Scheme overview

The Local Government Pension Scheme (LGPS) is one of the UK’s largest public sector pension schemes. It is open to most employees in local government and some other organisations.

The government has introduced new laws designed to help people save for their retirement.  It requires all employers to enrol their workers into a workplace pension scheme if they are not already in one.  This is known as automatic enrolment.

Your employer may have to enrol you in the LGPS under automatic enrolment rules, but if you want to opt out after you start work you can complete an LGPS opt out form available from our website and return it to your payroll department which is responsible for opting you out of the scheme.

• It is a statutory scheme with benefits set out in law so it is very secure.
  
• Its regulations are issued by the Department for Communities and Local Government (DCLG).
  
• The LGPS is contracted-out of the State Second Pension (S2P) so contributors pay reduced National Insurance Contributions. Members are entitled to basic state pension, but are not contributing to S2P.
  
• The benefits you build up in the LGPS are guaranteed and don’t depend on the investment performance of the scheme.

    

Scheme benefits

• A choice of tax free lump sum when you retire -  subject to maximums
  
• An annual pension based on your service and final pay
  
• The ability to increase your pension by paying extra contributions
  
• Voluntary retirement from age 60
  
• Retirement from age 55 with your employer’s consent
  
• An ill health pension from any age
  
• A death in service lump sum of three times your final pay
  
• A widow’s, widower’s, civil partner’s or nominated co-habiting partner's pension
  
• Children’s pensions

 

Calculating my pension

As the scheme regulations changed on the 1 April 2008, the way your pension is calculated will be different for any membership prior to this date.

For service after 1 April 2008

Your pension is calculated by using a simple calculation:

Annual pension

Your final pay ÷ 60 x the number of years you have been in the scheme.

Lump sum

There is no longer an automatic lump sum. Instead you can exchange £1 of annual pension for £12 of lump sum.

You will receive an annual benefit statement each year giving you a summary of your benefits to date.

Producing a summary of your benefits involves a lot of work as we have to get accurate information from your employer. If you need a statement of your benefits and think your annual benefit statement is not suitable then please let us know

Who can join? The Local Government Pension Scheme (LGPS) is open to all employees in local government and other organisations who have chosen to participate. You can join at any age up to two days before your 75th birthday. You can carry on contributing towards a personal pension plan or stakeholder pension scheme.

How to join? For most local government employees, membership of the LGPS is automatic if you have a contract of three months or more. You should complete a Starter information and membership option form which is also available from your employer. This should be sent to your payroll team (except for Hampshire County Council (HCC) employees, who should send this to the HCC Employer team at Pensions Service Section) If you are a casual employee, you may now be eligible to join the LGPS, you will need to contact your payroll who will tell you how to opt in.

Re-joining in current employment If you have previously opted out of the pension scheme and wish to start paying contributions again in the same employment you should complete the Application to re-join the LGPS in a current employment form. This should be sent to your payroll team (except for Hampshire County Council employees, who should send it to the HCC employer team If you prefer, you can write to your employer instead. Your employer may allow you to email them - if so, please include a statement to say that you have personally submitted your notice to join the LGPS. This should be sent to your payroll team (except for Hampshire County Council employees, who should send it to the HCC Employer team).

How much do I have to pay?

Your contribution rate will be assessed on the whole time equivalent pay for your job, unless you are a term time worker*. Your employer will inform you what contribution rate band you are in.

2013 / 2014 contribution rates

Band	Whole - time equivalent pay band (2013/14)	Contribution rate
1	Up to £13,700	5.5%
2	£13,701 to £16,100	5.8%
3	£16,101 to £20,800	5.9%
4	£20,801 to £34,700	6.5%
5	£34,701 to £46,500	6.8%
6	£46,501 to £87,100	7.2%
7	More than £87,100	7.5%

*Term time workers for this purpose:

• Must work for an educational establishment and
• Term time working must be the employer's requirement i.e. the workplace shuts over the school holiday. If you choose to work term time hours but your employer would let you work during school holidays, then you will be classed as a part time worker for the purpose of assigning your contribution rate band.

Transferring benefits into the Hampshire Pension Fund

If you have previous pension benefits, you may wish to transfer them into the Hampshire Pension Fund. Transfers must usually be made within the first 12 months of your Local Government Pension Scheme (LGPS) membership in your current employment.

 

Transfer of previous LGPS Benefits

Unless you elect to combine the benefits you built up in your previous membership(s) with those from your new membership, your earlier deferred benefits will remain separate.

Separate benefits

Benefits for your old LGPS membership are based on your final pay at the time it ceased, and benefits for current membership are based on final pay in your current employment

Combined benefits

Benefits are based on combined LGPS membership from both your old and current job and using the final pay from your current employment.

Before deciding whether to combine your previous LGPS pension benefits you should read the notes available on our Starter information and membership option form. To elect to do this you will need to complete this form and return to us at Pension Services.

 

Transfer of external pension benefits

You may be able to transfer pension rights into the Local Government Pension Scheme (LGPS) from:

• A previous LGPS fund
• A previous employer's pension scheme (including an overseas occupational pension scheme)
• A self-employed pension plan
• A 'buy-out' policy
• A personal pension plan
• A stakeholder pension scheme

You may not transfer benefits into the LGPS which are derived from a pension credit or from previous membership in the LGPS as a Councillor or Mayor. Pension credit refers to benefits granted to a spouse by a court under a Pension Sharing Order or by a qualifying agreement in Scotland following a divorce or annulment of marriage.

 

Arranging a transfer

The transfer of your benefits needs to be completed within 12 months of you joining the Hampshire Pension Fund.

The transfer process is described in detail in the Pension transfer booklet. Alternatively your employer can provide you with a copy when you join the LGPS.

When can I retire?

The normal retirement age for all members of the Local Government Pension Scheme (LGPS) is 65.

However:

• If you have at least three months' membership or have transferred pension rights into the LGPS, you can take early retirement from age 60, but your benefits may be reduced.
  
• If you are made redundant and are over the age of 55, you will be entitled to immediate payment of benefits
  
• If you are retired on the grounds of Ill-health you could receive immediate ill-health pension benefits at any age.

What if I do not want to join?

• Your employer may have to enrol you in the Local Government Pension Scheme (LGPS), but if you want to opt out after you start work you can complete an LGPS opt out form and return it to your payroll department which is responsible for opting you out of the scheme.
  
• If you have been a member of the Hampshire Pension Fund for less than three months, and have not transferred in other pension benefits, then you may receive a refund of your contributions through your payroll.
  
• If you were a member of the Hampshire Pension Fund for three months or more, or you have transferred in other pension benefits, then your LGPS benefits will be deferred until you either re-join under the same employment, combine to a new membership, transfer them to another pension provider or retire.

  

Why have I been automatically opted into the pension scheme?

• The government has introduced new laws designed to help people save for their retirement. It requires all employers to enrol their workers into a workplace pension scheme if they are not already in one. This is known as automatic enrolment.
  
• Although you can opt out of the Local Government Pension Scheme (LGPS) at any point after you start work, under automatic enrolment your employer may have to put you back into the pension scheme and start deducting contributions again.
  
• Your employer must tell you if they enrol you into the LGPS. If you become a member but you do not want to be, you will need to opt out by completing another opt out form, even if you have only recently done so.
  
• Usually your employer would put you back into the LGPS in about 3 years time, but because of the way the new laws work, it could be much sooner so it is important to read, and act on if necessary, any information that your employer gives you.

 

What are the implications of opting out?

We cannot advise you whether you should remain a member of the Local Government Pension Scheme, nor can your employer force you or opt you out of your Local Government Pension. However, if you choose to opt out of the scheme:

• You will lose the right to employer pension contributions
  
• May have a lower income when you retire
  
• You will be contracted back into the state pension scheme and will have a higher rate of national insurance contributions
  
• There will be no death in service benefits payable
  

What if I change my mind later on?

If you change your mind and you now wish to start paying contributions again in the same employment, you should complete part one of Application to re-join the LGPS in a current employment form and send onto your payroll provider. For HCC employees this should be addressed to HCC Employer Team and sent to Pension Services.

Additional Contracts

Making contributions into pension saving can be a cost effective way to increase your retirement benefits as they qualify for immediate tax-relief through your employer’s PAYE system

  

There are a two ways you can increase your retirement benefits within the Local Government Pension Scheme (LGPS):

Additional Regular Contributions (ARCs)	Regular contributions to buy extra amounts of pension (in multiples of £250 per year)
Additional Voluntary Contributions (AVCs)	Pay additional contributions to buy an annuity, increase your tax-free lump sum or both

 

Paying Additional Regular Contributions (ARCs)

You can pay additional regular contributions (ARCs) to buy extra amounts of pension in multiples of £250 per year up to a maximum of £5,000 per year.

How much you pay will depend on:

• Your gender
• Your age when you start paying the additional contributions
• The amount of extra pension you wish to buy
• Whether you are buying extra pension for yourself or you also want to increase your dependant’s benefits

Use the attached calculator to calculate the cost of buying additional pension over a chosen period depending on your age at the date contributions would begin.  

You can also find more details, including costs in  the ‘Purchase of additional pension’ guidance and 'Paying additional regular contributions booklet and application form'.

ARC payments are deducted from your pay in the same way as your normal LGPS contributions.

 

Paying Additional Voluntary Contributions (AVCs)

You can pay AVCs into one of our in-house schemes by deduction from your pay, up to a maximum monthly contribution of 50% of your monthly pay. Please check first with your employer that they provide this investment opportunity.

When you retire, you can use your AVC fund to buy an annuity, increase your tax-free lump sum or both!

AVCs are managed by external providers.  The current in-house providers you can choose from are Zurich and Prudential There are a wide choice of funds in which you can invest your AVCs.

	Zurich	Prudential
Funds	Information about which Zurich funds are available to you can be found in the Zurich’s starter pack. Not all Zurich funds are available to members of the Hampshire Pension Fund, you should discuss your options directly with Zurich.	Prudential funds available Guide to funds
Charges	Please check with Zurich. We are not aware of an exit charge, but you should check. Other charges may apply	Please check with Prudential Exit charges apply for funds withdrawn within 5 years of your first contribution, if they receive this on or after 19 August 2012. Other charges may apply
How to apply	Contact Zurich and ask for a starter pack. It includes an application form for you to complete and send to your employer	Email or post application form, alternatively you can phone to apply
Contact details	Phone: 0800 015 0617	Phone: 0800 731 0433, quote AVCSF Prudential AVC Calculator

The value of your investment may go down as well as up and the fund value in the future may be less than the payments you have made.