Local Government Pension Scheme - 2008 changes

Many of you will know about the changes to the LGPS, which come into effect on 1st April 2008

A newsletter was sent to all members, by the pension fund’s administrators, with the Annual Statement of Benefits. If, for any reason, you did not receive a copy or cannot now find it, please follow this link to see it: ESCC LGPS newsletter Oct 07.pdf

A further newsletter is also available at this link: LGPS Newsletter February 2008.

The Local Government Employers organisation has also produced a DVD giving details about the changes. This can be watched by following this link. It is strongly recommended that Mac users open the link via the Quicktime Player.

NEW! LGPS Summary Guide - April 2008.

Please note the following:

Contributions. The present rate of 6% will be replaced by a scale of contributions related to whole-time rates of pay, as follows –

Band Whole-time pay Contribution rate
1 £0-£12,000 5.5%
2 £12,001-£14,000 5.8%
3 £14,001-£18,000 5.9%
4 £18,001-£30,000 6.5%
5 £30,001-£40,000 6.8%
6 £40,001-£75,000 7.2%
7 More than £75,000 7.5%

The pay bands are to be raised annually in line with inflation. If you work part-time your contribution rate is based on your whole-time rate of pay.

If you are currently paying contributions at the rate of 5%, you will pay 5.25% in 2008/09, 5.5% in 2009/10 and 6.5% in 2010/11, although the above rates will apply if lower for year 2010/11. The 7 banded rates will apply to all members from April 2011. Further notification about the band to which individuals will be allocated to from 1st April, will be issued shortly.

Further reminder:

Improved Death Benefits. Provided you pay into the LGPS on or after 1st April 2008, there are improvements to the Schemes benefits if you die.

The death in-service tax-free lump sum, known as a death grant, increases from 2 to 3 times your annual pensionable pay. If you are part-time, the benefit is three times your actual part-time pay.

If you leave with deferred benefits and die before receiving them the death grant increases from 3 to 5 times your deferred annual pension; and for the death of a pensioner, it increases from 5 to 10 times the annual pension being paid, less the amount of pension already paid out.

Additional Benefits. The present rules that allow members to purchase up to 6 2/3 additional years of service are to be replaced by the facility to buy additional pension in units of £250 up to a maximum of £5000. If you wish to purchase added years it is therefore essential that you elect to do so by 31 March 2008. All existing elections to purchase added years will be honoured, the service counting as 'pre-2008' service in the calculation of retirement benefits.

Pensions for nominated cohabiting partners. In addition to survivor benefits for widows, widowers and civil partners the new scheme has been extended to cover nominated cohabiting partners who have been in a stable relationship for a minimum of two years. Nomination forms will be available for members to complete once the scheme is introduced.

Is there anything You need to do before the new scheme is introduced?
No, unless you are interested in purchasing additional years of membership (see Additional benefits above). All active members at 31 March 2008 will automatically be transferred to the new scheme on 1st April 2008. I would also like to remind you that this information will be of interest to all support staff, whatever your age, as there are many changes that you really do need to be aware of and understand.