New Look

1

• New Look
• Local Government Pension Scheme
• April 2008
• Jo Brewin
• Payroll Manager

2

• The Local Government Pension Scheme is changing
  with effect from 1 April 2008
• All current members of the scheme will
  automatically be transferred into the new look
  scheme
• The new regulations are designed to ensure that
  the LGPS continues to be viable and
  equality-proofed and remains fair and affordable
  for everyone
• The LGPS will remain a final salary pension
  scheme with new and improved benefits

3
Summary of Changes

• Contribution rates are changing
• Accrual rate how the pension is calculated
• Membership eligibility
• Death Benefits
• Survivor Benefits
• Additional Contributions
• Flexible retirement
• Ill Health retirement

4
Contribution Rates

• Contribution rates will be banded depending on
  earnings

5
Contribution Rates cont

• Banding will be based on total pensionable full
  time equivalent pay
• The pay bands will be adjusted each April in line
  with the cost of living
• Bands based on salary as at 1 April 2008
• Will be reviewed at 1 April each year
• If currently paying protected rate of 5
• from 1 April 2008 5.25
• from 1 April 2009 5.5
• from 1 April 2010 6.5 or (if lower) the
  relevant rate from the table
• from 1 April 2011 the relevant rate from the
  pay band table

6
How is my pension calculated?

• Up to 31 March 2008 1/80th of final salary for
  each year of service plus an automatic lump sum
  of 3 times pension
• From 1 April 2008 1/60th of final salary for
  each year of service no automatic lump sum
• Exchange pension for lump sum at a rate of 12
  lump sum for each 1 pension given up
• Normally calculated on final years pensionable
  pay
• If pay has been reduced can opt to have benefits
  based on the average of any 3 consecutive years
  in the last 10 years

7
Compare calculation

• Old scheme
• 18000 x 20/80 4500 annual pension 13500
  lump sum
• New scheme
• 18000 x 20/60 6000 annual pension no lump
  sum
• Convert 1125 pension into lump sum
• 13500 lump sum 4875 annual pension

8
Membership Eligibility

• All non academic employees who have a contract of
  3 months or more and who are under the age of 75
  will be eligible for membership of the LGPS
• Only exclusion casual employees where there is
  a contract of less than 3 months or where there
  is no mutuality of obligation

9
Death Benefits / Survivor Benefits

• In service - Death grant increased from 2 to 3
  times annual salary
• Leave before retirement - death grant increased
  from 3 to 5 times deferred pension
• Pensioner death grant increased from 5 to 10
  times annual pension less amount of pension
  already paid
• Survivor pensions paid to husband, wife,
  registered civil partner, eligible children
  calculated at 1/160th of scheme members final
  salary for each year of service
• Nominated co-habiting parter conditions laid
  down by LGPS

10
Increasing your Benefits

• Can buy up to 5000 of extra annual pension in
  multiples of 250
• Buying added years will no longer be available
  unless you make an election before 1 April 2008
• Added years elections already in force will
  continue on same basis
• Can continue to pay AVCs
• Prudential
• Standard Life

11
Flexible Retirement

• Normal pension age is 65
• Can stay in pension scheme to age 75
• Benefits drawn after age 65 will be increased
• Flexible retirement from age 55 at the
  discretion of the University
• If hours or grade reduced can take some or all of
  the benefits built up at that point in time
• Benefits taken before age 65 may be reduced for
  early payment

12
Ill Health Retirement

• 2 tiers may be 3
• First tier 2 years in pension scheme no
  reasonable prospect of being capable of gainful
  employment before age 65
• Benefits based on membership to date plus all
  prospective membership to age 65
• Second tier 2 years in pension scheme
  unlikely to be capable of gainful employment
  within a reasonable period of leaving but may be
  capable before age 65
• Benefits based on membership to date plus 25 of
  prospective membership to age 65
• Third tier still in consultation

13
And finally

• The cost of providing your Local Government
  pension is paid for largely by contributions from
  your employer
• 2008/09 University pays 14.3 rising to 16.5
  by 2010/11
• It is important that the scheme remains
  affordable so in the future costs of providing
  the scheme may need to be shared between members
  and employers.
• This will be in accordance with government
  guidance

14

• Further details will be sent to all members
  shortly
• Please contact Payroll with pension queries
• Jo Brewin - 2796
• Julie Robinson 2797
• Vi Treleaven 2798
• Any Questions?