Pensions Post. peninsula. pensions. Looking forward to your retirement

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1 peninsula pensions Looking forward to your retirement Pensions Post 2016 Your newsletter about the Local Government Pension Scheme from Peninsula Pensions

2 Welcome to Pensions Post Please read on for information about important changes to the Local Government Pension Scheme, including how the introduction of the single-tier state pension will affect you. I am also delighted to report that Member Self Service (MSS) is now up-and-running on the Peninsula Pensions website. Hundreds of members are already using MSS which is a secure area of the site where you can: Charlotte Thompson (APMI) Head of Peninsula Pensions view your personal record, view your annual benefit statements, produce pension projections, and update your personal details. Please sign up or visit at If you have any queries, please feel free to get in touch, and remember that the Peninsula Pensions website has lots of useful information about your pension: Yours sincerely, Charlotte Thompson (APMI) Head of Peninsula Pensions 2 Pensions Post 2016

3 State Pension Reforms The new State Pension and the end of contracting out The Government is introducing a new single-tier State Pension for people who reach State Pension age on or after 6th April This will replace the existing basic and additional State Pension. What does this mean for members of the Local Government Pension Scheme? As a member of the LGPS you are currently contracted-out of the additional State Pension. You receive a rebate on the National Insurance contributions you pay on any earnings between 5,824 and 40,040 per year (unless you are already over State Pension age or are one of the few members still paying the married woman s or widow s reduced rate of National Insurance). This means that while you are a member of the LGPS you are not building up much, if any, additional State Pension; you are building up pension benefits in the LGPS instead. From 6th April 2016 the new single-tier State Pension replaces the basic and additional State Pension for those who reach State Pension age after 5th April 2016 and the contracted-out status for all LGPS members (not just those reaching State Pension age after 5th April 2016) will no longer exist. This means that you will no longer receive the National Insurance rebate and you will pay a higher amount of National Insurance than in previous years (unless you are already over State Pension age or are still paying the married woman s or widow s reduced rate of National Insurance). There are no plans to change the benefits the LGPS provides as a result of the new State Pension. Pensions Post

4 Where can I get more information? You can find information about these changes at including information about the 50/50 section of the LGPS which allows you to pay half your normal pension contributions in return for building up half your normal pension, while retaining full life and ill health cover. The 50/50 section might be of interest to you if the rise in National Insurance contributions is likely to cause you financial difficulty and leads you to consider opting out of the LGPS. It offers a means to remain in the LGPS, at a cheaper rate, while retaining valuable benefits and you can opt back into the main scheme at any time. Further information about the LGPS is available at What does this mean for my State Pension? For information about the new State Pension please visit: National Insurance Database sharing your data To comply with legal requirements contained in the LGPS governing regulations, Peninsula Pensions participates in a data sharing project with other LGPS pension funds in England, Wales and Scotland. These regulations mean that if a member of the LGPS dies, we need to know if the deceased individual has also had other periods of LGPS membership elsewhere in the country. This information allows us to calculate the correct death benefits to be paid to any dependants. The LGPS National Insurance Database has been developed to help us share information to make sure this happens. The database also helps us make correct calculations when administering certain benefits including death grants, trivial commutations and refunds and is shared with other LGPS pension funds. These are all public bodies named in legislation as administering authorities of the LGPS. 4 Pensions Post 2016

5 All funds using the database are required to sign a data protection agreement with South Yorkshire Pensions Authority (the system s host) and the principles outlined in The Information Commissioner s Code of Practice on data sharing have been used as the basis for this agreement. For each member of the LGPS, the database contains: a National Insurance Number, a number to denote membership status, the last calendar year that the membership status changed, and a four digit number confirming the LGPS pension fund where that member s record is held. For more details on how we are sharing information for the NI Database, please visit Tell Us Once The Tell Us Once (TUO) service has been adopted alongside the NI Database to enable LGPS administrators to receive information from registrars in real time following the death of a scheme member. This should mean fewer overpaid pensions and therefore both a financial and administrative saving for schemes which take part. Notifications of deaths received from TUO also count as formal death notifications meaning funds would not also have to seek proof of the death through a death certificate. For the Tell Us Once service, an extract of the database containing individuals NI numbers will be securely shared with DWP every month so that they may maintain an up-to-date record of the LGPS membership. For more details on how we are sharing information with Tell Us Once, please visit: Pensions Post

6 Lifetime Allowance changes The Lifetime Allowance (LTA) is the amount of pension savings that an individual can build up over their lifetime. If, on retirement, an individual s pension savings (excluding any state pension or dependants benefits) exceeds the LTA a tax charge is due. For the 2015/16 financial year the LTA was 1.25 million, but with effect from 6th April 2016 it will reduce to 1 million. This means that anyone whose total pension pot is close to or already exceeds 1 million needs to take action to avoid tax charges in the future. Peninsula Pensions has already written to those affected but please note that we only have information about your LGPS benefits and the LTA takes into account all pension benefits. If we have not written to you and you believe you may be affected due to additional pension savings elsewhere please contact us. If you need to take action to protect your benefits this must happen before you retire. Annual Allowance The Annual Allowance is the amount that an individual s pension benefits can increase by in any one year without a tax charge becoming due. The current Annual Allowance figure is 40,000 and for the majority of people it will remain at this rate for the 2016/17 financial year. However, there will be a smaller Annual Allowance from 6th April 2016 for high earners, potentially affecting anyone earning 110,000 or more a year, and definitely affecting anyone earning 150,000 or more a year. This will be a tapered reduction, with a minimum allowance of 10,000 for those earning 210,000 or above a year. We have written to those we think will be affected by this change, but if you earn 110,000 or more a year and have not had a letter please contact us. 6 Pensions Post 2016

7 Also, please be aware that - whatever your earnings - the Annual Allowance applies to all pension benefits (excluding state pension and any dependants benefits). Each year we write to everyone who has exceeded the Annual Allowance in the previous financial year for the LGPS, but if you have pension benefits elsewhere and you are concerned that you may have exceeded the Annual Allowance, please contact us so we can advise how much Annual Allowance your LGPS benefits have used. Topping up your pension You can top up your pension so you have a larger pension when you retire. There are four ways you can do this: Additional Voluntary Contributions (AVCs). This is an in-house option offered through Prudential. Buying Additional Pension Contributions (APCs). You can elect to buy additional pension by taking out an Additional Pension Contribution (APC) contract. Free standing additional voluntary contributions (FSAVCs). These voluntary contributions would be made to a company of your choice. Paying into a stakeholder or personal pension plan. This arrangement is outside the scope of the LGPS. You will still get tax relief if you are a tax payer but these plans aren t subsidised by your employer. For more information, visit the topping up benefits page on the members part of the Peninsula Pensions website: Pensions Post

8 Paying in less: 50/50 If money is tight, you can contribute less to your pension through the 50/50 part of the scheme. Contributing to this part of the scheme means that you pay half of the contributions, so receive half of the benefits when you retire (although any lump sum, ill health benefits and survivors pension remains the same). For example: Main Section 50/50 Section Your Actual Pensionable Pay 24,500 24,500 Your Contribution Rate 6.5% 3.25% Your Gross Contribution Amount for 1 year (before tax relief) Your Pension built up in 1 year (payable every year in retirement) Your Lump Sum Life Assurance cover 1, ,500 73,500 You can choose to opt back to pay 100% at any time and there is no limit to the number of times you can switch between the 50/50 and main 100% sections. For more information, please visit: Contact details Peninsula Pensions, Great Moor House, Bittern Road, Sowton Industrial Estate, Exeter EX2 7NL. Tel: and ask for pensions pensions@devon.gov.uk Web: Peninsula Pensions is provided by Devon County Council and is a shared service with Somerset County Council 8 Pensions Post 2016