Local Government Pension Scheme (LGPS) Pension Pay Dates. Friday 24 May 2013 Monday 25 November 2013

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1 PENSIONER FOCUS Spring 2013 Local Government Pension Scheme (LGPS) Welcome to the 2013 issue of Pensioner Focus. The pension increase for this year is 2.2% which should help a little towards the cost of living. Please note that you no longer receive a payslip unless your pension goes up or down by 5.00 or more from the previous month. Your pension will be in the bank on the 25 th of every month, or even earlier if the 25 th falls on a weekend or bank holiday. We have included articles that we believe will be of interest to you, the usual round up of pensions news, tax updates and pay days. INSIDE THIS ISSUE: Pensions Increase Life Certificates 4 Re-employed Pensioners 4 Annual Report Income Tax Allowances 9 Previous Pension Rights 10 Changing your Details 10 Contacting Us 10 Change of Bank Form 11 Change of Address Form 12 Pension Pay Dates Friday 24 May 2013 Monday 25 November 2013 Tuesday 25 June 2013 December not yet known Thursday 25 July 2013 Friday 24 January 2014 Friday 23 August 2013 Tuesday 25 February 2014 Wednesday 25 September 2013 Tuesday 25 March 2014 Friday 25 October 2013 Friday 25 April 2014 National Fraud Initiative The authority is required by law to protect the Public Funds it administers. Please note that key payroll data and personal identifiers such as contact details may be provided to bodies responsible for auditing and administering public funds for the purposes of preventing and detecting fraud. For more details see

2 Pensions Increase 2013 (2.2%) The annual pensions increase to pensions effective from 8 April 2013 has been set at 2.2%. You will receive this increase if you: are aged 55 years or over are receiving a widow s, widower s or dependant s pension, or retired on ill health grounds direct from active service. You will receive the full increase if your pension began before 24 April 2012 or your pension entitlements were deferred and retained in the Harrow Council Pension Fund with a last day of service prior to 24 April If your pension began on or after 24 April 2012, a smaller pro-rata increase will be applied to your pension as shown in the table below. Pensions beginning Percentage increase % 24 April May May June June July July August August September September October October November November December December January January February February March In September of each year the Government measures the rate of inflation during the preceding 12 months. This percentage is then added to your Local Government Pension in April of the following year. You should note that it is not discretionary and therefore Harrow Council does not have the authority to pay any additional increase. If you have a Pre 1988 Guaranteed Minimum Pension payable (indicated on your pay slip as GMP ), the Department for Work and Pensions (DWP) is responsible for paying the pensions increase. If you have a Post 1988 Guaranteed Minimum Pension payable (indicated on your pay slip as Alternative GMP ), as this year s pension increase is 2.2%, this authority will pay the full increase on Post 1988 GMP s. 2

3 Example - How is pensions increase calculated and reflected in your April and future payments? Please see below illustrative payslips that show breakdown for March 2013 (pre increase), April 2013 (part month increase) and May 2013 (full increase) payments. Pre 2013 Pension Increase Part 2013 Pension Increase Full 2013 Pension Increase (7 days at old rate and 23 (2.2%) days at new rate, 2.2%) MARCH BASIC PENSION GMP ALT GMP PENSION INCREASE GROSS PENSION APRIL BASIC PENSION GMP ALT GMP PENSION INCREASE GROSS PENSION MAY BASIC PENSION GMP ALT GMP PENSION INCREASE GROSS PENSION Calculation method In order to assist you in checking your April payslip, detailed below is the calculations used to arrive at the figures of Alt. GMP and Pension Increase. It is important to note here that the old rates apply for the first 7 days of April and the new rate for the remaining 23 days. Alt GMP 10 multiplied by 2.2% multiplied by 23 days divided by 30 days = 0.17p (new rate) added to 10 (old rate) = Pension Increase 100 (basic pension) plus 20 (pension increase) multiplied by 2.2% multiplied by 23 days divided by 30 days = 2.02 (new rate pension increase) plus 20 (old rate pension increase) =

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) paid by cheque b) 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, no later than 31 st May Failure to return a validated certificate may lead to your pension being suspended. 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. 4

5 Summary of the Annual Report Introduction Management 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 Local Government Pension Scheme Regulations. The London Borough of Harrow is the administering employer. There are a further twenty three admitted and schedules 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 clearly 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 March 2012 March 2011 Employees 5,506 5,547 Pensioners 4,713 4,473 Deferred Pensioners 5,227 4,987 Total membership increased to 15,446 (2011:15,007). A deferred pensioner is an exemployee who has chosen to preserve their entitlements until he or 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. These powers are exercised on its behalf by the Council s Pension Fund Investment Panel. 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 to positively 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 tri-annual valuations and copies are available (see below). The most recent update was approved by the Pension Fund Investment Panel in March Investment Management The day-to-day management of the Fund s investments as at 31 March 2012 was carried out by the following ten external managers: Managers Aviva Investors Global Services Limited BlackRock Investment Management (UK) Ltd Fidelity International Longview Partners Investments Pantheon Private Equity Record Currency Management Limited State Street Global Advisors Limited UBS Global Asset Management (UK) Limited Wellington Management International Limited Mandate UK Property Global Bonds Global Equities Global Equities Private Equity Passive Currency Hedge UK Equities Passive Property Global Equities The active currency mandate with BNY Mellon Asset Management was terminated during the year. 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 on the Pension Fund Investment Panel. Performance At the end of March 2012 the Pension Fund totalled million, 12.4 million more than the value at the end of March Increases in the market value of investments of 7.0 million accounted for most of the change reflecting mainly a flat year for equity markets (returns of 0.5%) following two years of recovery from the lows reached in early Bonds continued their good run with another year of double digit returns (13.6%) and property also had a good year (6.3%). The remainder of the Fund value increase is due to an excess of income over expenditure of 5.4 million. 6

7 The Council uses the investment performance services of the WM Company. Their report for the year ending 31 March 2012 showed that the Fund achieved an overall return of 2.4% from its investments, which was 0.9% below the benchmark. For comparison purposes WM have estimated that the average return achieved among other local authority pension fund portfolios in was 2.6%. Harrow has a lower allocation to bonds than the average local authority and will under perform the average in years when bonds generate a higher return than equities. Long term performance is more important than single years and over the five years to March 2012, the Fund earned an average of 2.3% p.a., compared with the benchmark of 2.5%. The financial crisis from 2008 has impacted on longer term equity returns that form the core of the Fund s investments. 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 2012, along with the income and expenditure for that year. Income and Expenditure Income m Expenditure m Employees contributions 6.38 Pensions paid Employers contributions Retirement Grants 4.26 Transfers from other Schemes 2.53 Death Benefits 0.47 Capital contributions 0.09 Transfers to other Schemes 1.08 Investment income 4.95 Administration & Fund Management expenses 0.66 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 Harrow Pension Funds owns a share of the fund rather than a direct holding in individual equities, bonds and properties. Investment Distribution The Funds are 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 million. 7

8 Cash, 22,118, 5% Private Equity, 23,047, 5% Bonds, 62,705, 13% Prop, 41,343, 8% Curr, 1,648, 0%. Global Equities, 215,673, 44% UK Equities, 122,061, 25% Actuarial Review The Council s actuary, Hymans Robertson, undertakes an independent evaluation 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 st March 2010 at which point the Actuary determined that the level of assets represented 73.5% of the liabilities. The Actuary also determined that to meet the funding shortfall the level of Council contributions would be 18.85% from 1 April 2011, increasing by 0.25% p.a. The level of contributions for other employers is determined separately and is currently either the same as the Council or slightly higher. The next valuation is due as at 31 st March 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 George Bruce on or george.bruce@harrow.gov.uk. The Harrow Pension Fund is registered with the Occupational Pensions Regulatory Authority, reference

9 INCOME TAX ALLOWANCE 2013/14 Personal allowance Personal Allowance for people born after 5 April 1948 (1) 9,440 Income limit for Personal Allowance 100,000 Personal Allowance for people born between 6 April 1938 and 5 April 1948 (1) (2) 10,500 Personal Allowance for people born before 6 April 1938 (1) (2) 10,660 Married couples allowance Married Couples Allowance (born before 6 th April 1935 And aged 75 and over) (2) (3) 7,915 Income limit for the allowances for those born before 6 April ,100 Minimum amount of Married Couples Allowance 3,040 Blind Person s Allowance 2,160 1) The Personal Allowance reduces where the income is above 100,000 by 1 for every 2 of income above the 100,000 limit. This reduction applies irrespective of age. 2) These allowances reduce where the income is above the income limit by 1 for every 2 of income above the limit. The Personal Allowance for people aged 65 and over and born before 6 April 1948 can be reduced below the basic Peronal Allowance where the income is above 100,000. 3) Tax relief for the Married Couple's allowance is given at the rate of 10 per cent. Income Tax rates and taxable bands Starting rate for savings: 10%* 0-2,790 Basic rate: 20% 0-32,010 Higher rate: 40% 32, ,000 Additional rate: 45% Over 150,000 (from 6 April 2013) *The 10 per cent starting rate applies to savings income only. If, after deducting your Personal Allowance from your total income liable to income Tax, your non-savings income is above this limit then the 10 per cent starting rate for savings will not apply. Non savings income includes income from employment, profits from self employment, pensions, income from property and taxable benefits. The rates available for dividends are the 10 per cent ordinary rate, the 32.5 per cent dividend upper rate and the dividend additional rate of 42.5 per cent (the dividend additional rate is 37.5 per cent from ) Please find 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 Do you have previous pension rights? If you think you may have an old pension, but are not sure of the details, the Pension Tracing Service can usually help by tracing it for you. It can be easy, for instance, if you have changed jobs a number of times through your working life to have lost contact with a previous employer and their pension scheme. The Service may be able to provide you with an up-to-date contact address for a pension scheme free of charge and you can then use this information to contact the pension provider to pursue any financial entitlement. The Pension Tracing Service can be contacted on, phone (Textphone ) for an application form or write to: Pension Tracing Service The Pension Service, Tyneview Park, Whitley Road, Newcastle upon Tyne, NE98 1BA or You can complete the application form online go to the website: Pension tracing Service Changing your Bank and Address Details This office receives a lot of calls from pensioners wishing to inform us about a change of bank or address details. For security reasons, we cannot, at this time, make any of these changes 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. You may choose to use the form included at the end of this newsletter. Contacting Us Contacting us at the Shared Services Pensions 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. Shared Services Tel: rd Floor South Wing Fax: Civic Centre pension@harrow.gov.uk Station Road Harrow Middlesex HA1 2XF 10

11 TO: Shared Services 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) Bank SORT CODE Bank ACCOUNT No Section B Name and full address of Building Society (capital letters) 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: Shared Services 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