Local Government Pension Scheme Employees’ newsletter February 2007 Introduction Welcome to the February 2007 Newsletter for Scheme members within the Local Government Pension Scheme (LGPS) in East Sussex. This Newsletter is to inform you about the proposals for the new-look LGPS, which is due to become operative from 1 April 2008. Items covered in this issue New Look LGPS from 2008 AVC’s New Look LGPS from 2008 Following on from Phil Woolas MP, Minister for Local Government’s statement on 23 November 2006 about the ‘new look’ Local Government Pensions Scheme (LGPS), the Department for Communities and Local Government (DCLG) has now published the draft Local Government Pension Scheme (Benefits) Regulations. These draft regulations form only part of the draft regulations that are expected to be issued for consultation in relation to the new look scheme. It is the Government’s intention that the new Regulations will be published by April 2007, in order to comply with their timetable for the new-look LGPS in force by 1 April 2008. As part of this consultation the DCLG has confirmed the Government's commitment to providing a defined benefit scheme within local government, but has stressed that it needs to be affordable and viable and fair to tax payers. A summary of the proposals is set out below: This is not intended to be an exhaustive or comprehensive comparison of the proposals, but one merely to aid Scheme members. A copy of this Newsletter can be found the ESCC website (www.eastsussex.gov.uk) under pensions. Type of Scheme Pensions Accrual Existing Final Salary 1/80th (equates to 1/64th including automatic lumpsum) Automatic 3/80ths £12 lumpsum per £1 of pension given up. The maximum lump sum you can take is generally limited to 25% of the overall value of your pension benefits Proposed Final Salary 1/60th Lump- Sum Normal Pension Age (when unreduced benefits paid as of right) Survivor Benefits 65 (with 85-year rule protection for all pre1/10/2006 members up to 31/3/2008 plus further transitional protection for certain members) Spouse or same sex civil partner only 1/160th accrual ¼ of member’s pension per child up to maximum of two if survivor’s pension or, 1/3 of member’s pension per child up to maximum of two if there is no survivor’s pension Two times salary lump sum Age 50 (55 from 2010) No automatic lump sum. Optional commutation £12 lump-sum per £1 of pension given up. The maximum lump sum you can take is generally limited to 25% of the overall value of your pension benefits 65 (with similar transitional 85-year rule protections carried over from the pre 2008 scheme) Spouse, same sex civil partner or nominated cohabiting partner 1/160th accrual Children’s benefits payable to a maximum accrual of 1/160th ¼ per child up to a maximum of ½ member’s pension Three times salary lump sum For pre-1/4/2008 members age 50 (55 from 2010) For new starters from 1/4/2008, age 55 No change Children’s Pensions Death in Service Grant Earliest Retirement Age (other than for illhealth) Redundancy/ Efficiency Ill Health Rules Benefits paid unreduced and automatically if member over age 50 Immediate unreduced benefits payable at any age for those certified as permanently (to age 65) incapable of continuing to Three tiers – payable at any age. Tier 1 – Immediate accrued benefits, for those carry out own job or available comparable post With five or more years Scheme membership enhancement calculated certified as incapable of continuing to carry out own job or available comparable post but immediately capable of other work Tier 2 – Immediate accrued benefits plus 25% of prospective service to age 65, for those certified as incapable of continuing to carry out own job or available comparable post but able to do some gainful employment at some point before age 65 Final Pay (i.e. the pay on which pension benefits are calculated) Employees’ Contributions Additional Contributions to Buy Added Years Tier 3 – Immediate accrued benefits plus 50% of prospective service to age 65, for those certified as incapable of any gainful employment before age 65 Best of final year’s pay or Best of final year’s pay or best of last three years’ pay best average pay over (revalued) or as provided by three consecutive years a certificate of protection pay within last ten years, in certain circumstances revalued up to date of leaving 6% on all pensionable pay 5.5% on first £12,000 of (5% for protected manual pay 7.5% on balance of workers) pay above £12,000 Possible to purchase up to Option to buy up to £5,000 6 2/3 years membership by % additional annual pension contributions based on in increments of £250 per current age, payable to age annum 65 AVC’s ADDITIONAL VOLUNTARY CONTRIBUTION (AVC) RULES AVCs for members of the East Sussex County Council Pension Fund are provided by the Prudential. Recent changes to the rules concerning AVCs now mean that saving for retirement is more flexible. Are you a taxpayer? If you are, contributions may cost less than you think. You receive tax relief through your pay, so your net take home pay could go down by significantly less than the amount you choose to contribute. You could regard this as the tax man making a contribution to your savings. How much can you pay? The 15% maximum pension contribution limit has been removed. It is now possible to pay up to the equivalent of 100% of your earnings in any year up to a maximum (including the increase in the value of your existing pension benefits) of, currently, £215,000 per annum. However, it is proposed that contributions to the AVC may be limited in the near future to 50% of salary per year. If you would like to discuss in AVC’s in further detail, please telephone Prudential’s dedicated Public Sector support team, Pension Connection, on 0845 607 0077*. * Calls may be monitored or recorded for quality and security purposes. Contacts This newsletter can only provide an overview. The precise impact will depend upon individual circumstances. Queries or requests for further information can be directed as follows: Where SERCO Helpline (ESCC delivery partner) Tel: 01825 744544 Email: email@example.com Wendy Neller (ESCC Assistant Pensions Manager) Tel: 01273 481904 Email: firstname.lastname@example.org What Day-to-Day administration of the Local Government Pension Scheme. If you are dissatisfied with any part of the pension administration you have received.