is by 62/3.

Your employer must follow the separate rules for carrying out this augmentation and inform you of how any increase is worked out.

TO SUM UP

• There are many circumstances that allow you to retire with immediate benefits.
• In some cases, early retirement is possible without any loss of benefits.
• In other cases, taking early retirement may reduce your benefits.

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Working out your retirement benefits

THE BASICS

The way we work out your pension and lump sum retirement grant is simple.

Here are some examples to help you see how it works. Use the blank boxes to put in your figures…

EXAMPLE FOR A FULL-TIME MEMBER

Assuming your final pay is £18,000 and you joined at age 40 and retire at age 65, giving you 25 years’ membership:

WORKING OUT YOUR MEMBERSHIP

Most people don’t join or leave on their birthday. The actual membership calculation takes into account all the days you work as well.

For instance, if you joined on 1 April 1990 and left on 24 July 2015, your membership period would be 25 years and 250 days.

Days are changed into decimals by dividing by 365. So you would also have 250 ÷ 365 or 0.685 years. In total, that’s 25.685 years.

Working out your retirement benefits

EXAMPLE FOR A PART-TIME MEMBER

This is worked out slightly differently. First of all, work out your total membership, which for the example we’ll assume is 28 years and 194 days:

Options on leaving the Scheme

THE BASICS

If you leave the Scheme you will have to decide what to do with your contributions. There are three main options:

• Taking a refund.
• Taking a transfer.
• Leaving your pension in the Scheme.

Your options depend on how long you have been a member and whether you have transferred pension rights from another scheme when you joined.

THE DETAILS

If you leave the Scheme you have a number of options depending on how long you have been a member of the Scheme:

If you have less than three months’ membership

• Taking a refund

As long as you haven’t transferred benefits from a previous scheme and you are not going on to work for another local government employer you will automatically be given a refund of your contributions less tax and National Insurance. If you do not want a refund you will need to let the administering authority know. A refund of contributions is not payable if you rejoin the Scheme within one month and one day of your date of leaving the Scheme.

• Taking a transfer

If you are planning to join a company offering their own pension arrangement you can transfer your Local Government Pension Scheme contributions into that scheme. If you would like to do this you need to let the administering authority know otherwise you will automatically receive a refund.

THE DETAILS

If you have more than three months’ membership

• Taking a preserved pension

If you have more than three months’ membership or have brought a transfer value into the Scheme from another scheme you will have a preserved pension. You then have two options:

1. You can leave your preserved pension in the Scheme where it will be increased in line with inflation each year and you will receive a pension when you reach retirement age

or

2. You can transfer your preserved pension to a new pension arrangement, perhaps a new occupational scheme or a personal pension plan. If you choose this option you can ask for a transfer value quotation before deciding.

Opting out of the Scheme

You can leave the Scheme at any time after you have joined, even if you are not leaving employment. Your options are as above and depend on how long you have been a member (and whether you have transferred in pension rights from another scheme).

Before deciding what to do, it would be wise to speak to an independent financial adviser to discuss your personal situation. We would also recommend you read 'leaving the scheme - are you sure?'.

TO SUM UP

• If you have been a member for less than three months you will automatically receive a refund unless you say you do not want one.

• If you have been a member for more than three months you can choose whether to transfer your preserved pension or keep it in the Scheme.

• If you become a member before 1 April 2004 and leave before 1 April 2006 with less than two years' membership, you can choose either a preserved pension or a refund of contributions.

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Death benefits

THE BASICS

You care about your loved ones and you’ll want to know that they have some financial protection after your death – whether that is before you retire or after.

The Scheme covers both situations and provides pensions and cash, depending on when you die.

THE DETAILS

Death In Service – Cash Sum

This generally applies to those people who are still in employment and are active members of the Scheme. If you die under these circumstances, then your dependants will get a
cash lump sum of:           2 x final pay

If you work part-time, this will be: 2 x actual final pay

If your retirement grant is bigger than your death grant then that will be paid instead.

Your administering authority decides who gets this cash sum, but you can ask them to consider your wishes by filling in a death grant nomination form. 

Benefits for Dependants

Your dependants will also get pension benefits if you die before you retire.

For the first three months your husband/wife will get a pension equal to your final pay. This will be increased to six months if you have any dependent children.

If you have at least two years’ membership (including transferred-in membership from another scheme) your husband or wife will also get a long-term pension for the rest of their life. This will be equal to half the amount you would have received if you had retired because of illness on the date of your death.

This will be increased each year in line with inflation.

FOR EXAMPLE

If you are under 55 on final pay of £16,000 and have been in the Scheme for 10 years, your husband or wife will get a pension of:

Half this amount: = £16,000 x 20 ÷ 80 = £2,000

The membership is increased from 10 to 20 under the same terms as retiring early because of illness, so giving a higher pension than would otherwise have been paid.

Death benefits

THE DETAILS

Death After Retirement – Cash Sum

If you die within five years of retirement, then a lump sum is paid to your dependants. This is worked out as the balance of any pension payments that would have been paid during those five years.

For example, if you retired in April 2000 on monthly pension of £500 and died in September 2003 that’s 18 monthly payments left out of 5 years (60 months).Your dependants would get a lump sum equal to 18 x £500, which is £9,000.

Benefits for Dependants

Your dependants will also get pension benefits if you die after you retire.

For the first three months your husband/wife will get a pension equal to your retirement pension.

From then on they will get a long-term pension for the rest of their life. This will be equal to half the pension you were receiving when you died. This will be increased each year in line with inflation.

TO SUM UP

• If you die before retiring, your dependants receive a cash sum and a pension.
• If you die after retirement, your dependants will get a pension and, in some cases, a cash sum.

SPECIAL CONDITIONS

If you have left the Scheme and then rejoin later…

…then the lump sum on death after retirement can be higher. Your administering authority can pay a lump sum of twice your final pay from your most recent period of membership plus any lump sum or remaining pension from your earlier membership, as long as the total lump sum is not more than four times your final pay.

If you marry after retirement…

…then the pension paid to your husband/wife may be lower. We will give your husband or wife a full explanation of why this has happened.

Providing additional dependant’s pension

If you wish to provide additional dependant’s pension on your death, you can give up some of your own pension on retirement to arrange this for when you die. You must apply to your administering authority within one month before or after you retire.

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Death benefits – child’s pension

THE BASICS

The Scheme can provide a pension for your children as well giving you even further security.

THE DETAILS

Who is eligible?

To get a child’s pension, the child must be:

• Your legitimate or adopted child OR dependent on you

AND must be born before the first anniversary of your death.

A person only counts as a child if he/she is aged under 17 on the day you die.

If they are over 17 he/she must satisfy one of the following conditions:

• He/she has been in continuous full-time education (including training for a trade, profession or vocation) since they were 17
• He/she has been disabled since before they were 17
• He/she became disabled after 17 and has been in continuous full-time education (including training for a trade, profession or vocation) since they were 17.

Children you have adopted are also eligible under the same conditions.

Pension Amounts

If no short-term pension is being paid to your husband/wife then a child can receive a short-term pension equal to either your final pay as an active member or your pension after retirement, depending on when you die.

The amount of pension depends on the number of children you have and whether your husband/wife is receiving a long-term pension:

Your administering authority decides how pension is shared between children.

All children’s pensions are increased each April in line with inflation (as measured by the Retail Prices Index).

TO SUM UP

• Your children may benefit from the Scheme as well.

Ready reckoner

THE BASICS

A quick and easy way to work out your approximate pension – simply choose the nearest years of membership along the top and salary figure along the side to match your current situation. Where the two boxes meet gives a rough idea of your pension from the Scheme.

To get an idea of the possible retirement grant cash sum, simply multiply pension by three.

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Boosting your retirement income

THE BASICS

Retirement could be twenty or thirty years long. Are you sure you have prepared? If you wait until you reach retirement to find out whether you have enough income – that will be too late.

Using the Scheme’s AVC arrangement offers you a way to boost your pension.

THE DETAILS

Why Would You Want To Pay More?

If you have:

• Had a career break
• Joined the Scheme later in life
• Want to retire early
• Have moved jobs a few times

…then, even in a good scheme, you will not get the maximum retirement benefits available to you.

What Can You Do?

There are three ways you can boost your benefits. However, you may have to produce a satisfactory medical report first.

You can pay up to 9% extra of your pay to:

• Buy added years
• Pay Additional Voluntary Contributions

Or you can pay up to £3,600 a year into a:

• Stakeholder pension scheme

Added Years

By buying additional periods of membership, you can build up your total membership to a maximum of 40 years. You may have to prove to your administering authority that you are in a reasonable state of health first.

The extra membership you buy is used to work out your pension but does not count towards any qualifying periods.

Ask your administering authority for more details about buying added years and how any conditions apply.

Boosting your retirement income

THE DETAILS

Additional Voluntary Contributions (AVCs)

You can pay directly into an AVC fund. This is a separate fund to the main Scheme and you have an individual account. There are no medical restrictions on who may pay AVCs.

As you pay contributions to this account, they are invested, and over time, the intention is that the fund grows. When you reach retirement, you can use this fund to provide additional fixed pension income.

You may also be able to transfer the fund to the main Scheme to buy added years under these circumstances:

• If you become ill and have to stop work permanently, and are allowed to retire early with an immediate pension 
• If you stop paying AVCs but remain an active member of the Scheme after age 50.

Ask your administering authority  for more details about transferring your AVC fund into the main Scheme.

AVCs can also be used to increase the amount of dependant’s pension if you die before retirement. This special arrangement provides additional pension of twice your pay under a policy with an insurance company. In this case, certain health checks may be required.

Stakeholder Pension Scheme

As long as you are earning less than £30,000 a year, or have earned less than that at any time in the last five years, you can contribute to a stakeholder pension scheme as well as the Local Government Pension Scheme.

You are not limited to 15% of your total pay or to a maximum benefit of two thirds of your final salary.

For further details about stakeholder you can contact your administering authority or you can talk directly to a stakeholder provider such as a bank or an insurance company.

TO SUM UP

• There are many reasons why you should consider paying AVCs.
• AVCs are a tax-efficient way of boosting your pensions.
• You can choose how much you want to contribute.

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Pensions and Divorce

Under the LGPS, if you get divorced, you may wish to note that:

• Your ex-wife or ex-husband will cease to be entitled to a widow's or widower's pension should you predecease them.

• Any children's pension payable in the event of your death will not be affected by your divorce.

• If you nominated your ex-wife or ex-husband to receive any death grant payable, your nomination will remain in force until you change it. The Court may, however, issue an Earmarking Order stating that all or part of any lump sum death grant is payable to your ex-spouse.

You should also note that in proceedings for divorce. judicial separation or nullity of marriage, you will be required to obtain the cash equivalent value of your pension rights from the administering authority which the court will take into account in the divorce settlement. In Scottish divorces, only the pension rights built up during the period of the marriage are taken into account.

The Court may offset the value of your pension rights against your other assets in the divorce settlement or it may issue a Pension Sharing Order or an Earmarking Order against your pension.

If the Court issues an Earmarking Order, the Order may require that when your benefits come into payment your ex-spouse should receive one, or a combination, of the following benefits:

• All, or part, of your pension (this does not apply in Scotland).

• All, or part, of your lump sum retirement grant.

• All, or part, of any lump sum paid in the vent of your death.

An Earmarking Order, against pension payments, but not lump sums (unless the Order directs otherwise), will automatically lapse on the remarriage of your former spouse and the full pension would be restored to you. Pension payments to your former spouse would cease on your death.

If the Court issues a Pension Sharing Order or your benefits are subject to a qualifying agreement in Scotland, a percentage of your rights will be allocated to your ex-spouse at the point of divorce. Your pension (and any Guaranteed Minimum Pension), your lump sum and the contingent spouse's pension, but not the contingent children's pensions, will be reduced accordingly, and your ex-spouse will hold benefits in his / her own right which can be left in the Scheme to be payable from, normally, age 65 or transferred to another qualifying pension scheme.

The reduction to your benefits is known as a Pension Debit. The amount of the Pension Debit will be increased in line with the rise in the Retail Prices Index between the date the Debit was first calculated and the date your benefits become payable. When your benefits become payable, the revalued amount of the Pension Debit will be deducted from your retirement benefits. You may be able to purchase extra years of membership in the Scheme, pay Additional Voluntary Contributions, or contribute to a concurrent personal pension plan or stakeholder pension scheme in order to make up for the benefits 'lost' following a Pension Share.

A separate leaflet providing more information is available from the administering authority upon request.

All correspondence received by the administering authority in connection with divorce proceedings will be acknowledged in writing. If no acknowledgement is received, you should contact the administering authority to ensure that your correspondence has been received.

The cost of supplying information and complying with any court order imposing obligations on the LGPS will be recovered from you and/or your ex-spouse in accordance with a schedule of charges published by the administering authority.

Further information

THE BASICS

Your Administering Authority…

…is Bath & North East Somerset Council, which is responsible for paying your pension and for looking after the Scheme. The Avon Pension Fund address is:

The Avon Pension Fund 
Floor 3 South 
Riverside 
Temple Street 
Keynsham
BS31 1LA

Tel: 01225 477000
Fax: 01225 395258
E-mail: avon_pensions@bathnes.gov.uk

Occasionally we may have to change our telephone numbers or contact points. The most up to date list can be obtained here.

THE DETAILS

Questions?

If you have a question about your pension arrangements or are not sure what you may get, simply contact us at the address or telephone number above.

Complaints

We try to deal with all problems as quickly and effectively as we can. If you are not happy with a decision made by either your employer or your local administrators, then you can use our internal complaints procedure. This consists of two stages:

The first stage involves a specified person who will consider your complaint. (You must make your complaint within six months of receiving the decision you are appealing against.) The specified person will then tell you of his/her decision.

If you are not happy with this, then you must refer the matter to the administering authority (at the above address), again within six months of receiving the specified person’s decision.

You can get a leaflet explaining this procedure from our address above.

TO SUM UP

Always contact your administering authority (at the address above) first if you have a question about your pension arrangements. We will do all we can to help you and we are always on hand to explain the details for you.

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Further information

THE BASICS

There are a number of other organisations that can help you. The details below explain what each does and how you can use their services.

THE DETAILS

OPAS – The Pensions Advisory Service

OPAS will explain your legal rights and responsibilities as a Scheme member.

If you cannot settle a pension dispute using the internal complaints procedure on page 23, then you should contact OPAS next. Although they cannot force pension schemes to abide by their decision, they can help you decide what to do next. Their services are completely free.

To contact OPAS write to: OPAS
                                         11 Belgrave Road
                                         London SW1V 1RB

Pensions Ombudsman

The Ombudsman will investigate and adjudicate on a dispute that you cannot first settle through OPAS as long as you refer your complaint to the Ombudsman within three months of the event.

The Ombudsman can also settle disputes of fact or law for company and personal pension schemes. The Ombudsman’s decision is final and binding, but he/she cannot investigate matters where legal proceedings have already started.

You can contact the Ombudsman at OPAS’ address. Again the Ombudsman’s services are without charge.

The Pensions Regulator

The Pensions Regulator’s main role is to protect members’ interests. It can act where trustees, employers or professional advisers have failed in their duties.

To contact the Pensions Regulator write to: 

The Pensions Regulator
Napier House
Trafalgar Place
Brighton
BN1 4DW

Pension Tracing Service

You may have pension benefits with a former pension scheme of which you were a member in the past. If you have lost touch with that scheme you can use this service provided by the Pension Tracing Service.

All occupational and personal pension schemes must register and your Local Government Pensions Scheme has also done so.

To contact them write to: 

Pension Tracing Service
The Pension Service
Whitley Road
Newcastle upon Tyne
NE98 1BA

Checking your pension records

All the administering authorities are registered under the Data Protection Acts 1984 and 1998.You have the right to check that your personal details held on computer are accurate.

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Guaranteed minimum pensions (GMPs)

THE BASICS

• Before 1997 Schemes that contracted out of SERPS* had to guarantee to provide a minimum benefit called the Guaranteed Minimum Pension.
• The Guaranteed Minimum Pension was replaced by a new Reference Scheme test on 6 April 1997.
• Members of the Scheme before 6 April 1997 will be entitled to the GMP for membership up to this date.

THE DETAILS

Until 6 April 1997, for the Scheme to be contracted-out of the State Earnings-Related Pension Scheme (SERPS) it had to provide a minimum benefit known as the Guaranteed Minimum Pension (GMP).This is broadly equivalent to the pension that would have been provided under SERPS, if the Scheme had not been contracted-out.

On 6 April 1997, a new Reference Scheme test replaced the GMP. However, the Scheme still has to provide GMP for service before 1997.

Will the GMP part of my deferred pension be increased after I leave the Scheme?

Yes. If you leave service with a deferred pension in the Scheme, the GMP part will be increased fully in line with the Retail Price Index (RPI) (which measures price inflation) between the date you leave and State Retirement Date.

Will the GMP part of my pension be increased after I retire?

GMPs only become effective at age 65 for men and 60 for women. If you retire before then, the whole of your pension, including the GMP part built up before 6 April 1997, will be increased fully in line with the RPI up to State Retirement Date.

From age 65 for men and 60 for women, the GMP part of your pension will be increased each year in line with the RPI. For GMPs built up before 6 April 1988, the State pays all the annual increase. For GMPs built up from 6 April 1988 - 5 April 1997, up to the first 3% is paid by the Scheme and the State provides any additional amount to match the rise in inflation.

That part of your pension above your GMP will be increased by the Scheme in line with the RPI .

Does the GMP affect my tax-free cash lump sum?

If you take advantage of the tax-free cash lump sum option when you retire, the amount you receive cannot be so large as to reduce your pension to less than the GMP amount. In such cases, it may be necessary to restrict the cash sum.

Does the GMP affect me if I retire early?

If you take early retirement, the Scheme must ensure that the pension you are receiving by age 65 for men and 60 for women is not less than your GMP.

Does the GMP affect my spouse’s pension?

If you die before or after retirement, the Scheme must also provide your spouse with a pension of not less that one half of your GMP. For female members, the spouse’s pension is not less than one half of your GMP built up since 6 April 1988.

TO SUM UP

• The rules governing GMPs changed on 6 April 1997.
• Those who were members of the Scheme will still be entitled to GMP they have built up.

* On 6 April 2002 SERPS was replaced by the State Second Pension. This provides a more generous pension for low and moderate earners and will, for the first time, cover certain carers and people with long-term illness or disability. However, any entitlement built up under SERPS will be protected.

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State second pension (S2P) 

THE BASICS

• SERPS was replaced by the State Second Pension (S2P) on 6 April 2002
• Your SERPS rights (GMP) are protected for the future
• All members are contracted-out of S2P from 6 April 2002 (see page 1 of the Booklet).

THE DETAILS

The Additional Pension (First Appointed Year) Order 2001 [SI 2001/208] provides that the tax year

2002/2003 is the first tax year in which the provisions of the State Second Pension will be in force. The State Second Pension is an element of State Pension payable in addition to the flat rate Old Age Pension and replaces the State Earnings Related Pension Scheme.

The State Second Pension will also, for the first time, cover certain carers and people with long-term illness and disability, whose working lives have been interrupted or shortened. They will be able to build up an additional state pension for periods when they could not work. Initially the State Second Pension will be an earnings related pension but it is proposed that, from some future date, it will be changed to begin accruing as a flat rate pension for people under age 45 at the date of the change.

TO SUM UP

• Any GMP rights are protected
• You are still contracted-out – of S2P.

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