Welcome 2014
to the new
Setting the scene……
March 2011
It’s finally
arrived....
the long
awaited
new LGPS
2014 is here!
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.
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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 that we are different to
other public sector pension schemes.
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.
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
Still awaiting transitional regulations
which link the current scheme to the
new scheme!!
Local Government
Pension Scheme
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.
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…….
• The new scheme will cost more!
• The pension you get will be less!
• You will have to work longer to get
your pension!
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
that 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.
What’s not changing?
• The LGPS will remain a guaranteed scheme where the
benefits are still defined … i.e. you get a proportion of
your pay each year.
• 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).
• You continue to receive tax relief on contributions to
the LGPS.
• You can still give up some of your pension to get a tax
free cash lump sum when you draw your benefits.
• 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).
• 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?
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