2017 The Local Government Pension Scheme
Your Annual Benefit Illustration I am pleased to provide you with an illustration of your pension benefits as at 31 March 2017. Your benefit illustration provides the following information:- an indication of your final salary and CARE Local Government Pension Scheme (LGPS) benefits at 31 March 2017 survivor s pension and death grant payable should you die whilst a current member of the scheme an indication of your final salary and CARE LGPS benefits projected to your Normal Pension Age details of your pensionable membership up to 31 March 2014 used in the calculation or your final salary pension benefits the names of those you have nominated (if any) to receive payment of any death grant. I cannot stress enough the importance of you checking the details contained in this illustration as it may not be possible to question these later as payroll records are only kept for a limited time. If you have any questions concerning the information shown, please first read the explanatory notes within your illustration. You will also find far more information on our website www.kentpensionfund.co.uk. If however you still have a question then you can contact us using the information at the end of this letter. Mrs Barbara Cheatle Pensions Manager Please note this is an important document and should be kept in a safe place. Copies of these illustrations cannot be provided
Your Details Name Date of Birth National Insurance Number Payroll Number CARE Pensionable Pay as at 31/03/2017 [1] Final Salary Pensionable Pay as at 31/03/2017 [2] Section of scheme as at 31/03/2017 Date joined Kent Pension Fund Pensions Notes relating to the numbered points [1] CARE Pensionable Pay* This is your pensionable pay for the year to 31 March 2017 that is used to calculate the value of your pension account for the scheme year ending 31 March 2017. The figure is based on your actual earnings, any fees you may receive in relation to your role and any overtime (contractual or non-contractual). If during the year you were receiving a reduced amount, or no contractual pay, due to illness, paid child related leave or reserved forces leave the CARE pensionable pay figure should include an amount of assumed pensionable pay for those periods. This ensures that your pension account is not reduced as a result of the reduction in your pay. Please note if your CARE Pensionable Pay is 110,000 or more you should refer to page 10 [2] Final Salary Pensionable Pay* This is your whole time equivalent pensionable pay for the year to 31 March 2017 that is used to calculate your benefits up to 31 March 2014, if you were a member prior to this date. The figure is based on your pensionable earnings for the year to 31 March 2017 including any fees that are pensionable but will not include any non-contractual overtime or additional hours. If you are a part time employee the figure is the pensionable pay you would have received if you worked full time. If you are not contracted to work 52 weeks a year, this has also been taken into account. This figure should not be reduced due to sickness, child related leave or reserved forces service leave. *Please note both of these pay figures are supplied by your employer and therefore if you believe that they are not correct you will need to contact your employer. The CARE Pensionable Pay figure in particular should be checked now as payroll records are only kept for a limited period and you may not be able to query this figure in the future. If you disagree with the figure then initially you should raise this with your employer however, if any issues are not resolved you do have the right of appeal via the scheme s Internal Dispute Resolution Procedure details of which can be found at www.kentpensionfund.co.uk/idrp. 1
Pensions YOUR TOTAL PENSION BENEFITS AS AT 31/03/2017 Total Annual Pension [including CARE and Final Salary benefits] *No reductions for early retirement have been applied see page 5 Lump Sum [3] BENEFITS PAYABLE ON YOUR DEATH IN SERVICE [AS AT 31/03/2017] Survivor Pension [4] Death Grant [5] [3] Lump Sum Notes relating to the numbered points If you only have membership from 1 April 2008 your lump sum will be nil. Regardless of the lump sum quoted you will be given the option at retirement to convert part of your pension into an additional lump sum. [4] Survivor Pension This is the amount of survivor pension that would be payable should you die whilst a current member of the scheme. A survivor s pension is payable to a widow, widower, civil partner or a cohabiting partner in certain circumstances. As we do not know the marital status for most of our members, for the purposes of this illustration, we have assumed that you are married or in a civil partnership as at 31 March 2017 and the pension is based on all of your membership of the scheme. However, the survivor s pension may be less than quoted in this illustration if you die after you have left the scheme, if you marry or form a civil partnership after leaving the scheme or if the survivor pension is in respect of a cohabiting partner. A pension may also be payable in respect of any eligible children. [5] Death Grant Should you die whilst a current scheme member the death grant is equal to 3 times your Assumed Pensionable Pay. If you also have a LGPS deferred pension, a pension in payment or a suspended Tier 3 Ill Health pension from membership of any LGPS Fund in England or Wales, then only one death grant will be paid whichever is the greatest. The death grant is not automatically paid to your next of kin. It is possible for you to express a wish as to who you would like to receive the death grant and wherever possible payment will be made in accordance with your wishes. You will see that your benefit illustration states who is currently nominated. Should you wish to change your nomination, or make a nomination if you have not already done so, please complete and return an Expression of Wish Form which can be obtained from www.kentpensionfund.co.uk/nom or contact us for a form. 2
The following information provides a breakdown of your CARE Pension and your Final Salary Pension as at 31 March 2017. These amounts are not paid in addition to the total amount of your pension benefits as shown in the section Your Total Pension Benefits. AMOUNT OF CARE PENSION BUILT UP IN THE YEAR TO 01/04/2016-31/03/2017 Pensionable Pay for the year to 31/03/2017 in MAIN Section Pensionable Pay for the year to 31/03/2017 in 50/50 Section Main Section Pay / 49 [6] 50/50 section Additional Pension Transfers + Pay / 98 [7] + bought [8] + in [9] = Total TOTAL CARE PENSION Closing balance at 31/03/2016 Revaluation [10] - + In Year build up (as shown above) = Total CARE Pension AMOUNT OF FINAL SALARY PENSION AT 31/03/2017 Final Salary Pensionable Pay for the year to 31/03/2017 Annual Pension Lump Sum [3] PROJECTION OF YOUR PENSION BENEFITS AT YOUR NORMAL PENSION AGE [ ] Total Annual Pension (including CARE and Final Salary benefits) *No reductions for early retirement have been applied see page 5 Lump Sum [3] Survivor Pension [4] [6] Main Section Notes relating to the numbered points above This shows the amount of pension you have accrued in the main section of the LGPS over the scheme year. If the amount is zero this is because you have not paid towards the main section of the scheme during the year ending 31 March 2017. 3
[7] 50/50 Section Notes relating to the numbered points This shows the amount of pension you have accrued in the 50/50 section of the LGPS over the scheme year. If the amount is zero this is because you have not paid towards the 50/50 section of the scheme during the year ending 31 March 2017. [8] Additional Pension bought If there is a value shown in this field this relates to any additional pension purchased in this year through the pension scheme. This value does not include any Additional Voluntary Contributions [9] Transfers in If there is a value shown in this field it will relate to the additional pension bought by a transfer of pension rights received from another pension scheme during the year. Any transfers received before this date will either be detailed in your Final Salary Membership details or will already be included in your CARE benefits. [10] Revaluation At the end of every scheme year the value of the pension held in your CARE pension account is revalued. Revaluation means that the value of your pension reflects the change in the cost of living. The value of your pension is revalued in line with HM Treasury Revaluation Orders which currently use the change in the rate of the Consumer Prices Index (CPI) to revalue your pension account. If the cost of living falls, and a negative HM Treasury Revaluation Order is issued the value of the pension held in your pension account is reduced. Your CARE pension account as at 31 March 2016 has been reduced by 0.1% which was the change in the rate of CPI in the 12 months to 30 September 2015. The figures on this statement are based on the information held on our records as at 31 March 2017. Whilst every care has been taken in producing the figures, they should not be seen as a definitive statement of the benefits payable and they may not take into account the maximum level of benefits allowed by HMRC. 4
Explanatory notes to help you understand your Benefit Illustration Your illustration shows the value of your benefits as at 31 March 2017. It is possible for you to retire from age 55 with the immediate payment of your benefits, although these will be reduced to reflect their early payment. Details of these reductions can be found on our website www.kentpensionfund.co.uk/abi. If you are within 6 months of your anticipated retirement age and would be over 55 at that time, you should request an estimate, via your employer, to ensure you receive details of all the options available from the Pension Scheme. Your Total Pension Benefits as at 31/03/2017 This shows the benefits that you have earned in the scheme as at 31 March 2017. The summary includes the total of your Final Salary benefits based on any membership accrued to 31 March 2014 and your total accrued CARE pension as at 31 March 2017. In order to be entitled to pension benefits you must have 2 years membership of the LGPS or meet other criteria. If you were aged over 55 at 31 March 2017, the benefits shown do not include any reductions that may apply for early retirement and therefore if you are thinking of retiring we would stress the importance of requesting an estimate via your employer in order that you may see the benefits that would be payable. If you leave after your Normal Pension Age then your benefits will be paid at an increased rate to reflect late payment. Projection of your pension benefits at your Normal Pension Age (NPA) Your Normal Pension Age is the date that you can retire and receive your full pension benefits from the Local Government Pension Scheme (LGPS). The date is determined by your State Pension Age however you should be aware that your Normal Pension Age could change in the future should the Government make further changes to the State Pension Age. The value of your projected pension assumes that you remain on the same pensionable pay and within the same section of the scheme used in this illustration. The projection does not assume any pay increases. Benefits can be drawn earlier or later than your NPA, between age 55 and 75, provided that you leave your employment. If taken earlier than NPA they will normally be paid at a reduced rate, if drawn later than NPA they will be paid at an increased rate. Scheme Pays and Pension Sharing Orders If you have at any time exceeded the Annual Allowance tax limits and have elected for the Scheme to pay the tax charge or your pension benefits are subject to a Pension Sharing Order the reductions applied to your benefits have not been taken into account for the purposes of this illustration. Any reductions that are applicable will be applied when you take payment of your pension benefits. 5
Your Membership Details up to 31 March 2014 From 1 April 2014 membership is no longer used in the calculation of your pension benefits therefore only details up to 31 March 2014 are included. Your final salary membership is inclusive of completed transferred in service from any previous pension entitlement received prior to 1 April 2014, as well as breaks in membership. If a break is shown, i.e. ** it could be for the following reasons: Strike / Absence / Maternity / Paternity / Adoption Leave Employer From To 6 Due to space restrictions the lines of membership shown are limited.
The membership shown is normally split when you change employers or your hours of employment. However, occasionally the Pension Section will split your membership for its own internal processes. This will not impact on you in any way. Calendar Length Years / Days Percentage of Whole Time Membership to be used in the calculation of benefits years/days However, all membership is included in the benefit amounts in the illustration. 7
How your LGPS benefits are calculated Your standard benefits are calculated as follows:- For membership from 1 April 2014:- For membership from 1 April 2008 to 31 March 2014:- For membership before 1 April 2008:- Standard or converted benefits Annual Pension = CARE pensionable pay x 1/49 (Main Section) Or Annual Pension = CARE pensionable pay x 1/98 (50/50 Section) Automatic Lump Sum = nil Annual Pension = Membership from 01/04/2008 x Pensionable Pay x 1/60 Automatic Lump Sum = nil Annual Pension = Membership to 31/03/2008 x Pensionable Pay x 1/80 Automatic Lump Sum = Annual pension x 3 You may choose, at retirement, to have payment of standard benefits OR to convert part of your pension to provide a larger lump sum. When you retire, you will be provided with a form by your employer, on which you may choose whether to have standard OR converted benefits. For every 1 reduction to your pension, an additional 12 lump sum will be awarded up to a maximum of 25% of your fund value. For example: If you choose to convert 100.00 of pension you would be provided with an additional 1200.00 lump sum. Information regarding converting pension to lump sum, including a calculator, can be found at www.kentpensionfund.co.uk/convertpension There are H M Revenue and Customs (HMRC) rules which restrict the amount of tax free cash that can be taken in this way. In the event of you electing to convert pension to lump sum at retirement these limits will be applied. You are not able to give up lump sum to provide additional pension. Your pension is subject to income tax in line with tax codes supplied by HMRC. Any lump sum payable from the scheme is not subject to income tax. It should be noted that any survivor benefit will be unaffected as a result of any conversion. 8
Expression of Wish for Payment of Death Grant If you die whilst a current member of the Local Government Pension Scheme, a death grant is due no matter how long you have been a member of the Scheme. You may complete an Expression of Wish indicating to whom you wish the payment of any death grant to be made. Kent County Council, as the Authority responsible for administering the Pension Scheme, has absolute discretion as to whom any death grant is paid (thus ensuring that there is no liability for Inheritance Tax on this payment). Generally the Council will pay to the nominated beneficiaries shown on the Expression of Wish. However, the Council is required to consider all relevant information in reaching the decision about whom it will pay and consequently in exceptional circumstances it will consider payment to beneficiaries, other than those specified on the Expression of Wish form. If no Expression of Wish has been completed payment of any death grant due will be made at the absolute discretion of the Authority. Your Current Nomination Details Spouse Child Dependents Should you wish to change your nomination, or make a nomination if you have not already done so, please complete and return an Expression of Wish Form which can be obtained from www.kentpensionfund.co.uk/nom or contact us for a form 9
PENSIONS TAXATION - ANNUAL ALLOWANCE What is the Annual Allowance? The Annual Allowance (AA) is the amount by which the value of your pension benefits may increase in any one year without you having to pay a tax charge. The AA was reduced to 40,000 from 6 April 2014. Further changes to the AA were made for high earners from 6 April 2016. Does the AA affect everyone? It usually only affects scheme members who are high earners, those who have a significant increase in their pay, those that combine sizeable periods of membership, either in the Kent Pension Fund or from another LGPS fund, those that transfer pension rights from other schemes (in certain circumstances) and those that pay large amounts of additional contributions. The increase in every member s pension benefits have to be assessed but the majority will not reach the AA limit. If we think that the increase in your LGPS pension benefits has exceeded the limit for 2016/17 then we will write to you by 6 October. What if I have contributed to other pension arrangements during the year 2016/17 that mean I may have exceeded the AA? We will only automatically write to you if you exceed the 40,000 limit based on the benefits that we administer. If you think you need this information you will need to contact us, using the contact details on the inside cover. You will need to obtain similar information from your other pension provider. Tapered Annual Allowance for high earners From 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. Threshold Income is broadly your taxable income after the deduction of your pension contributions. Adjusted Income is broadly your threshold income plus pension savings built up over the tax year. This means that you may exceed the 150,000 threshold even if your salary is below this level. From 6 April 2016, the taper reduces the AA by 1 for 2 of adjusted income received over 150,000 until a minimum AA of 10,000 is reached. It is for individuals to calculate whether the taper impacts on them and contact us for their Pension Input Amount as this will not automatically be provided. More information regarding Annual Allowance, including tapered annual allowance, some of the terms above and examples of calculations, can be found on our website www.kentpensionfund.co.uk or at www.gov.uk. 10
PENSIONS TAXATION - LIFETIME ALLOWANCE What is the Lifetime Allowance? The Lifetime Allowance (LTA) is the maximum amount of pension savings that you can make tax-free over your lifetime. The LTA reduced to 1 million from 6 April 2016. To calculate the value of your benefits to compare against the LTA you need to multiply your pension by 20 and then add the amount of any lump sum and the value of any Additional Voluntary Contribution fund. Therefore if have a pension of 5,000 per year plus a lump sum of 15,000, this would have a value of 20 x 5000 plus 15,000 = 115,000. Changes to the Lifetime Allowance Due to the change to the LTA from 6 April 2016 two new protections were introduced know as Fixed Protection 2016 and Individual Protection 2016. Individual Protection 2016 (IP2016) You can apply for Individual Protection 2016 if you have pension savings valued at over 1 million on 5 April 2016. However, if you have primary protection or individual protection 2014 you can t apply for IP2016. Fixed Protection 2016 (FP2016) You can apply for Fixed Protection 2016 if you expect your pension savings to be more than 1 million when you come to take them. You can t have FP2016 if you already have primary, enhanced, fixed protection 2012 or fixed protection 2014. Applying for Fixed and Individual Protection 2016 HMRC have introduced an online self-service for pension scheme members to apply for individual protection 2016 and fixed protection 2016. There is no application deadline for IP2016 or FP2016, however, you must apply before you take your retirement benefits. If using the figures quoted at 31 March 2017 and the formula above you think you are close to, or have exceeded, the value of 1 million you should e-mail pensions@kent.gov.uk asking for the value of your benefits at 5 April 2016 for Lifetime Allowance purposes to be calculated as you will need this information for any application for protection that you may wish to make. Before applying for either of these protections we strongly recommend that you find out more information about them either by visiting our website, information at www.gov.uk or by seeking independent financial advice. More information regarding Lifetime Allowance, including explanations for some of the terms above and examples of calculations, can be found on our website www.kentpensionfund.co.uk or at www.gov.uk. 11
Financial Planning for Retirement Courses These courses are held throughout the year and include a presentation by a representative from the Pensions Section concerning all aspects of the benefits payable from the Local Government Pension Scheme. This covers such issues as the calculation and payment of benefits. Following this session there will also be an Independent Financial Advisor present who will be talking about the financial considerations of retirement such as conversion of pension to tax free lump sum, State Benefits, taxation, Inheritance Tax planning and the implications of long term care. If you are interested in attending one of these courses and are within 18 months of your proposed retirement date, then please visit our website www.kentpensionfund.co.uk for information regarding the dates of the courses and to access a booking form. Alternatively contact us using the contact details on the inside cover of this booklet. Kent County Council Superannuation Fund Report and Accounts For information about the management of the Kent Pension Fund including preparation of fund accounts, collection of contributions from employers and managing the fund s cash flow please visit our website. You will also find details of the Pension Fund Report and Accounts. www.kentpensionfund.co.uk/accounts Freedom and Choice You may have heard that the Government have made changes to pensions called Freedom and Choice. These changes are designed to give people in some types of pension schemes far more choice about how to access their pension pots. These changes are mainly targeted at people in defined contribution schemes. The Local Government Pension Scheme is not this type of scheme but is a defined benefit scheme. If you are considering opting out of the LGPS in order to join a defined contribution scheme so that you can access these changes we would strongly advise that you take independent financial advice before making this move. In addition if you were to consider transferring your existing LGPS pension benefits to a defined contribution scheme, if the transfer value is 30,000 or more, you will have to provide evidence that you have taken proper independent advice. The Government has set up a service called Pensionwise, www.pensionwise.gov.uk which offers online help and there is also one to one information from bodies like Citizens Advice. They will not advise people what to do, but will offer guidance by helping them weigh up their options. 12
Contact Us For queries regarding your Annual Benefit Illustration:- H 03000 413488 (Benefit Illustration Helpline Monday to Friday 10:00 to 16:00) C G b www.kentpensionfund.co.uk/abi pensions@kent.gov.uk The Pensions Section, Invicta House, County Square, Maidstone, Kent ME14 1XX For information regarding your State Pension:- H C 0345 3000 168 Department of Work and Pensions www.gov.uk Recently moved? It is very important that you keep us informed of any change of address in order that we can keep in touch with you. You can notify us by completing the on-line form on our website www.kentpensionfund.co.uk/address, by email to pensions@kent.gov.uk or by writing to the address shown above.