Local Government Pension Scheme (LGPS)

Transcription

1 PENSIONER FOCUS Spring 2016 Local Government Pension Scheme (LGPS) Welcome to the 2016 issue of Pensioner Focus. Unfortunately, there is no pension increase this year. Further information on this can be found on page is an important year in the LGPS world as all the Local Government Pension Scheme Funds are subject to an Actuarial Valuation. This is where the Scheme Actuary values the Pension Fund in terms of its assets and liabilities and subsequently sets an employer contribution rate that will ensure all liabilities will be met. Further information on the actuarial valuation process can be found on the Harrow pension website. We have included the usual round up of pension news, tax updates and pay dates. INSIDE THIS ISSUE: Pensions Increase Overseas pension payments 2 Keep us in the Loop 3 How data is shared 3 LGPS National Insurance Database 3 Tell us once 3 Life Certificates 4 Annual Report Income Tax Allowances 9 Re-employed Pensioners 10 Overhaul of State pensions 10 Contacting Us 10 Change of Bank Form 11 Change of Address Form 12 Pension Pay Dates Wednesday 25 May 2016 Friday 25 November 2016 Friday 24 June 2016 December not yet known Monday 25 July 2016 Wednesday 25 January 2017 Thursday 25 August 2016 Friday 24 February 2017 Friday 23 September 2016 Friday 24 March 2017 Tuesday 25 October 2016 Tuesday 25 April 2017 Changing your Address and Bank Details You must let us know if you are changing your address. Please note if we get undelivered mail sent back to us, we will assume you are no longer around and we will stop your pension. For security reasons, we cannot make any changes to address or bank details from information provided over the telephone or via . You must inform us in writing, please try to tell us at least two weeks before pay day to avoid any delays. A change of address/bank form is provided at the back of this newsletter for your convenience..

2 No Pensions Increase for 2016 Increases in your pension are tied into the consumer prices index (or CPI) which is the Government s preferred measure of inflation. It s the rate recorded each September, which then sets the rate of CPI that applies from the following April. When inflation was measured last September it was actually recorded at -0.1% - in other words there was negative inflation. The rules are quite clear on how we have to treat your LGPS pension when there is either zero inflation or negative inflation, as has happened. The rules say in this case we must leave the value of your pension unchanged. So sorry, there is no pensions increase this year. What might the future hold? We will have to wait and see how next year figures pans out. Historically, negative inflation is very rare in the UK. But it s true to say that during 2015 the UK hit a spell of either flat or falling prices, so we don t expect a dramatic turnaround in the rate of inflation any time soon. Paying Overseas Pension Payments We can now pay pensions all over the world. If you live overseas and get a pension from us, we can now pay your pension to your overseas account through Western Union. This brings several benefits: There is no charge for the transaction They use their own payments network so pensions should normally be paid around one day after the normal UK pay date (this can take longer if pay day falls over a bank holiday).. There are preferential exchange rates. Please contact the pension section for further information. Keep us in the loop Sometimes one of our pensioners dies and whoever is looking after their affairs fails to tell us, meaning we carry on paying the pension when we shouldn t. Normally this is a genuine error, and quite understandable at the time of someone s death. But do please help us avoid cases like this by discussing the issue with whoever is going to look after your affairs after your death. Please tell them that they should let us know as soon as possible when you die, and they can do this simply by phoning us on That way we can stop your pension before any wrong payments have been made, and of course put into place any new pensions which are due, such as a pension for a dependent. 2

3 How data is shared To pick up any overpayments - whether accidental or otherwise - we take part in the National Fraud Initiative, which cross checks the records from key payroll data for pension schemes like ours with the Department for Work & Pensions database. This is used for the purpose of preventing and detecting fraud, which are then investigated further. For more details, please see New LGPS National Insurance Database London Borough of Harrow participates in a new National Insurance database with other Local Government funds in England, Wales and Scotland. This has been introduced in order to comply with legal requirements contained in the LGPS regulations. Provisions contained in the LGPS Regulations 2013 mean that, if a member of the LGPS dies, it is necessary for the scheme s administrators to know if the individual also had other periods of LGPS membership elsewhere in the country so that the right death benefits can be calculated and paid to the deceased member s dependants. As the LGPS is locally administered, each pension fund has its own membership records and it can be difficult to tell if an individual has other LGPS records and where these are held. To comply with the requirements set out above, a national Database has been developed that will enable funds to check if their members have LGPS pensions records in other pension funds. Tell us Once London Borough of Harrow along with other LGPS funds also participates in the Department for Work and Pensions (DWP) Tell us Once service. An extract of the membership information contained in the NI Database will periodically be shared with the Department for Work and Pensions (DWP) in order for us to participate in the service. Tell Us Once is a service offered in most parts of the country when an individual registers a death. When the death of an LGPS member is registered, the DWP systems will ensure that the LGPS pension fund is informed of the death, meaning that the member s records can be processed more quickly and simply than would otherwise be the case. 3

4 Life Certificates Every year, in line with Audit requirements, we issue a Life Certificate to a sample of Harrow Pension Fund pensioners. This year the sample will be made up of pensioners:- a) 10% sample b) Paid by cheque c) Living outside the UK If you fall into one of the above categories you will find a Life Certificate enclosed with this Newsletter. The Certificate needs to be witnessed by one of the following:- 1) Any individual named on the London Borough of Harrow electoral roll or 2) A Justice of the Peace, Solicitor, Fireman/Woman, Doctor Pharmacist/Dentist, State Registered or State Enrolled Nurse, Magistrate, a Minister of Religion, Teacher, School Governor, Bank/Building Society Official, Fully Qualified Accountant, Police Officer, Post Office Official, Housing/Residential Warden, MP, Civil Servant or Officer of a Local Council. If signed by an individual whose profession or position of responsibility is included in status 2 above, the form must also carry an official stamp, business card or other form of proof of title. Unfortunately, each year a number of certificates are returned to pensioners as they are incomplete on receipt in this office. In order to minimise the need for further action I have detailed below the main areas of concern, which you can use as a double-check before submitting: the certificate has not been signed by the pensioner or the witness the witness was not named on the London Borough of Harrow electoral roll or in the profession or position listed in status 2 above If signed by an individual whose profession or position of responsibility is included in 2 above, the form did not carry an official stamp, business card or other form of proof of title IMPORTANT The Life Certificate must be returned, duly signed and certified, in the envelope provided, by no later than 31 st May Failure to return a validated certificate may lead to your pension being suspended. 4

5 Summary of the Annual Report This report gives a summary of the London Borough of Harrow Pension Fund s activities during the financial year The Harrow Pension Fund is administered in accordance with the Local Government Pension Scheme Regulations. The London Borough of Harrow is the administering employer. There are a further 28 admitted and scheduled employers who participate in the Fund. Both staff and the Council contribute to the Fund, from which pensions and other benefits are paid. Staff contributions and the level of pension entitlements are set out in Government regulations. The scheme is a defined benefits scheme where, no matter what happens to the economy and financial markets, your pension benefits are protected and do not depend on the performance of the Fund s investments. Membership of the Fund Members March 2015 March 2014 Employees 5,526 5,582 Pensioners 5,294 5,087 Deferred Pensioners 6,323 6,023 Total membership increased to 17,143 (2014: 16,692) A deferred pensioner is an ex-employee who has chosen to preserve his/her entitlements until he/she reaches pensionable age Statement of Investment Principles Pension Funds are required by the Local Government Pension Scheme Regulations to prepare a Statement of Investment Principles ( SIP ) that outlines the principles and policies followed in the management of the Fund s assets. The Council, as administering authority, decides on the investment policies most suitable to meet the liabilities of the Pension Fund and has ultimate responsibility for the investment strategy. During , these powers were exercised on its behalf by the Pension Fund Committee. Part of the SIP covers social, environmental and ethical issues. The Council expects that when exercising their delegated duties the fund managers (see below) will take into account any financial impact on the portfolio these issues may have. The fund managers are asked positively to engage and seek to influence companies in which the Fund invests to take account of key social, environmental and ethical considerations. Details on how to access copies of the SIP are given below. 5

6 Funding Strategy Statement The Funding Strategy Statement (FSS) is a summary of the Fund s approach to meeting the pension liabilities. It is not an exhaustive statement of policy on all issues. The Department for Communities and Local Government has stated that the purpose of the FSS is: to establish a clear and transparent fund-specific strategy which will identify how employers pension liabilities are best met going forward; to support the regulatory framework to maintain as nearly constant employer contribution rates as possible; and to take a prudent longer-term view of funding those liabilities. The FSS is updated at least every three years in conjunction with the triennial valuations and copies of the Statement updated in March 2014 are available (see below). Investment Management The day-to-day management of the Fund s investments as at 31 March 2015 was carried out by the following 10 external managers: Manager Aviva Investors Global Services BlackRock Investment Management(UK) GMO LLC Insight Investment Longview Partners Investments Oldfield Partners Pantheon Ventures Record Currency Management State Street Global Advisors Standard Life Investments Mandate UK Property Corporate and Index-linked Bonds Emerging Markets Equities Alternatives Global Equities Developed World Equities Private Equity Passive Currency Hedge Alternatives Global Equities Passive GMO. Insight and Oldfields were appointed during the year and contracts with Barings, Fidelity and Wellington terminated. All the managers have full discretion in making investment decisions whilst working within Council guidelines. The relative performance of the managers is closely monitored by Council officers and is also subject to review by Councillors at the Pension Fund Committee. Performance At the end of March 2015 the value of the Pension Fund totalled 674.8m, 84.0m more than the value at the end of March Increases in the market value of investments of 79.3m accounted for most of the change reflecting a good year for the Fund in which all the main assets provided positive returns. The remainder of the Fund value increase is due to an excess of income over expenditure of 4.7m. 6

7 The Council uses the investment performance services of The WM Company. Their report for the year ending 31 March 2015 showed that the Fund achieved an overall return of 15.2% from its investments, which was 1.8% above the benchmark. For comparison purposes WM have estimated that the average return achieved among other local authority pension fund portfolios in was 13.2%. Harrow s asset allocation led to an under-performance of 0.2% whilst the successful stock selection by most of the managers realised a relative outperformance of 2.0%. Long term performance is more important than single years and over the five years to March 2015, the Fund earned an average of 9.5% p.a., 0.2% above the benchmark. Pension Fund Accounts The audit of the accounts has been completed and the external auditor has confirmed that the accounts as presented in the Statement of Accounts give a true and fair view of the financial position of the Pension Fund at 31 March 2015, along with the income and expenditure for that year. Investment Distribution The Fund is invested in a range of investment classes and individual securities, which reflects a policy of diversification aimed at reducing risks. The following table shows how the Fund was invested at 31 March The total value of the investments was 673.7m. 7

8 Income and Expenditure Income m Expenditure m Employees contributions 6.56 Pensions paid Employers contributions Retirement Grants 6.07 Transfers from other Schemes 1.27 Death Benefits 0.75 Investment income Transfers to other Schemes 2.27 Administration & Fund Management expenses 1.17 Total Total The value of pensions in payment continues to grow with the increase in the number of pensioners. Most of the investments are now held within pooled funds in which income and expenses are reflected in the change in market value of the Fund and in which the Harrow Pension Fund owns a share of the fund rather than a direct holding in individual equities, bonds and properties. Actuarial Review The Council s actuary, Hymans Robertson, undertakes an independent valuation of the Pension Fund every 3 years to determine the funding level and the future rate of employers contributions. The last valuation was undertaken as at 31 March 2013 at which point the Actuary determined that the level of assets represented 70.3% of the liabilities. The Actuary also determined that to meet the funding shortfall the level of Council contributions would be the equivalent of 19.9% from 1 April The levels of contributions for other employers are determined separately and vary considerably from that of the Council. The next valuation is due as at 31 March 2016 and will be implemented from 1 April Further Information The Funding Strategy Statement, the Statement of Investment Principles and the full Statement of Accounts are available on request, or can be viewed on the Council s web site, Should you have any queries relating to the Pension Fund s investments please contact Ian Talbot on or ian.talbot@harrow.gov.uk 8

9 INCOME TAX ALLOWANCE/RATES 2016/2017 Tax Allowance up to 11,000 for the new tax year Most people are allowed to receive a certain amount of income in a tax year before they pay tax, and this is called personal allowance. For the new tax year, the ordinary allowance goes up to 11,000. No more age related allowances In previous years there has been age related allowances for people born before a certain date. The Government has deliberately left these unchanged for the last few years, so that the standard personal allowance would eventually catch them up, and that has now happened. So there are no more age related allowances. Personal Savings Allowance From April 2016, the Government have introduced the new Personal Savings Allowance, this means that basic rate taxpayers will not have to pay tax on the first 1,000 of savings income they receive and higher rate taxpayers will not have tax to pay on their first 500 of savings income. Income Tax rates and taxable bands Basic Rate 20% 0-32,000 Higher Rate 40% 32, ,000 Additional Rate 45% Over 150,000 Contact Please see below contact details if you have a query about tax on your pension. HMRC PAYE & Self Assessment PO Box 1970 Liverpool L75 1WX Phone Always quote your National Insurance number and tax office reference 120/B29. 9

10 Re-employed Pensioners There is a legal requirement for any re-employed pensioners to notify this office of any period of employment with a Local Authority or an employer that has access for employees to the Local Government Pension Scheme. Please note that re-employment may have a material impact on both present and future retirement benefits paid by this authority. Major overhaul of State pensions There is a big shake up in State pensions heading our way from April 2016, but many people already on pension won t be affected. People in schemes like ours are contracted out of the additional State pension (this used to be called SERPS, and many people still call it this). So they haven t paid for, or built up, this part of the State pension. As part of the old contracting out rules, some members who have retired have something called a GMP - a guaranteed minimum pension. This is a guaranteed level that their pension from us has to reach, and in those cases the State actually pays part of any annual increase in the pension from us. Contracting out is ending in April, so if you reach State pension age between the periods 6 April 2016 to 31 December 2018 and have a GMP, future pensions increase will be paid by Harrow Council. At the time of writing we are waiting for further details from the Government regarding who will be paying the GMP pensions increase for those reaching State pension age after 31 December Contacting Us Contacting the Pension Team has never been easier using any of the methods below. You are also able to make an appointment or, if you are the spontaneous type, you are able to drop in without an appointment and can see a member of the team during normal office hours. HR Operations Tel: rd Floor South Wing Fax: Civic Centre pension@harrow.gov.uk Station Road Harrow Middlesex HA1 2XF 10

11 TO: HR Operations Pensions 3 rd Floor, South Wing Civic Centre Harrow Middlesex HA1 2XF Name in full (Capitals) Pension Payroll Number CHANGE OF BANK DETAILS I wish to inform you of my change of bank details from (please insert date). Please pay my pension into the Bank/Building Society Account as detailed below: - PLEASE COMPLETE EITHER SECTION A OR B Section A Name and full address of Bank (capital letters) Account Name Bank SORT CODE Bank ACCOUNT No Section B Name and full address of Building Society (capital letters) Account Name Building Society SORT CODE Building Society ACCOUNT No PERSONAL ACCOUNT / ROLL No NB. Some Building Societies operate current accounts similar to those of Banks, other accounts require a Roll Number also. If you are not sure of the details, please check with your branch of the Building Society before completing this form. Signature Date 11

12 TO: HR Operations Pensions 3 rd Floor, South Wing Civic Centre Harrow Middlesex HA1 2XF Name in full (Capitals) Pension Payroll Number CHANGE OF ADDRESS I wish to inform you of my change of address from (please insert date). Please send all future correspondence to the address as detailed below:- ADDRESS: POST CODE: Signature Date 12