Existing Members as at 31 March 2014 Active members as at 31 March - - PowerPoint PPT Presentation

• Active members as at 31 March 2014, will have transferred automatically

to the New Scheme on 1 April 2014.

• Benefits built up until 31 March 2014 will be protected under the current

regulations and will continue to be linked to your Final Salary upon their retirement.

Existing Members as at 31 March 2014

• Additional protection has been awarded

if (as at 31 March 2012) you were within 10 years of their Normal Pension Age as at 1 April 2012 i.e. over age 55 as at 1 April 2012.

• A ‘Contribution Banding Arrangement’ will still exist.
• Under the 2008 scheme, contribution rates were based on your

annual full time equivalent pay, even if part time.

• From 1 April 2014, your rate is to be calculated in accordance with

your annual ‘actual pensionable pay’.

• ‘Non-contractual overtime’ will become pensionable from

1 April 2014.

How much will I pay?

Contribution Banding Arrangement

Band Actual Pensionable Pay Gross Rate (%)

1 Up to £13,500 5.50 2 £13,501 to £21,000 5.80 3 £21,001 to £34,000 6.50 4 £34,001 to £43,000 6.80 5 £43,001 to £60,000 8.50 6 £60,001 to £85,000 9.90 7 £85,001 to £100,000 10.50 8 £100,001 to £150,000 11.40 9 £150,001 or more 12.50

When can I retire?

• You will be able to retire at anytime from age 55 to 75.
• Employer Consent NO longer needed to draw benefits between age

55 and 60.

• Your Normal Pension Age (NPA) will be linked to your ‘current’ State

Pension Age (SPA), which will sit between age 65 and 68!!

• Any future change in SPA, will mean a change to your NPA!
• You can calculate your State Pension Age online:
• https://www.gov.uk/calculate-state-pension

How will my benefits be calculated?

• NO LONGER a ‘final salary’ scheme from 1 April 2014. The new Scheme will
• perate on a ‘Career Average Re-valued Earnings’ (CARE) basis.
• Benefits will be calculated with reference to ‘actual pensionable pay’

(from 1 April to 31 March) and will build up at a ‘1/49th’ accrual rate.

• You will have a ‘pension pot’ for each of your employments, which will

be credited annually with the amount of pension built up for that year (from 1 April to 31 March).

• Your pot will then accumulate and will be re-valued annually in line with the

Consumer Price Index (CPI).

Membership... up to 31 March 2008

Annual Pension (80th)

+

Automatic Lump Sum FS

(3/80th)

’97 Scheme

Total Benefits

Annual Pension Automatic Lump Sum

Commutation

Option

£1 pension = £12 tax free cash (subject to HMRC limit)

Membership... 1 April 2008 to 31 March 2014

Annual Pension ONLY

(60th)

FS ’08 Scheme

CARE

From...

1 April 2014

Annual Pension ONLY

(49th)

’14 Scheme

Calculating your ‘CARE’ Benefits

Y1 Y2 Y3 Y4 Y5

• Assess ‘actual pensionable pay’ from 1 April to 31 March.
• Actual Pensionable Pay ÷ 49 = ...
• Pension deposited to ‘pension pot’.
• Pension pot to be re-valued

annually by CPI.

Calculating your ‘Pre / Post 2014’ Benefits

Example

Sian joined the LGPS on 1 April 1998 and has decided to retire on 31 March 2019 i.e. her Normal Pension Age. She has always been full time with her employer.

STEP 1 - Calculating the ‘CARE’ element Y1

2014 / 2015 1/49 x £29,000 = £591.84 £591.84 + CPI

Y2

2015 / 2016 1/49 x £29,290 = £597.76 £1,189.60 + CPI

Y3

2016 / 2017 1/49 x £29,582 = £603.71 £1,793.31 + CPI

Y4

2017 / 2018 1/49 x £29,877 = £609.73 £2,403.04 + CPI

Y5

2018 / 2019 1/49 x £30,175 = £615.82 £3,018.86 + CPI

Total value of ‘CARE Pension Pot’

£3,018.86

Membership from 1 April 1998 to 31 March 2008: 10 years Membership from 1 April 2008 to 31 March 2014: 6 years Final pay as at 31 March 2019:

£ 30,175 (10 ÷ 80 x £30,175 = £3,772

Automatic Lump Sum:

+ 6 ÷ 60 x £30,175 = £3,017)

= £ 6,789

STEP 2 - Calculating the ‘Final Salary’ element

CARE pension pot:

Annual Pension:

£ 3,018.86

Final Salary element:

Annual Pension: £ 6,789.00 Automatic Lump Sum: £ 11,316.00

Total Value of Annual Pension: £ 9,807.86 Automatic Lump Sum: £ 11,316.00

STEP 3 - Total value of Pension Benefits

Remaining Annual Pension: (£9,807.86 - £2,896.59) £ 6,911.27

Annual Pension: £ 9,807.86 Automatic Lump Sum: £ 11,316.00

Amount of Annual Pension to be given up: £ 2,896.59 Maximum Tax Free Lump Sum: (12 x £2,896.59 + £11,316) £ 46,075.08

STEP 4 - Commutation Option

Will my benefits be reduced?

• Benefits payable before ‘Normal Pension Age’ (NPA) will continue to

be actuarially reduced to take account of early payment, although certain ‘85 year rule’ protections will continue.

• Exclusions to the rule... benefits payable on the grounds of ill health,

redundancy or efficiency.

• Benefits paid later than your NPA will continue to be actuarially

increased to take account of late payment.

Years Early Pension (M) Pension (F) Auto Lump Sum (B)

1 6% 5% 3% 2 11% 11% 6% 3 16% 15% 8% 4 20% 20% 11% 5 25% 24% 14% 6 29% 27% 16% 7 32% 31% 19% 8 36% 34% 21% 9 39% 37% 23% 10 42% 40% 26%

Reduction Factors

Additional Voluntary Contributions (AVC)

Limit on Contributions Tax Free Cash Option upon Retirement Arrangement set up on

• r before 31 March 2014

50% of pensionable pay Up to 100% of AVC Fund

(Subject to HMRC limits)

Arrangement set up on

• r after 1 April 2014

Up to 100% of pensionable pay Limited to Max. 25% of AVC Fund

• Replaces the Additional Regular Contributions (ARC) option.
• ALL existing ‘Added Years’ / ARC contracts will be honoured.
• In-house option to purchase an additional pension amount (maximum amount

that can be purchased is £6,500).

• The cost of the ‘contract’ is calculated by the Fund, which can then be paid

monthly via the payroll or as a ‘one off lump sum’.

• Contributions must NOT exceed 100% of monthly pensionable pay. Members

gain tax relief on the additional contributions made.

• Application subject to medical examination (as paid by the member).

Additional Pension Contributions (APC)

What if I leave the Scheme?

• You are still able to ‘opt out’ of the Scheme at any time.
• You MUST obtain the ‘Opting Out Form’ from the Dyfed Pension

Fund and return directly to your employer.

• Qualification period has increased from 3 months to 2 years.
• If decide to opt out or leave the Scheme with under 2 years

membership, you will have the option to claim a refund, defer your benefits or transfer to another pension arrangement.

Can I pay less into the Scheme?

• Members will have the option to pay 50% of normal contribution,

to receive 50% of benefits during that period (per employment) under the new ‘50 / 50 option’.

• For example... instead of paying 6.50% a member can elect to pay

3.25% but benefits will then be calculated at a 1/98th for that period.

• However, FULL ‘ill health / death cover’ will be retained during the

50/50 period.

• You will need to complete an Election Form (available from your

Employer), which will then need to be returned to your Employer.

What are the other changes?

• Ill health Retirement
• Same 3 tier arrangement will apply.
• Payable from any age, if you have 2 years membership.
• Retirement on the grounds of Redundancy / Efficiency
• Immediate payment of unreduced pension benefits.
• Payable from age 55, if you have 2 years membership.
• Flexible Retirement
• With Employer consent... reduction in working hours or grade.
• Payable from age 55, if you have 2 years membership.

What happens if I die?

• Added Life Assurance
• Active - 3 x ‘assumed pensionable pay’ (inc. non-contractual overtime)
• Deferred - 5 x annual pension
• Pensioner - 10 x annual pension (less any already paid)
• Survivor’s Pension
• Will continue to be calculated at a rate of 1/160th.
• Automatically payable to a Spouse & registered Civil Partner.
• Now automatically payable to a Co-habiting Partner.
• Pensions still payable to any ‘eligible children’.

Have you registered to MPO?

• Interactive web portal providing you with 24 / 7 access to

your pension details via the Fund website:

www.dyfedpensionfund.org.uk

• You will be able to:
• update your contact details
• update your death grant expression of wish
• perform benefit calculations
• view your annual benefit statement
• view important Scheme information

Thank you for listening

Mathew James

 MaJames@carmarthenshire.gov.uk

 (01267) 224 043

 www.dyfedpensionfund.org.uk

Any questions?

These slides explain the changes to the Local Government Pension Scheme (LGPS) from April 2014, as well as the protections in place for members of the scheme who have built up benefits in the scheme before 1 April 2014. It reflects known changes at the time of publication in April 2014. The information contained in these slides has been prepared by the Dyfed Pension Fund in accordance with the Local Government Pension Scheme Regulations

• 2013. They are based on our and our current understanding and should NOT be

treated as a complete and authoritative statement of the law. You may wish to take your own legal advice on the interpretation of any particular piece of legislation. NO responsibility whatsoever will be assumed by the Dyfed Pension Fund for any direct or consequential loss, financial or otherwise, damage

• r inconvenience, or any other obligation or liability incurred by any member

relying on the information found within these slides.

Disclaimer