After many months of planning and
consultation on the future of the LGPS, the
new scheme is finally in place and we are now
in a position to give you further information.
The reason for us being so cautious up until
now is that the rules have been open to
change right up to the last minute.
In this issue we will look at the new features and
terminology in terms of what this means for you.
We will cover Pension Accounts, flexibility on when
benefits can be taken, pensions build up, retirement
age and protection for existing members.
But before we go any further this is a brief
explanation of how we got here.
Setting the scene……
March 2011
Lord Hutton published his final report on public sector
pension provision, setting out recommendations
to Government on how to ensure public service
pensions could continue to provide valuable benefits
for its members well into the future.
July 2011
Government agreed to separate talks for the LGPS
recognising the LGPS is different to other public
sector pension schemes.
It’s finally arrived the
long awaited new
LGPS 2014 is here!
December 2011
Government, Employers and Unions reached an
agreement on the way forward for LGPS reform. A
central decision was taken to ensure no contribution
rises in 2012 or 2013 for LGPS members but
instead make changes to the Scheme a year earlier
than other public sector pension schemes.
May 2012
New LGPS proposals released.
Welcome
to the
2
NEW
August 2012
Union members say yes to new LGPS.
September 2013
The main rules of the new scheme were laid before
Parliament. Those rules covering the protections for
current members of the Scheme taking somewhat
longer to agree.
Current Position
What’s not changing?
Still awaiting transitional regulations which link the
current scheme to the new scheme!!
• The LGPS will remain a guaranteed scheme
where the benefits are still defined … i.e. you get a
proportion of your pay each year.
As people are living longer, and so receiving their
pensions for longer, the cost of providing pensions
has risen. As a result the Scheme has been updated
to reflect the needs of a modern workforce and to
ensure it remains affordable whilst still providing an
excellent level of pension benefits.
• You will still get valuable life cover, with a lump sum
of 3 years pay if you die in service as well as cover
for your family with pensions for dependants if you
die.
• Ill-health cover for you, payable at any age, should
you be unable to work due to ill-health (if you meet
the requirements of the pension scheme. For
example a registered medical practitioner will have
to certify that a member is permanently incapable
of performing efficiently the duties of their job. They
then have to determine the likelihood of a member
being able to work again before Normal Pension
Age).
The principles which the Scheme has been
designed around were that pensions would
be worked out on a career average basis from
April 2014 and that there should be no increase
in the cost of the Scheme to the majority of its
membership.
Now let’s start with dispelling
the myths…….
• You continue to receive tax relief on contributions
to the LGPS.
• The new scheme will cost more!
• You can still give up some of your pension to get
a tax free cash lump sum when you draw your
benefits.
• The pension you get will be less!
• You will have to work longer to get your
pension!
• Flexible retirement from age 55 onwards with
your employers permission (the requirements for
flexible retirement is that members would either
have to reduce their working hours or grade of
job, then with their employers consent and in
line with their policy elect to receive pension
benefits).
Almost every week there seems to be a story about
pensions in the paper or on TV. Given all the doom
and gloom that you hear about pensions it’s easy
to see why many people are concerned about what
they are going to have to live on when they retire.
You might think that because the LGPS is changing
it must mean “I’m going to be worse off”. It would
appear there are many myths circulating at present
with members thinking that it’s going to cost more in
the new scheme for less pension and that you will
have to work longer before you can choose to draw
your pension. In this newsletter we’re going to look
at the details of the new scheme, dispel the myths
and get to grips with the facts about the changes
from April 2014 and the protections you have.
Not everything is changing!
With all the talk of changes you’d be forgiven for
thinking everything is going to be different from 1st
April 2014 but this is not the case. Many benefits
of the Scheme remain the same and in addition
there are a number of protections in place if you are
already paying into the Scheme before April 2014.
• Members who leave on the grounds of
redundancy or interests of efficiency and
are aged 55 or above will receive benefits
immediately and without reduction for early
retirement.
• Your employer will continue to contribute to the
Scheme. On average they contribute twice as
much as you do to ensure you get an excellent
pension when you retire.
Still an excellent
scheme!
So What’s New?
Local Government Pension Scheme
2014
3