Local Government Annual Pension Statements
Updated July 2021
These notes should be read in conjunction with the information provided on your LGPS annual statement.
Each year the Pensions Section is committed to providing an annual statement for our scheme members. Your statement is divided into sections:Supporting information.
CARE Annual Benefit Statement – Personal Details
This shows your marital status, employer name plus the pay figures used in the calculations, along with the statement date.
Summary of Benefits
This shows a summary of the estimated pension benefits you have built up to the date of the statement and also shows the date that they would be payable from, in full, without any reductions.
Death in Service Benefits
This shows the estimated value of your death in service lump sum, also known as a death grant and annual survivor pension that may be payable in the event of your death, based on the assumption that you will still be an active contributor to the LGPS.
Also note that if in addition to this LGPS record, you have a further entitlement to:
- A deferred pension;
- A suspended tier three ill health pension, or;
- A pension in payment from an earlier period of LGPS membership in England or Wales;
Then the death grant payable is the greater of the estimated amount shown on your statement or the death grant due from any of your other LGPS benefits. If the death grant quoted on your statement is greater, no death grant will be payable in respect of the other LGPS benefits. However, if the death grant from one of the other LGPS benefits is greater, no death grant will be paid from this pension benefit.
CARE Benefits Accrual
This shows how the pension benefits you have built up since the CARE (Career Average Revalued Earnings) rules came into effect from 1st April 2014 are calculated.
Your CARE pensionable pay will reflect the actual pay that you paid pension contributions on during the period 1 April 2020 to 31 March 2021. If you have elected to move from the main section to the 50:50 section, your employer has provided two separate figures, one relating to each period.
This would include casual overtime, but not expenses or mileage.
If you have been on any reduced or nil pay due to sickness, or reduced pay because of maternity or child related leave, for pension calculations only, your employer will boost your actual pay up to a level in line with what you would have been earning had you not been away from work. Please check to see if this has happened in your case.
This figure needs to be accurate as part of your eventual retirement income will come from this figure.
If you believe that this figure is incorrect then you should contact your employer’s payroll section (not the pensions section) for clarification. You should do this before 31 March 2022.
Final Salary Benefits Accrued
This shows how the pension benefits you built up before the CARE rules came into effect from 1st April 2014 are calculated, based on the Final Salary rules that applied at that time.
Your final salary pensionable pay will reflect your salary grade, i.e. the level of pay you would have earned had you been full time from 1 April 2020 to 31 March 2021. Full time for this exercise means the pay you would have received had you worked a 52 weeks year, working 37 hours a week.
Casual overtime would not be included in this figure.
The figure should be unaffected by any periods of reduced or nil pay sickness, or reduced pay due to maternity or child related leave. The employer should have provided us with the level of pay you would have received had you not been absent from work.
If you are a Clerk to Governors or a Returning Officer, you will see an actual pay figure showing the value of the fees paid to you, as your pension is worked out slightly differently from other LGPS members who receive a salary or are on an hourly rate.
This figure needs to be reasonable as this is just a forecast. More precise figures will be calculated when you actually come to retire/leave employment.
If you believe that this figure is significantly different to what you think it should be, then, again, please contact your employer’s payroll section (not the pensions section) for clarification.
Projection to NPA
These are your pension benefits, should you continue to work in your current post, projected to your normal pension age as shown on the statement. Your retirement age in the LGPS is now linked to your state pension age, subject to a minimum of 65, and is known as your Normal Pension Age, or NPA. If your NPA is after 65 and you have final salary benefits then an ‘actuarial’ increase is included in this calculation, calculated on current factors. Note that the factors change from time to time and can go down as well as up, meaning that the actual increase that is applied when you retire may be less than is included here. If you need more information regarding ‘actuarial increases’ please contact the Pensions Helpdesk for more information.
Please also note the date quoted on this statement reflects your current state pension age, but should that date change in the future, then your NPA will also change.
Qualification for pension benefits
If you joined the LGPS on or after 1 April 2014, with no earlier period of LGPS membership in England or Wales and having not transferred any previous pension rights into the LGPS, you must be a member of the scheme for TWO YEARS before you have any entitlement to LGPS pension benefits. This information therefore is calculated on the assumption that you will continue to contribute to the LGPS until your retirement age.
There are two areas of taxation for pension growth, the annual allowance and lifetime allowance.
The annual allowance is the amount by which your pension benefits may increase, in any one year, without having to pay a tax charge.
The lifetime allowance is a limit on the total value of pension savings that you can have, without triggering a tax charge. From 6 April 2016 to 5 April 2018 the lifetime allowance was £1,000,000. Since then it has generally increased each year in accordance with inflation but in March 2021 the link to inflation was removed for the following five financial years and it currently remains at the April 2020 rate of £1,073,100.
Paying additional contributions, including Additional Voluntary Contributions (AVCs), will increase the likelihood of triggering a tax charge.
Pension taxation is a complex area and legislation can change on a regular basis. If you feel that you will be affected by either the annual allowance or lifetime allowance, visit the Pension taxation page for more information or seek your own financial advice. The Pensions Section cannot provide financial advice.
Please note that the following elements are not taken into account on your pension statement:
- Early Retirement Reductions - If you are over age 55 as at 31 March 2021, your benefits do NOT include any early retirement reduction that would apply if you were to retire before your retirement age.
- Additional Voluntary Contributions - AVC contributions are not taken into account on your statement, although any pension purchased under the scheme are included (i.e. ARCs or APCs).
- Pension Sharing Orders - If a pension sharing order has been applied to your pension following a divorce, resulting in a reduction to your pension benefits, this has NOT been taken into account in the figures stated.
- ‘Scheme Pays’ Reductions - If you have, at any time breached the annual allowance and elected for the pension scheme to pay the tax charge, the figures quoted do NOT take into account the reduction to benefits to meet the tax charge.
Our pledge to combat pension scams
Leicestershire County Council Pension Fund has signed up to The Pension Regulator’s (TPR) Pledge to combat pension scams. By doing so we are committing to:
- Regularly warning members about pension scams;
- Recognising the warning signs of a scam by ensuring key staff have access to training resources such as the scams module in the TPR’s trustee toolkit;
- Taking appropriate due diligence measures by carrying out checks on pension transfers and documenting transfer procedures;
- Clearly warning members if they insist on high risk transfers being paid;
- Reporting concerns about a scam to the authorities and communicating this to the scheme member.
Further information on how to avoid pension scams is available on The Pensions Regulator website.
When the LGPS changed from a final salary to a career average pension scheme in 2014, protections for older scheme members were introduced. Similar protections were provided in other public sector pension schemes. The Court of Appeal ruled that younger members of the Judges’ and Firefighters’ Pension schemes have been discriminated against because the protections do not apply to them. The Government has confirmed that there will be changes to all main public sector schemes, including the LGPS, to remove this age discrimination. This ruling is often called the ‘McCloud judgement’.
Whilst Government have provided remedy for some public sector pension schemes, they are still considering exactly what changes need to be made to remove the discrimination from the LGPS. This means it has not been possible to reflect the impact of the judgement in your annual benefit statement this year. If you qualify for protection it will apply automatically - you do not need to make a claim. For more information, see the frequently asked questions on the national LGPS website.
Disclaimer: Every effort is made to ensure that figures provided are as accurate as possible but cannot be guaranteed. At the point that you claim your pension benefits your employer will provide up to date pay information which would determine the amount of benefits you will receive. The Council disclaims any liability arising from any decision taken on the basis of the figures quoted.