What benefits will I get?
How your pension is calculated depends on when you joined the scheme - before April 2014 the scheme was a final salary scheme, after this date the LGPS changed to a Career Average Re-valued Earnings (CARE) scheme.
If you were a member of the scheme before April 2008 then your benefits are calculated as:
1/80 x service x pay
Example - If pay was £20,000 and you had been in the scheme for 10 years before April 2008 then your pension would be
1/80 x 10 x £20,000 = £2,500 a year
You will also be entitled to an automatic cash lump sum of calculated as
3/80 x service x pay
Using the figures in the above example the cash would be calculated as 3/80 x 10 x 20,000 = £7,500.
If you were a member of the scheme between April 2008 and April 2014 then your benefits are calculated as:
1/60 x service x pay
Example - If pay was £20,000 and you had been in the scheme for 6 years then your pension would be
1/60 x 6 x £20,000 = £2,000 a year
There is no automatic entitlement to a lump sum for service in the scheme after April 2008 you can however exchange part of your annual pension for a one-off tax free cash sum. You can take up to 25% of the capital value of your pension benefits as a lump sum. For every £1 of pension that you give up you will receive £12 lump sum.
For periods of membership before April 2014 the definitions of service and pay are:
The length of time that you have been in the scheme up to 31st March 2008. Periods of part-time service are pro rata'd, for example if the full time hours for your job were 37 and you worked 18.5 hours a week you are working for 50% of the year so will build up 6 months service towards your pension.
Normally, calculated on the years pay you receive before leaving (if you are part time your final pay is increased to what you would have received had you been full time i.e. your Full Time Equivalent).
Or, if your pay was higher in one of the two previous years then this can be used instead of your last year.
Or, if your pay is reduced or increases to your pay are restricted in your last 10 years of continuous employment you could have the option of having your benefits based on the average of any 3 consecutive years pay received in the last 13 years (ending on 31st March) provided you opt to do so no later than one month before leaving.
If you were a member of the scheme after April 2014 then your pension is calculated as:
Each year that you are in the scheme you build up pension at a rate of 1/49th (in the Main section of the scheme) of your pensionable pay, the amount that you build up each year is added to your pension account and inflation is added to make sure that your pension keeps up with the cost of living.
If your pensionable pay is £20,000 your pension account will have £408.16 (i.e. £20,000 divided by 49) added to it. If inflation was 3% then at the end of the year the £408.16 would be increased to £420.41.
In year 2 if your pensionable pay is £20,500 your pension account will have £418.36 (i.e. £20,500 divided by 49) added to it. If inflation was 3% again then your pension account would increase to £863.93.
This can be shown as:
|Year||Pension at Start||Pensionable Salary||Accrual Rate||Amount of Pension Built up in the year||Total Pension Built Up||Revaluation||Pension At End|
You can opt to move to the 50/50 section of the scheme which allows you to pay half the contribution rate that you would do in the main section and build up half the amount of pension. If your pensionable pay is £20,000 then you will have £204.08 added to your account (i.e. £20,000 divided by 98).
If you were in the scheme before 1st April 2014 you will automatically move from the final salary scheme to the CARE scheme. When you leave the scheme your benefits built up before April 2014 will be based on your service up to 31 March 2014 but using your full time equivalent salary when you actually leave the scheme.
Please contact the Pension Fund for further information.