Human Resources New Look Local Government Pension Scheme 2008 An overview of the changes.
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Transcript of Human Resources New Look Local Government Pension Scheme 2008 An overview of the changes.
![Page 1: Human Resources New Look Local Government Pension Scheme 2008 An overview of the changes.](https://reader035.fdocuments.us/reader035/viewer/2022081907/5515eb3f550346cf6f8b5152/html5/thumbnails/1.jpg)
Human Resources
‘New Look’ Local Government Pension Scheme 2008
An overview of the changes
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Directorate of Human Resources
What are the key features of the new scheme?
• Retirement age
• Transitional regulations
• How benefits are calculated
• The % that employees pay
• Additional contributions to boost your pension
• Pensions for co-habiting partners
• Flexible retirement arrangements
• Ill-health retirement provisions
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Directorate of Human Resources
Retirement age
• Normal pension age is 65
• Pension paid after 65 will be enhanced
• Pension must be paid by age 75
• ‘85 year rule’ still applies for those who will be 60 by 31st March
2016
• Pension is payable from 60 but will be actuarially reduced
• Pension may be payable from age 55 (by 2010 for current
members) with employer permission but will be reduced
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Directorate of Human Resources
Transitional regulations
• For members before 2008, two pension calculations carried out
• The same final salary figure is used for both calculations
• Best of:
• Final 365 days’ salary
• Either of the 2 years before that
• Best average of 3 consecutive years in last 10 years of
service
• Service up to 31st March 2008 calculated under old scheme
• Service from 1st April 2008 calculated under new scheme
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Directorate of Human Resources
How benefits are calculated
• Pension based on 1/60th of final salary for every year of
service
• No automatic lump sum
• Up to 25% of pension pot can be converted to tax free
lump sum
• Every £1 of pension converted results in £12 of lump sum
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Directorate of Human Resources
For example …• Individual retires at 65 with 10 years of membership up to March 2008
and 10 years from April 2008 and final salary of £20,000
• Pension from old scheme:
• Annual pension – £20,000 x 10/80 = £2,500
• Lump sum - £2,500 x 3 = £7,500
• Pension from new scheme:
• Annual pension - £20,000 x 10/60 = £3,333
• No automatic lump sum
• Maximum lump sum = 25% of pension pot
Pension pot = approximately 20 x annual pension
I.e. (£2,500 + £3,333) x 20 = £116,660
• 25% = £29,165 maximum total lump sum (including £7,500 from old scheme)
• Remaining total annual pension - £4,028
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Directorate of Human Resources
Employee contribution rates
• The % that is deducted from pay each month will depend on salary
• Part-time staff pay contributions on the full-time equivalent salary• Semester-time only staff rate based on full-time equivalent for the number of
weeks that they work• Manual staff who were paying 5% will be phased into line with other rates
Band Pay Rate
1 Up to £12,000 5.5%
2 £12,001 to £14,000 5.8%
3 £14,001 to £18,000 5.9%
4 £18,001 to £30,000 6.5%
5 £30,001 to £40,000 6.8%
6 £40,001 to £75,000 7.2%
7 Above £75,000 7.5%
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Directorate of Human Resources
Additional contributions to boost your pension
• The provision to buy additional years has been removed
• Existing contracts will be honoured
• Replaced with a provision to buy additional pension
• Purchased via additional monthly contribution
• Increases the annual pension after retirement by minimum of
£250 and maximum of £5,000 per year
• The facility to pay AVCs (Additional Voluntary Contributions) is
retained
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Directorate of Human Resources
Pensions for co-habiting partners
• Receive the same long-term pension as a spouse or civil partner in the
event of the member’s death
• Must be living together as man and wife or civil partners
• Must be free to marry or form a civil partnership
• Must not be living with a third party as man and wife or civil
partners!
• Must be financially interdependent or nominee is dependent on
scheme member
• These conditions must have been satisfied for 2 years
• Must make a nomination
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Directorate of Human Resources
Flexible retirement
• The existing flexible retirement provision has been extended
• Scheme members who are 50 or over (55 by 2010) can apply to reduce
either hours or grade and take some or all of their pension benefits
• Pension benefits will be reduced unless the 85 year rule is fulfilled
• Previously scheme members have had to take all of their benefits, now
they will have the option to take only part
• Needs employer permission
• That will depend on operational needs and cost
• You will need to reduce your hours by at least 20% of your normal
working hours
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Directorate of Human Resources
Ill-health retirement
• Current ill-health retirement scheme is being extended
• Those who are permanently unable to work due to ill-health will still be
entitled to immediate, unreduced benefits
• Pension will be enhanced so it is based on the total service that would
have been accrued to age 65
• Those who are permanently unable to work in current role but may be
able to do some work, but not within a reasonable period will also be
entitled to immediate, unreduced benefits
• Pension will be enhanced by 25% of the total prospective service to
age 65
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Directorate of Human Resources
Other changes
• Death in service grant – 3 times annual salary
• Death grant after retirement:
• Pension will be guaranteed for 10 years
• A partner’s pension of 1/160th for each year of service will
also be payable
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Directorate of Human Resources
Further information
• See our web pages:
http://www.brookes.ac.uk/services/hr/reward/pensions/index.html
• Contact your link Human Resources team or Laura Naunko, HR Adviser
• E-mail [email protected]
• See the scheme website www.lgps.org.uk