Pensions - Frequently Asked Questions

Questions

1. Why have I paid pension contributions without my agreement?
2. What percentage of salary do I have to pay?
3. Can I opt out of the LGPS?
4. Can I have a refund of pension contributions?
5. If I have a refund of contributions how much will I get back?
6. I don't pay Income Tax so why has tax been deducted from my refund?
7. Can I transfer previous pension rights into the LGPS?
8. How can I increase my benefits?
9. Can I nominate a beneficiary to receive my death grant?
10. How does part time service count towards my benefits?
11. What pension information do I need if I am getting divorced?
12. When will I receive my Annual Benefit Statement?
13. Is my partner entitled to a pension if I should die?
14. What is the minimum period of membership I need to be entitled to ill health benefits?
15. When deciding the 3 tiers, what do you mean by “gainful employment”?
16. Is there any impact if I am part time when I retire on ill health?

Answers

1. Q. Why have I paid pension contributions without my agreement?A. Your employer should have given you information about the Pension Scheme when you started work. 
   
   The Local Government Pension Scheme (LGPS) is a statutory scheme whose rules are agreed by Parliament. These rules require all new employees to join the LGPS upon taking up employment unless they have opted out before they commence. It is a legal requirement.
   
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2. Q. What percentage of salary do I have to pay?
   A. Your contribution rate depends on how much you are paid but it will be between 5.5 and 7.5% of your pensionable pay.  The rate you pay depends on which pay band you fall into.  However, tax relief and a reduced National Insurance contribution can reduce the cost.
   
   A person earning £12,000 per annum will have their net pay reduced by about 3.7 per cent after taking account of the tax and National Insurance contribution.
   
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3. Q. Can I opt out of the LGPS?
   A. Anyone can opt out of the LGPS at any time. 
   
   This can be done either by completing the membership option form provided by your employer when you commence employment or at a later date by writing to your employer.
   
   The opt out will normally take effect from the beginning of the next payment period after the option is received.
   
   Once the Pension Section has received notification of your opt out we will write to you with details of your pension benefits.
   
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4. Q. Can I have a refund of pension contributions?
   A. Yes, provided you have been a member for less than 3 months and have not transferred any other pension rights into the LGPS from a previous scheme. 
   
   If you opt out within 3 months the contributions paid will be refunded through the payroll department and your membership cancelled.
   
   If you opt out with membership of 3 months or more  the Pension Section will write to you with details of your pension benefits.
   
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5. Q. If I have a refund of contributions how much will I get back?
   A. The average return of contributions is approximately 65% of the amount paid.
   
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6. Q. I don't pay Income Tax so why has tax been deducted from my refund?
   A. The Pension Fund must pay tax at 20% to the Inland Revenue on the value of contributions refunded after the deduction for National Insurance has been made.  The liability is passed onto the member.
   
   It is not Income Tax and cannot be reclaimed from the Inland Revenue.
   
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7. Q. Can I transfer previous pension rights into the LGPS?
   A. Yes.
   
   If, before taking up your current employment you were in the LGPS with another employer you can elect to transfer your previous LGPS service to count with your current service.  Service transferred will count in exactly the same way as it did with the previous employer.
   
   This may not be beneficial if your current whole-time equivalent pay is lower. We will write to advise you of this when you investigate the transfer.
   
   Pension rights can also be transferred from any other pension scheme into the LGPS.  The amount received from your previous scheme will buy a period of years and days in the LGPS. 
   
   The transfer will only take place upon your agreement. There may be a loss of benefit if the transfer is made more than 12 months after joining the LGPS with your current employer.
   
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8. Q. How can I increase my benefits?
   A. You can buy additional pension or pay Additional Voluntary Contributions (AVC's) into the County Council's  arrangement with Scottish Widows.
   
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9. Q. Can I nominate a beneficiary to receive my death grant?
   A. The County Council will allow nomination of the death in service grant which is equal to 3 times your pensionable pay. 
   
   The nomination must be made on a Death Grant Nomination Form which can be obtained from your employer or pension section. The nomination remains in force until cancelled in writing or a new nomination is made.
   
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10. Q. How does part time service count towards my benefits?
    A. If you are part-time, your scheme membership will count at its part-time length but your pension benefits will be calculated on the whole time rate of pay you would have received if working whole time.
    
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11. Q. What pension information do I need if I am getting divorced?
    A. Your solicitor may ask you to obtain a C.E.T.V. (Cash Equivalent Transfer Value)
    
    This must be requested from the Pension Section in writing.
    
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12. Q. When will I receive my Annual Benefit Statement?
    A. Annual Benefit Statements are issued once a year for current and deferred members. 
    
    When you receive your statement will depend on us receiving relevant information from your employer and the data cleansing which results from this. 
    
    A Feedback Form accompanies the statement for any further changes you wish to be made to your personal details.
    
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13. Q. Is my partner entitled to a pension if I should die?
    A. From 1st April 2008 the LGPS Regulations made provision for partner pensions for members who were contributing to the scheme on or after that date. 
    
    To nominate a cohabiting partner to receive a survivors pension your relationship has to meet certain conditions laid down by the LGPS. 
    
    Please read the explanatory notes on the Nomination of Cohabiting Partner for Survivor's Pension form on this link.
    
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14. Q. What is the minimum period of membership I need to be entitled to ill health benefits?
    A. Three months.
    
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15. Q. When deciding the 3 tiers, what do you mean by “gainful employment”?
    A. This means paid employment of at least 30 hours a week for at least 12 months.
    
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16. Q. Is there any impact if I am part time when I retire on ill health?
    A. Any extra membership will be adjusted to reflect your part time hours on leaving.
    
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