Welcome to the 2017 edition of Scheme Talk, the pension newsletter from Your Pension Service.

Transcription

1 2017 Welcome to the 2017 edition of Scheme Talk, the pension newsletter from Your Pension Service. In this edition we have included information on the benefits available in the event of your death; the 50/50 section of the scheme and an update on the fund accounts. Don t forget your annual benefit statement is now available to view via our website using the My Pension Online service. You can also book a one to one appointment at one of the many pension surgeries being held throughout the County. As always, we welcome your feedback on any of the services we provide including what you would like to see in future editions of this Scheme Talk newsletter. You can share your thoughts by completing our Customer Satisfaction Survey, click here to take part. I hope you enjoy this issue of scheme talk. Diane Lister Head of Your Pension Service Cumbria Scheme Talk TSC

2 Fund Accounts Members Contributions: 16.4m Employers Contributions: 49.4m Transfers in: 3.4m Investment income: 50.0m Change in Value of Investments: 353.1m Pensions paid: 65.0m Lump Sums: 14.4m Transfers out: 3.8m Deaths: 2.1m Management and Admin Exp: 10.2m Value of fund at 31 March 2017: 2.4 billion * This information is taken from the 2017 Fund report and accounts unaudited at the time of going to press. Assets % UK Equities Alternatives Property Fixed Interest Bonds Cash Overseas Equities 35% 19% 14% 10% 7% 7% 5% 3% Index Linked Bonds Other 2

3 Contribution rates The amount which you contribute to the Local Government Pension Scheme is based on your pensionable pay. Your employer will decide your appropriate rate of contributions for each employment by matching your actual pensionable pay to the appropriate band in the contributions table (please see below). The contribution earnings band will run in line with inflation each year. The rate of inflation in September 2016 (Consumer Price Index) was 1.0%, therefore these bandings have been increased for 2017/2018 as shown below. If your actual pensionable pay is: Contribution table 2017/18 You pay a contribution rate of: 1 Up to 13, % 2 13,701 to 21, % 3 21,401 to 34, % 4 34,701 to 43, % 5 43,901 to 61, % 6 61,301 to 86, % 7 86,801 to 102, % 102,201 to 153, % 153,301 or more 12.5% State Pension - Contracting Out Since 6 April 2016 the way in which you accrue your State Pension changed. There is now no longer a Basic and Additional State Pension but rather a Flat Rate State Pension. As a member of the Local Government Pension Scheme (LGPS) you had been contracted out of the Additional State Pension as you were accruing benefits in the LGPS. For the period you had been contracted out you were paying a lower rate of National Insurance contributions. Since 6 April 2016 you have been contracted back into the Flat Rate State Pension, meaning you will be paying more in National Insurance contributions. For more information regarding your State Pension please contact Department for Work and Pensions. Phone: (enquiries and statements) Pensions Increase The rate of inflation used in the Local Government Pension Scheme is the Consumer Price Index (CPI). Since the introduction of the new Career Average Revalued Earnings scheme in April 2014 your benefits accrued since that date are linked to CPI. At the end of each scheme year pensions are revalued using the rate that CPI was on the September the previous year. As CPI for September 2016 was in fact 1.0%. This means that this value will be applied to all active pension accounts. For more information on how your pension builds please see the guides section of our website 3

4 HM Revenue and Customs impose two controls on the amount of pension savings you can make without having to pay extra tax. These controls are known as the Annual Allowance and Lifetime Allowance. This is in addition to any income tax you pay on your pension once it is in payment. Lifetime Allowance The lifetime allowance is the total value of all pension benefits you can have without triggering an excess benefits tax charge. If the value of your pension benefits when you draw them (not including any state retirement pension, state pension credit or any partner s or dependant s pension you may be entitled to) is more than the lifetime allowance, or more than any protections you may have, you will have to pay tax on the excess benefits. The lifetime allowance covers any pension benefits you may have in all tax-registered pension arrangements - not just the Local Government Pension Scheme (LGPS). The lifetime allowance limit has been steadily reducing since 2012 and for the year 2017/18 is 1 million. When any LGPS benefit, or any other pension arrangement you may have, is put into payment you use up some of your lifetime allowance - so even if your pensions are small and individually will not be more than the lifetime allowance you should keep a record of any pensions you receive. There are other events upon which you use up some of your LTA (if you transfer your benefits to an overseas scheme, if we pay a death grant in respect of you, etc). If the value of your LGPS benefits are more than the lifetime allowance you have remaining at that point you will have to pay tax on the excess. If your excess benefits are paid as a pension the charge will be 25%, with the ongoing pension payments subject to income tax; if the excess benefits are taken as a lump sum they will be taxed once only at 55%. Not many people are affected by the lifetime allowance but for information on this and the Annual Allowance please visit the Tax Issues page on our website using the link below: Tax Issues - Factsheets The factsheet also contains information about protections for which you may apply if you believe that the value of your pension benefits is or will exceed 1 million. Annual Allowance The Annual Allowance (AA) is the amount by which the value of your pension benefits may increase in any one year (6 April to 5 April) without you having to pay a tax charge. This is in addition to any income tax you pay on your pension once it is in payment. The AA limit for tax years 2016/17 and 2017/18 is 40,000. If the value of your pension savings in any one year (including pension savings outside of the LGPS) are in excess of the annual allowance limit, the excess will be taxed as income. You are most likely to be affected if you have a lot of scheme membership and you receive a significant pay rise, you are a high earner and/or pay a high level of additional contributions. increase in a year (6 April to 5 April) by more than 40,000, or, if it does they are likely to have sufficient unused allowance from the previous 3 years. From the tax year 2016/17 the AA is tapered for members who have a Threshold Income in excess of 110,000, and Adjusted Income in excess of 150,000. For every 2 that your Adjusted Income exceeds 150,000, your AA is tapered down by 1 (to a minimum of 10,000). For further information regarding threshold income and adjusted income please visit the Tax Issues page on our website using the following link. We will inform you if the value of your LGPS pension savings in this fund increase in a tax year by more than 40,000. We will write to you by no later than 6 October of the following tax year. Where you exceed the annual allowance, any unused annual allowance from the previous 3 years is used to offset or eliminate the excess. To have unused annual allowance in a year, you must have been a member of a tax registered pension scheme in that year. Most people will not be affected by the AA tax charge because the value of their pension saving will not 4 You may ask us for an AA statement even where you won t exceed the AA in this LGPS fund. You will need to do so if you have pension savings elsewhere and you consider there to be a possibility that when taken together you will exceed the AA. You may also wish to do so if you are subject to the taper AA and there is a chance that you will exceed your taper AA but not the 40,000 AA.

5 Annual Benefit Statement Pension Surgeries Towards the end of the year Your Pension Service will hold a series of Pension Surgeries across Cumbria. Staff from Your Pension Service will be available for you to speak to regarding your LGPS and Fire pension queries or if you just want some information about joining the scheme. Where possible our AVC provider Prudential will also be available on these days. To book a 15 minute appointment with our staff, please click the link here to use our online booking system remember to book early! *We would recommend you print your annual benefit statement off and bring it with you. You can do this through My Pension Online. If you wish to speak with Prudential it would be helpful if you could also bring along a recent pay slip or current pay and tax code details. No matter who your employer is, you can book an appointment at any of the sessions listed. Venues Barrow Borough Council, The Forum, 28 Duke Street, Barrow-in-Furness, Cumbria LA14 1HH Cumbria County Council, Conference Room A, Cumbria House, 117 Botchergate, Carlisle CA1 1RD Carlisle City Council, Flensburg Room, Civic Centre, Carlisle, CA3 8QG South Lakes District Council, Bindloss Room Kendal Town Hall Highgate LA9 4DL Eden District Council, Council Chamber, Town Hall, Penrith, CA11 7QF Allerdale Borough Council, Lonsdale Room, Allerdale House, Workington, CA14 3YJ Copeland Borough Council, Blencathra House Tangier Street Whitehaven CA28 7UW Dates 31 Oct Nov Jan Jan Feb Mar Mar 2018 Please note: Your Pension Service is committed to electronic communications so that we can provide you with the most efficient service possible, although you can opt out of electronic communications if you wish. Just let us know in writing. If you have already opted out of electronic communications you will receive your annual benefit statement by post. 5

6 Are your details up to date and correct? Keep your details up to date from the comfort of your armchair with just a few clicks! Has anything significant changed since you last updated your details? If you haven t already done so then please register for an activation key so that you can begin to enjoy the benefits of the My Pension Online system. You will find instructions on how to register in the article My Pension Online below. This is now the main method of communication between us and you, therefore we do not want you to miss important information. Once you are a member you can: Change your address Change your address Run retirement forecasts on your chosen retirement date Watch your pension grow each month View your nominated beneficiaries (where applicable) View factsheets and access forms Contact Your Pension Service If you do not wish to use My Pension Online then you can still notify us of changes in writing, but please be aware that this can take longer. My Pension Online As highlighted above we now have a service where you can view all of your Pension details online. If you would like to register for the service please follow the instructions below: 1. Go to the website 2. Click My Pension Login at the top left hand corner of the page 3. Select Cumbria Members Login 4. Click Sign Up to request an activation key for your online account 5. Complete the 4 fields on the registration form and then click Submit An Activation key will be sent to your home address, once received you should revisit the website and follow instructions 1-4 above, but this time select Complete Your Registration and complete the relevant fields to finalise your account. Once you are a fully registered Member then please check that your details are up to date. If you believe that your address is incorrect then we will not be able to get the activation key to you, so please contact the helpdesk (details on final page). You will now have full access to all the features above. If you have any problems with your registration please contact the helpdesk (details on final page). Going Halves Did you know you can reduce your monthly pension contribution by half? If you feel you can t afford the full contribution you can elect to join the 50/50 section of the scheme Death in and pay half of your normal monthly amount. During Service Grant this time you will receive half of your normal pension build up, but you will still get the same excellent life cover from the scheme as you always have. The 50/50 option is a great alternative to opting out of the scheme all together for those members who are struggling to make the full contribution. Above is an example of how your pension would be affected in the 50/50 section. Based on a salary of 22,000 per annum. 6 Section Main 50/50 Percentage per month Annual Pension build up per year 6.50% 3.25% ,000 66,000

7 Retirement forecasts update When running a retirement estimate within My Pension Online you can now amend the final salary pay figure that is used as well as amend the CARE pay figures. In a nutshell, the final salary pay is the pay that will be used to calculate the benefits that you have accrued pre 1 April It is the final salary at your date of leaving that will be used to calculate these benefits. The CARE pay is the pay that your benefits are calculated on for benefits accrued post 1 April So there will be two different calculations when you come to retire: Final salary benefits benefits accrued pre 1 April 2014 the final salary amount should be your full time equivalent pay. CARE benefits benefits accrued post 1 April 2014 the CARE pay should be your actual annual pensionable pay. So if you are part time this will be different to the final salary pay. The CARE pay is derived from the monthly figures that your Employer provides so this should be up to date. You can however amend it. The final salary pay is updated annually as part of the annual benefit statement production process, therefore any changes to your rate of pay that may occur during the year won t be reflected in the final pay figure. You can now amend this figure when running a retirement estimate. Please note it is still only an estimate of benefits payable. ONLINE EXAMPLE: 7

8 Additional Voluntary Contributions (AVC s) Want to retire earlier? Did you know that you can save into Additional Voluntary Contributions (AVCs) alongside your Local Government Pension Scheme? This could boost the amount of money you have available to you when you retire. AVCs offer a tax efficient way to save for retirement and are taken from your pay at the same time as your pension scheme contributions. The tax you pay depends on your individual circumstances. HM Revenue & Customs tax rules may change in the future. This could mean you have more financial control and choice over how and when you retire. It is possible to take your pension scheme benefits from the age of 55, but the earlier you take them, the more your benefits may be reduced. With AVCs, you could use the pot you ve built up to help make up the shortfall. As with any investment, remember that the value of your AVC can go down as well as up and you may not get back the amount you put in. To find out about more about starting or increasing your AVC, please call Lines are open Monday to Friday, 9am to 6pm. Alternatively visit Additional Pension Contributions (APC s) As an active member, you may buy additional annual pension by paying APCs which you pay alongside your normal contributions. You may pay APCs by regular deductions from your pay over a set number of years or by making a one off payment (there are certain situations in which this would be the only option). You can only buy additional pension for yourself. It will not increase any benefits payable upon your death. The additional annual pension you buy is adjusted in line with the cost of living, both before and after you draw your benefits. There is a limit on the amount of additional pension that you may buy. From 1 April 2017, the limit is 6,755 which will increase each 1 April thereafter in line with the cost of living. The cost of buying additional pension will depend upon a number of factors. For example, your age, your gender, the amount you wish to buy, whether you will pay by lump sum or regular deductions. Please click here to visit the topping up section of the website. Here you can estimate the cost by using our APC Calculator and find out more information about both of these top up options. Data Protection Act All data held is for the purpose of administering the pension scheme and paying pension benefits. The administrators have a legal obligation and a legitimate interest under the Data Protection Act 1998 in processing data as a result of your membership of the scheme. This may include passing such data to the actuary, administrators, auditors, insurers, lawyers and such other third parties as may be necessary for the operation of the scheme. Cumbria County Council is the data controller under the Data Protection Act, with the Local Pensions Partnership processing data on its behalf. 8

9 Are you single and living with your partner? For deaths occurring from 1 April 2014, the condition that you must have nominated your cohabiting partner for them to be eligible to receive a survivor pension no longer applies. Nonetheless, to speed up any process after your death, you may tell us about your cohabiting partner by completing the nomination form and returning it to the address shown on the form. The form can be found at At your death, your cohabiting partner will be eligible to receive a survivor s pension provided we are satisfied that the relationship met the following conditions for a continuous period of at least 2 years on the date of death: both you and your cohabiting partner are, and have been, free to marry each other or enter into a civil partnership with each other, and you and your cohabiting partner have been living together as if you were husband and wife, or civil partners, and neither you or your cohabiting partner have been living with someone else as if you/they were husband and wife or civil partners, and either your cohabiting partner is financially dependent on you or you are financially interdependent on each other. Lump Sum Death Grant As well as a co-habiting partner/spouses pension which is payable for life there is also a death grant payable. You can nominate anyone to receive your death grant. Death Grant The death grant is generally 3 times your annual pensionable pay. We will pay this at the Fund s absolute discretion to the person(s) you nominated, your personal representative or any person appearing to the Fund to have been your relative or dependent. If you have not already done so or you wish to amend your nomination, please complete the Nomination Form which is available on our website. In most cases we will not deduct tax from the death grant. This won t apply if either: The death grant exceeds your available lifetime allowance (see the Lifetime Allowance Factsheet available on our website) We pay it after the end of the 2 year period from when we found out about the death. If at death you also hold deferred benefits or suspended Tier 3 benefits or are receiving a pension in payment under any fund in the LGPS (England and Wales), multiple death-grants won t be payable. Generally only the largest death grant will be payable. Also note that if we pay the grant after the end of the 2 year period from the date of your death we will pay the grant to your personal representative. If we don t know about the death within that 2 year period, the 2 year period for this purpose begins when we found out. To check your nomination visit My Pension Online. The relevant form is also available to download from our website. 9

10 Meet the Team Your Pension Service Partnerships Team The Partnerships Team are here to engage with Employers & Members of the Schemes that we administer. Our work is extremely varied and our regular activities include: Hosting Annual Benefit Surgeries on an annual basis where Members can attend and discuss their Annual Benefit Statement Visiting your Employers to provide scheme updates, identify training requirements and generally discuss how we can support them in supplying the data that is required for administrating pensions Delivering Employer training Hosting annual Employer and Member conferences Briefing sessions to Employers / Members where there are significant scheme changes Delivering presentations on scheme basics and preretirement at the request of Employers Hosting My Pension Online sessions, assisting you as Members to get signed up online Collecting and reviewing feedback, implementing improvements as a result of the feedback Maintaining the Your Pension Service website ensuring that all material is kept up to date JULIE WIGG Partnerships Manager I have worked for your pension service for over 20 years in a number of roles ranging from calculating pensions to training staff within the service and I am now responsible for the Engagement team which also includes the pension s helpdesk. I am passionate about pensions and helping people understand the value of not only saving for retirement but raising awareness of the benefits of the LGPS and what a great scheme we have. In my spare time I enjoy watching football matches especially tying them in with a city break abroad, spending time with my family which includes my two grandchildren Arabella and Edison and socialising with friends, which usually involves dining out. AMMIE MCHUGH Client Liaison Officer I joined Your Pension Service in April 2009 working on the processing team. This involved processing all aspects of pensions casework including transfers in and out of the scheme, calculating deferred pensions and calculating and paying retirement benefits. In 2013 I began working for the partnerships team on a secondment basis to develop my skills outside of pension s casework, since then I have obtained the role on a permanent basis and have never looked back! Every day as a Client Liaison Officer is different from speaking face to face with members of the pension scheme to help them understand the benefits of the LGPS to delivering training sessions to scheme employers. In 2015 I obtained a foundation degree in Pension s Administration and Management which has helped immensely with fulfilling my role and understand the bigger pensions picture. In my spare time I like to keep fit. I enjoy cooking and also take pleasure in overseas travel. JONATHAN HOWARTH Client Liaison Officer I have worked for Your Pension Service since September 2013 and I started on the Customer Service Helpdesk dealing with a massive range of queries from Employers and Members on LGPS, Police and Fire schemes. Prior to this my background was training and development and in my last role I was responsible for the delivery of Employability Skills Workshops, encouraging long term unemployed people to find sustainable employment. After joining YPS I knew quite quickly that I was interested in pension administration and found all the regulations fascinating. I love my current role as I am given the opportunity to help people by simplifying information which can be complex and technical. In my spare time I like running to keep fit and am regularly setting myself challenges to run further distances. I may successfully complete a marathon one day! Pensions Tel: am to 6pm Monday to Friday Askpensions@localpensionspartnership.org.uk Feedback As always we welcome your feedback on any of the services we deliver as well as what you would like to see in future editions of Scheme Talk. Why not take part in our survey by completing the Customer Satisfaction Survey Website: Contact Address: Your Pension Service, PO Box 100, County Hall, Preston PR1 OLD 10 Important notice Please note that whilst we make every effort to ensure that the content of this newsletter is accurate, nothing within overrides the provisions of the pension scheme and associated legislation.