Saving it for later You’re a deferred member if you left the scheme or office before the age you can take your pension. Your deferred pension is safe with us until it’s time to take it, or you transfer it to another pension scheme. Find out how your deferred pension goes up over time, when you can take it, and more. When will my deferred benefits be paid? You can claim your deferred pension benefits at any time between age 60 and 75. We pay your deferred benefits from your normal pension age unless you decide to take them earlier at a reduced rate, or later at an enhanced rate. We will send you a retirement pack just before your normal pension age. The pack will include a form that you need to fill in and return so we can pay your deferred benefits. Your normal pension age is the age you can retire and take the pension benefits you have built up in full. Are deferred benefits inflation proofed? Deferred benefits keep their value while they’re with us because we adjust them every year in line with the Consumer Prices Index. You’ll be able to see how your deferred benefits are changing on your statement each year. Your statement will show you the value of your benefits at the time you left the scheme, and the current value of your benefits, including cost-of-living increases that we add each April. Normal pension age What is my normal pension age? Your normal pension age is the age you can retire and take the pension you have built up in full. This is generally your 65th birthday. What is my state pension age? Use the government’s state pension age calculator to find out your state pension age. Note that the calculator doesn’t include proposed changes to state pension age. Ill health What happens if I become ill before I start getting my pension? If you become permanently too ill to work at any age we may be able to pay your benefits on health grounds. You need to apply in writing to your former council. Pensions increase Deferred pensions go up by 3% in 2018 The 3% increase on deferred benefits is due from 9 April 2018. This increase is based on the value of the Consumer Prices Index on 30 September 2017. If you left your office or the scheme part way through the year you won’t get the full increase straightaway. Increases on your deferred benefits usually start building up from the day after the date you left the pension scheme. You’ll start to get the full increase from next year. Will my pension increase in the future? Your deferred benefits will increase each April in line with the rise in the Consumer Prices Index for the previous September. When you start getting your pension, it will go up each year in this way too. How your deferred pension is worked out The membership you have built up from the date you joined the scheme to the date you left the pension scheme is used to work out your pension benefits. It’s all treated as full-time membership. What’s career-average pay? It’s the pay we use to work your pension benefits out, and is the pay for each year of your membership (or part year) in the scheme up to the date you left the scheme, which is increased to take into account cost of living increases (except for your final year or part year). The total of all the revalued pay is then divided by your total membership to give your average pensionable pay over the time you were a member of the scheme. Example Let’s say you were in the pension scheme for three years starting on 1 April 2013. This is how we would work out your career-average pay. Step 1 We increase each year’s pensionable allowances by the cost of living increases and add them together. Year-end Year-end pay (£) Revalued amount 31/03/2014 11500.00 12512.00 31/03/2015 12500.00 12975.00 31/03/2016 14000.00 14000.00 Total £39487.00 Step 2 We work out how long you were a member. So that’s 1 April 2013 to 31 March 2016, or 3 years 0 days. Step 3 We divide the total adjusted allowances by the time you were in the scheme. That’s £39487.00 divided by 3 years. Your career-average pay in this example would be £13162.33. If your allowances vary over the years because you hold different positions, we take this into account in your career-average pay calculation. How do we calculate your pension We work out your annual pension using the following calculation. Pension = membership x career-average pay ÷ by 80 You get an automatic lump sum (a one-off tax-free payment) too, which is simply three times your pension. Transfers Can I transfer my pension rights to another pension scheme? A transfer can be paid to either: a UK HM Revenue & Customs registered pension scheme, or a Qualifying Recognised Overseas Pension Scheme (QROPS) You can ask your new pension scheme/provider to request transfer details from us. Or you can contact us directly. But – to be entitled to a transfer – you must: Have at least 3 months membership Not be retiring from the scheme on grounds of redundancy, business efficiency or ill-health Leave the scheme and elect for a transfer at least 1 year before your NPA Not already be in receipt of a LGPS pension (England & Wales only) or have previously retired on Tier 3 ill health grounds Not be an active member of the LGPS in any job (England & Wales only) You should think carefully before deciding to go ahead with a transfer Your deferred benefits are valuable benefits that keep pace with the cost of living both before and after you start drawing your pension. And they include generous death benefits for your dependants. You should compare these benefits to the benefits a transfer would provide for you before making any decision to transfer. The Money Advice Service gives clear unbiased advice and information about all sorts of financial matters. You may find some useful information about transferring pension rights at www.moneyadviceservice.org.uk (external link) Before a transfer can be paid, you may be required to take appropriate independent advice (at your own cost) from an adviser authorised by the Financial Conduct Authority (FCA) – see ‘Freedom & Choice’ below for details. You should consider taking this advice, even if you are not required to do so. Freedom & choice Changes to Defined Contribution Schemes In the 2014 budget the Government announced reforms to defined contribution schemes, like personal pensions. These reforms are effective from 6 April 2015 and give members of such schemes, aged 55 or over, greater flexibility over how they can access their pension savings. However, even under the new flexibilities, HMRC rules require that anything above 25% of pension savings will be taxable as pension income at a member’s marginal rate. To help people understand their retirement choices from schemes offering the new flexibilities, the government has introduced a free and impartial service called Pension Wise Transfers from the LGPS to Defined Contribution Schemes The LGPS isn’t a Defined Contribution Scheme so the new flexibilities don’t apply to it. But there are indirect changes for LGPS members considering transferring to such a scheme. For details – refer to this Q & A for LGPS members. Additional Voluntary Contributions (AVCs) The Department for Communities and Local Government (DCLG) are currently considering how the changes will impact on LGPS in-house AVC plans. Don’t be a victim of a ‘pension scam’ (also known as ‘pension liberation fraud’) The Pensions Regulator (TPR) is working with a multi-agency taskforce of Government, regulators, financial services bodies and criminal justice agencies (Project Bloom) to disrupt and prevent scams. The Pensions Advisory Service (TPAS) also launched a campaign to highlight the dangers of pension scams. This campaign is being run in association with Project Bloom. The tactics used by pension scammers are constantly changing. Many scammers are now directing members to transfer into single member occupational schemes in an attempt to escape scrutiny from regulators. They may attempt to target members interested in transferring to a scheme offering the ‘freedom & Choice’ pension flexibilities, introduced in April 2015. Pension scammers offer free pension reviews and use ‘one-off investment opportunities’, ‘pension loans’ or upfront cash incentives to entice members to transfer their pension savings. ‘Investment opportunities’ are often overseas. For many people the offers will be bogus. They claim they can help members access their pension before the legal minimum age of 55. It’s normally only in rare circumstances, such as serious ill health, that you are able to take retirement benefits before age 55. They also claim they can help members take more than 25% of their pension savings as ‘tax free’ cash, after age 55. HMRC rules require that all pension savings above 25% are taxable as pension income at a member’s marginal rate, even if they are taken as a lump sum. If you are taken in by a pension scam and agree to transfer, you will probably lose most, if not all, of your pension savings. You could also receive tax charges of up to 55% of the value of your pension for taking what is classed as an ‘unauthorised payment’ for tax purposes. If you do receive an ‘unauthorised payment’, you must declare it to HM Revenue & Customs (HMRC). If you fail to declare an unauthorised payment to HMRC, you may be charged penalties in addition to the tax. The Pensions Regulator(TPR) has produced the following information about Pension Scams, for members. A video showing how easily a member could lose all their pension savings (this is based on a true story). You can watch the video here or on YouTube here. An infographic poster can be viewed here. A pension scams booklet can be viewed here (pdf 389KB). This booklet lists ‘Ten steps to protect your pension’ and includes ‘typical hallmarks’ of a scam based on real life experiences of scam victims. You can view the pension scams campaign page of TPR’s website at www.thepensionsregulator.gov.uk/pension-scams.aspx The pension scams section of The Pensions Advisory Service (TPAS) website can be viewed here and includes information about: How to spot a scam What happens when you transfer into a scam How to protect your pension from scams What to do if you think you’ve been or are being scammed HMRC also produced a factsheet (pdf 218KB) about ‘Pension liberation and tax’. This can be viewed here. Linking LGPS membership Can I link my previous CLLR LGPS membership to my current membership? No, you can’t link your councillor LGPS membership to any LGPS membership you have because you have a job within LGPS. Death benefits Death grants For deferred members, the death grant if they die whilst still a deferred member is their deferred lump sum, including cost of living increases from the date of leaving to date of death. However the death grant that is payable may be affected if you have active membership elsewhere in the Local Government Pension Scheme. Please contact us for further information about this. Choosing who receives the death grant You can choose who should receive any death grant by filling in death grant 'expression of wish' form. If you have not filled in a death grant nomination form and would like to do so, please download a form from our website or contact us. If you do this, we can pay any money due quickly, and inheritance tax will not be taken from the death grant. What will my dependants get if I die? We automatically pay pensions for a surviving husband, wife or civil partner on your death. Children's pension Quotes How do I get a quote Contact us for a quote when you decide to claim your benefits. We will send you some forms to fill in and a booklet explaining your benefits. Can I get my deferred benefits early? From 14th May 2018, if you are age 55 or over you can ask the Fund to pay your deferred benefits early. If you want to do this, please ask us for a quote three months before the date you want to take your benefits. We may not be able to pay your benefits if you are working for a local government employer.