A Welcome from Jean Hinks, Bath and North East Somerset Council Resources Director
Welcome to the summer 2003 issue of Avon Pension News. We’ve lots to tell you in this issue, see below for what’s included. Best wishes for
a great summer!
Pension Fund investments – customised benchmark
What’s new on the Fund’s website
Maternity, paternity and adoption leave – new regulations
Staff changes – who’s left and who’s new
How to trace an old pension scheme
Clinics 2003
Facts and figures about the Avon Pension Fund
What’s happening in the Investments Team
Pensions for Councillors
CONTACT US:
Avon Pension Fund, Floor 3 South, Riverside, Temple Street, Keynsham
BS31 1LA
Telephone: 01225 477000
Facsimile: 01225 395258
Email: avon_pension@bathnes.gov.uk
Please quote your National Insurance number and the
name of your employer when ringing us or writing.
Please direct your comments and feedback about this newsletter to the Fund’s Marketing & Communications Officer, Martin Downes.
Either email him or telephone him on 01225 395280
Audio tape, Large print and Braille in English can be
provided and also translated into other languages. For further information
please contact Avon Pension News on 01225 395280
LGPS Stocktake: The Latest…
In our last newsletter, we told you a number of different discussion documents had been issued which had a potential future impact on the
Local Government Pension Scheme (LGPS). These ranged from discussion documents on the LGPS Stocktake, the Government green
paper on pensions and a consultation paper on “Simplifying the Taxation of Pensions.”
The Local Government Pensions Committee [LGPC] encouraged employers to agree on a common response and most local authorities have
responded through them, having assisted in supplying information and statistics to substantiate points raised.
The LGPC has also been part of a working party made up of other employer groups [including Society of County Personnel Officers, Society
of County Treasurers and Trade Unions] looking at the future for the LGPS. Each of these groups has submitted responses from its own
perspective.
So what have been LGPC’s initial responses on the LGPS Stocktake?
• The LGPS should remain a final salary scheme.
• Any worsening of the LGPS could have a knock-on effect, meaning more people relying on State benefits.
• The LGPS is an important part of pay and conditions, and helps attract and retain staff.
• The LGPS does meet the needs of much of the workforce, and even if not ideal for all staff, no other scheme would meet their needs better.
• Redesigning the LGPS would not change this position. The Government should instead look at State benefits, so that any extra pension
benefits someone builds up, through a scheme like ours, would simply sit on top of these.
Steps should be taken to limit its cost and maintain its sustainability; these could include:
• Basic contribution rate for new staff going up from 6% to 7%, but with partners’ pensions introduced.
• Ensuring Scheme has Normal Retiring Age of 65 by removing the ‘85 year rule’. Thus anyone retiring early would receive an actuarial
reduction.
• Increase the earliest age at which benefits can be taken from 50 to 55 [as proposed in the Green Paper].
• Remove right to automatic unreduced benefit on redundancy or efficiency retirements but allow for an actuarial reduced benefit with the
employer given discretion to waive reduction.
• Allow more employers access to the Scheme particularly where outsourcing services thus maintaining the membership stability of the
pension fund.
• Existing flexibilities in the Scheme have not been greatly used, and adding more flexibility would only make the Scheme more complicated.
• The proposed changes to the way pension schemes are affected by Inland Revenue rules are welcomed [e.g. abolition of 15% maximum
contribution level and earnings cap].
So how does this affect current scheme members?
Changes are not going to happen overnight. Some of the taxation changes are proposed for introduction in 2004/05 but any other more
radical scheme changes are not expected for at least 2 – 3 years.
The Government has been keen to stress that no-one’s rights under the present Scheme will be changed.
Later this year, the Government will put out further consultation papers, so things are still at an early stage. Maybe we will see a brand new
version of the scheme, a simpler more streamlined scheme, or perhaps a second scheme for future entrants. It may just be a case of spot the
difference for your average member.
Watch this Space!
As soon as any further developments are known we will keep you informed.
If you want full details of the LGPC response go to: www.lg-employers.gov.uk/pensions/guides/index.html and look up Circular No.137
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When can I retire?
Some of you have been having problems working out when you can retire!
Technically, you can retire at any time but if you want to receive pension as well then this is determined by your age?
Age under 50
No entitlement to receive immediate benefits.
Age 50 – 60
You can elect to receive your benefits but need your employer’s consent.
Age 60 and over
You can retire without your employer’s consent.
However, whenever you retire, the amount of benefits you receive is determined by age and service. Full pension benefits, based on service
accrued, are payable at age 65 for both male and female members, but if you choose to retire before age 65 then the 85-year rule takes effect.
Using whole years, add your years of membership to your age at leaving; if it amounts to 85 or more, you will receive your benefits without
reduction. Any reduction is calculated using factor tables supplied by the Government Actuary’s Department (GAD) and is determined by the
period until either you satisfy the 85-year rule or, if sooner, reach age 65.
For this purpose, membership is based on the actual calendar length of service in the pension scheme including any periods of service
transferred in from other occupational pension schemes. Transfers in from personal pension arrangements and periods of service
purchased by additional contributions count at the credited service length.
Age
|
Service Accrued
|
85yr Rule
|
Period to 85 (yrs)
|
Period to age 65 (yrs)
|
Pension Reduction (%) Using lower of (c) or (d) from GAD table
|
Lump Sum Reduction (%) Using lower of (c) or (d) from GAD table
|
Employers consent required
|
| (a) |
(b) |
(a) +
(b) |
(c) |
(d) |
male |
female |
All |
|
| 55 |
10 |
65 |
10 |
10 |
48 |
45 |
26 |
yes |
| 55 |
30 |
85 |
0 |
10 |
0 |
0 |
0 |
yes |
| 57 |
10 |
67 |
9 |
8 |
43 |
39 |
21 |
yes |
| 60 |
7 |
67 |
9 |
5 |
33 |
27 |
11 |
no |
| 60 |
25 |
85 |
0 |
5 |
0 |
0 |
0 |
no |
| The entries below show the effect on a member’s benefits the longer retirement is delayed. Ranging from reductions of 43/39% on pension and 21% on lump sum at age 55 on 14 years service to no reductions if retirement was delayed until age 63 on 22yrs service |
| 55 |
14 |
69 |
8 |
10 |
43 |
39 |
21 |
yes |
| 57 |
16 |
73 |
6 |
8 |
37 |
31 |
14 |
yes |
| 60 |
19 |
79 |
3 |
5 |
22 |
18 |
7 |
no |
| 62 |
21 |
83 |
1 |
3 |
8 |
7 |
2 |
no |
| 63 |
22 |
85 |
0 |
2 |
0 |
0 |
0 |
no |
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Pension Fund Investments - Customised Benchmark
Since 1 April 2003 the Avon Pension Fund has had a “customised benchmark”. What is the significance of this and why is it important?
Traditionally, it has been the custom for local authority pension funds to compare their performance against that of other local authority
pension funds. In terms of accountability this may seem a natural thing to do, given that local authority pension funds all operate within the
same legislative framework. However, over the course of time, the average local authority fund has become a benchmark not just for
comparative purposes but, more critically, for determining asset allocation policy (i.e. the allocation between main asset categories). In other
words it is the “normal” policy for a local authority pension fund to have the same proportions in UK equities, overseas equities, gilts, etc. as
the average local authority fund. This policy is feasible because details of the asset allocation of the average local authority is published
quarterly by The WM Company (the local authorities’ performance measurer).
An increasing number of local authority pension funds are questioning whether such a policy makes sense. Why should external forces
control their asset allocation policy? This question is particularly pertinent given the wide range of funding levels among local authority
pension funds. Significantly, this challenge to traditional practice was recently given added weight by the Government-sponsored Myners
Report which, after highlighting the shortcomings inherent in what are known as “peer group benchmarks”, recommended that those funds
which had not already done so should adopt “customised benchmarks” as soon as possible.
Having received advice from investment consultants Hymans Robertson, the Pensions Committee recently agreed a “customised
benchmark” for the Avon Pension Fund which takes into account the Fund’s own liabilities and funding position (currently estimated to be
around 80%). As mentioned above, the “customised benchmark” became effective from 1 April 2003 and has as its principal objective the
restoration of a full funding position as soon as practically possible.
Details of the newly adopted “customised benchmark” are set out in a revised Statement of Investment Principles (approved by the
Pensions Committee at its meeting on 28 March 2003). Copies can be obtained by writing to the Investments Officer using the address on the
front page of this newsletter, emailing him on tony_worth@bathnes.gov.uk or ringing him on 01225 395281. Alternatively, go to
the Investments Section of this
website
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What else is new?
The website is constantly being updated and new things added. You will find lots of information that is relevant to you as an active member of
the Avon Pension Fund. For those of you considering your retirement options, you’ll want to see our new
‘Into Retirement’ guide.
News from the world of pensions is regularly added and can be located here.
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New parent or parent-to-be?
You need to know about the new regulations
The new regulations are the Paternity and Adoption Leave Regulations 2002 [SI 2002/2788] and the Maternity and Parental Leave
(Amendment) Regulations 2002 [SI 2002/2789]
Maternity/Paternity/Adoption Leave
These regulations incorporate changes to the maternity leave provisions and the introduction of paternity and adoption leave. This has
implications for the Local Government Pension Scheme and the new basic provisions are as follows:-
1. Ordinary Maternity/Adoption Leave or Statutory Paternity Leave
Basic employee pension deductions are automatically made on the pay actually received or deemed made when not in receipt of any pay.
2. Unpaid Additional Maternity Leave or Additional Adoption Leave
An employee can elect within 30 days of returning to work to make contributions for any period of unpaid leave based on the pay immediately
prior to the unpaid period. Details of how to elect can be obtained from your employer. The service, where contributions are paid or deemed
paid, will count as if normally worked. Where employee contributions are paid or deemed paid, the employer will pay pension contributions on
notional pay as if the employee had been at work. Any additional contributions being made to buy additional service must continue to be paid
throughout any of these leave provisions as if working normally and you should consult your employer’s payroll section if this applies to you.
A new Maternity, Paternity and Adoption leaflet outlining these new provisions in greater detail is now available from your employer. This
leaflet is also available on the Fund’s website please
click here
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Staff changes in Avon Pension Fund
Goodbye to Madeline
After a long career arranging pensions for thousands of retired members of the Fund, a long serving member of the Avon Pension Fund's
senior staff is looking forward to enjoying her own pension.
Madeline Bickle retired at the end of March 2003 after more than 29 years service.
She joined the County of Avon Superannuation Department on 25 March 1974 as a Clerical Assistant at the time of the 1974 Local
Government Reorganisation. From 1 April 1996, following the abolition of Avon, she transferred to Bath and North East Somerset Council
when the new Unitary Authority assumed responsibility for the administration of the Avon Pension Fund.
Madeline has efficiently undertaken all aspects of Local Government pensions administration and for many years headed a team as their
Principal Pensions Officer. During the last two years, she has shared her vast pensions knowledge in her role as Training Officer.
Madeline lives in Pill and is now looking forward to spending more time in her garden and taking her dogs for leisurely walks. She is also a
keen traveller and will now enjoy the opportunity to plan trips to exotic parts of the world.
We wish Madeline along, healthy and happy retirement.
Goodbye to one Alan and hello to another!
Alan Thornell, our Technical & Compliance Officer, officially retired at the end of April. Alan had been with the Avon Pension Fund for over 30
years and was regarded as one of the country's leading experts on LGPS Regulations - what he does not know about the Regulations is
frankly not worth knowing! We wish him well in his retirement.
This is not however the last we will be seeing of Alan as he has agreed to come back part-time for a short while to assist the new Technical
& Compliance Officer.
are very fortunate to have obtained the services of another Alan – Alan South - who was fulfilling a similar role for the Wiltshire Pension
Fund. The “new” Alan has worked in local government pensions with various local authorities across the UK, also for over 30 years. He is
a welcome addition to the Avon Pensions Team and brings to us his considerable expertise, as well as his vast pensions experience and
perhaps a new perspective on local government pensions gained outside the Avon area. So if you do need to contact us on any technical
matter you can still speak to an Alan!
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Trace an old pension scheme
Do you have an old company scheme you’d like to track down?
If you lose contact with former pension schemes, you may not receive the pension benefits to which you are entitled when you retire. This
happens to many people when they change jobs, or if former employers change names. The Pension
Tracing Service can help you find
pension schemes you have belonged to in the past.
Call the Registry on 0845 6002 537 and ask for a tracing request form. Of, you can write to:
Pension Tracing Service, The Pension Service, Whitley Road,
Newcastle upon Tyne NE98 1BA
Or go online at www.thepensionservice.gov.uk
When you fill in the form it will help if you can recall:
• The full name and address of the employer who ran the occupational pension scheme you are trying to trace. Did the employer change
names, or was it part of a larger group of companies?
• The type of pension scheme you belonged to. For example was it an occupational pension scheme, personal pension scheme or a ‘group
personal pension scheme’ (GPP)?
• The dates you belonged to the scheme
Clinics 2003
Following their success and popularity in 2001 and 2002, 2003 sees the continuation of Avon Pension Fund clinics. Contact your employer to
find out if one is being held for you and your colleagues.
Please remember that it is not essential to attend one of the clinics to obtain the information you need; you are able to contact the Fund at
any time. Our address, telephone number, email and website address are on the front page of this newsletter. Provided we are given
sufficient notice, personal visits to the offices in Keynsham can be arranged.
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Did you know?
The current membership of Avon Pension Fund is over 63,000 This is an increase of 3.3% from last year. This comprises 35,659 active
members, 16,094 pensioner members and 11,398 preserved (deferred) members.
63 employers currently make contributions and nearly £63 million of pensions were paid in the year 2002/2003 (a further £11.3 million is also
paid to retired teachers and firefighters)
Pensions are paid to retired members all over the globe – from Antigua to United States
The value of the Fund is a massive £1.2 billion
(All figures as at 31 March 2003)
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What’s happening in the Investments Team?
Because the Fund’s investments are externally managed, it is not necessary for the Fund to have a large in-house investments team. Until
recently the work involved in appointing, overseeing and monitoring the investment managers, reporting to Pensions Committee and
undertaking a range of ancillary activities had been the responsibility of just two staff. External consultants had been appointed to assist as
necessary.
However, during the past year it has become increasingly apparent that there was a need to supplement existing resources. This followed
the increase in the number of investment managers from four to five in March 2002, the introduction of additional responsibilities as a result
of the Myners Report and an acknowledgement by the Pensions Committee that development work was required in a number of key areas. A
new post of Assistant Investments Officer was therefore created.
The new team of three now consists of Tony Worth (Investments Officer), Liz Feinstein (Assistant Investments Officer) and Julie Martin
(Investments and Custody Relationship Officer). Liz joined the team in May, having moved from London where she had been working as an
investment manager. Julie Martin is also a new recruit, having been appointed to her post in April after working elsewhere in Bath & North
East Somerset Council.
While all three members of staff will be available to take members’ queries, any requests for investment information should be addressed in
the first instance to Tony Worth (Tel. 01225-395281)
Pensions For Councillors
As from 1 May 2003, the Local Government Pension Scheme has been amended to allow Councillors to elect to join the Local Government
Pension Scheme providing their Council has agreed that they can.
Contributions will be paid on the basic allowance and/or the special responsibility allowance depending on the decision of their Council.
Information on the benefits that are applicable to Councillors can be found in a leaflet that is available from the following Councils:
• Bath & North East Somerset Council
• Bristol City Council
• North Somerset Council
• South Gloucestershire Council
The information can also be found on the Avon Pension Fund web site here.
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If the pdf version takes too long to download, the text version
contains identical information.