Information for IFAs
We do not correspond directly with financial advisors. Information you require will be provided to our member who may then pass it on to you.
Your client will be able to provide you with their latest benefit statement and annual allowance information. They can use My Pension Onlineto estimate their pension and produce projections including actuarial reductions.
Cash Equivalent Transfer Values (CETV’s)
We're only able to make CETV payments when we're satisfied that a transfer has met the Pensions Regulators’guidance.
Members are only entitled to make one free request for a guaranteed transfer quotation in any 12-month period. If they wish to proceed with a transfer, the election to proceed must be made at least 12 months before their Normal Pension Age (NPA) in the LGPS. A member may have more than one NPA. It is the earliest NPA that determines whether there is any entitlement to a transfer.
Members can only transfer benefits from the LGPS if they have left the scheme. Generally, if there is an entitlement to a transfer, all benefits must transfer at the same time, e.g. one deferred record cannot be retained whilst another is transferred, even if held by different funds in England or Wales.
If a member is already in receipt of a pension from another period of membership with this or any other LGPS fund in England & Wales, section 93 of the Pensions Schemes Act 1993 does not allow a CETV to be paid.
There is no charge or penalty for transferring out of the scheme.
Information about the LGPS which you require is available on the LGPS Regulations and Guidanceand LGPS members website.
Where a request is for a transfer to a scheme where GMP or protected rights cannot be accepted, it is possible to transfer all rights to such a scheme provided the transferring member is aware of the rights being given up.
Transferring accrued LGPS benefits to another scheme
Members have the right to transfer their accrued LGPS benefits to another scheme including a scheme that offers flexible benefits. However, if the total value of their LGPS benefits across all LGPS funds in England and Wales is £30,000 or more, then they are required to take independent advice (but not for AVCs), from an authorised independent advisor who is registered and authorised by the Financial Conduct Authority to carry on the regulated activity in Article 53E of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
Seek independent financial advice if the value of LGPS benefits is £30,000 or less
If the total value of their LGPS benefits is £30,000 or less (or in respect of a transfer of AVCs), we recommend that members seek independent financial advice before deciding to transfer their LGPS pension benefits.
Transferring additional voluntary contributions (AVCs)
In accordance with the LGPS, we allow current members to start new Additional Voluntary Contributions (AVCs) payments via Prudential, but older contracts could be with Standard Life.
At present, a scheme member can only take a draw down of AVCs if they are transferred to another pension scheme which allows such draw down. AVCs can be transferred at any time before the earlier of their date of retirement in the LGPS or age 75. The member does not need to have left the scheme, however AVC payments must cease before a transfer can take place.
A new AVC contract can be taken out once the transfer has been completed.
If a member wishes to transfer their AVC fund value, they should make a request to Bedfordshire Pension Fund in writing providing details of the receiving scheme.
Members can change their AVC investment choices with their chosen AVC provider at any time. Members have access to their AVC accounts via the provider’s website.
About the scheme
The LGPS changed from a final salary scheme to a career average scheme on 1 April 2014. 1/49th of their pensionable pay is added to their pension account at 31 March each year. The balance in their pension account is then revalued in line with the cost of living.
If the member joined the Scheme before 1 April 2014, they have built up benefits in the final salary scheme.
For membership built up between 1 April 2008 and 31 March 2014 they receive a pension of 1/60th of their final pay as a pension.
For membership before 1 April 2008, they receive a pension of 1/80th of their final pay plus an automatic lump sum of three times their annual pension.
The final pay is usually the pensionable pay in the year they leave the Scheme. Pay from one of the previous two years can be used if it is higher.
There are some protections if a member’s pay has been reduced within 10 years of leaving or retiring. They may be able to apply to their employer to have their former higher pay used as their final salary pay. You can read more about reductions in pensionable pay here.
You can find a guide to the LGPS in our guides to the LGPS section on our website.
Normal Pension Age (NPA)
For pension benefits built up from 1 April 2014 the NPA is linked to the State Pension Age (SPA)
For pension benefits built up before 1 April 2014 the NPA for most people is age 65.
If your client joined the LGPS before 1 April 1998 and left before 1 October 2006, their NPA is the earliest of:
• age 60, if by that age they would have built up 25 years membership if they had remained in the scheme until then, or
• the date they would have achieved 25 years membership if they had remained in the scheme, if that date falls between their 60th and 65th birthday, or
• age 65 if, by that age, they would not have built up 25 years membership if they had remained in the scheme until then.
If your client left the LGPS before 1 April 1998, they do not have an option to defer payment of their benefits beyond their Normal Retirement Date i.e. they have to take payment of their benefits at that date if they are not already in payment.
Early retirement reductions
If the member chooses to take their pension benefits before their NPA, they will normally be reduced.
The reduction is based on the period between the date your benefits are paid and their NPA. The earlier they take their pension, the bigger the reduction.
The current reductions for taking their benefits up to 13 years early are shown in the table below. If the number of years is not exact, the reductions will be adjusted.The lump sum reductions are only applicable to any automatic lump sum built up before 1 April 2008.
|
Number of years
|
Pension reduction
|
Lump sum reduction
(for membership to 31 March 2008)
|
|
0
|
0%
|
0%
|
|
1
|
4.9%
|
1.7%
|
|
2
|
9.3%
|
3.3%
|
|
3
|
13.5%
|
4.9%
|
|
4
|
17.4%
|
6.5%
|
|
5
|
20.9%
|
8.1%
|
|
6
|
24.3%
|
9.6%
|
|
7
|
27.4%
|
11.1%
|
|
8
|
30.3%
|
12.6%
|
|
9
|
33.0%
|
14.1%
|
|
10
|
35.6%
|
15.5%
|
|
11
|
39.5%
|
N/A
|
|
12
|
41.8%
|
N/A
|
|
13
|
43.9%
|
N/A
|
Ill health retirement
An employer (or former employer) can decide that a member’s pension can be paid on the grounds of ill health retirement. The employer must get the opinion of an Independent Registered Medical Practitioner (IRMP) before they make their decision.
If a member qualifies for ill health retirement their pension may become payable immediately (at any age) without any reductions for early retirement. In some cases, if a member is still paying into the scheme and depending on the severity of their ill health, the pension may be enhanced.
You can read more about ill health retirementon the LGPS website.
Funding
The scheme is funded by employer and member contributions as well as investments. Find out more about this in our Funding Strategy Statement and our Investment Strategy Statement.
You can also view the latest actuarial valuation report.
Pensions increase and revaluation
Active members
The entire career average pension pot is revalued every April by the Treasury Revaluation Order index. It is worth noting that revaluation will usually be positive but can also be negative.
Deferred members
Deferred pensions will increase each April in line with the Consumer Price Index (CPI). Pension Increase cannot be negative on deferred pensions.
If the client left the pension scheme part way through the year, they won’t get the full increase. Increases on deferred benefits usually start building up from the day after the date they left the pension scheme. They will get the full pension increase from the next year.
Pensioner members
Pensions already in payment will increase each April in line with the cost of living.
The percentage increase is set by HM Treasury under the Pension (Increase) act 1971 and is based on the CPI over the 12 months to the previous September.
The pension increase is payable from the first Monday following the 6 April, if the 6th is not the first Monday.
If your client left the pension scheme part way through the year, they won’t get the full increase. Increases on pension benefits usually start building up from the day after the date they left the pension scheme. They will get the full pension increase from the next year.
Some pensioners may not receive the full pension increase if the pension increase percentage is more than 3%, they have a ‘Guaranteed Minimum Pension (GMP)’ and have attained State Pension Age before 6 April 2016.
Guaranteed Minimum Pension
The LGPS was contracted out of the State Earnings Related Pension Scheme (SERPS) and later State Second Pension (S2P) until 5 April 2016.
Members who paid into the LGPS before 1997 and have reached State Pension Age will probably have a GMP.
The LGPS must ensure that the pension paid to a member is as much as they would have been paid under S2P. This is known as the Guaranteed Minimum Pension (GMP). It isn't a separate pension; it's simply the minimum amount their LGPS pension must reach. Usually, their LGPS pension is more than their GMP.
Government legislation changed in 1988 so the GMP is made up of 2 elements:
1. pre 1988 and
2. post 1988 amounts.
If the member’s state pension age is on or after 1 April 2016, we pay the full increase on the GMP element of their LGPS pension.
If their state pension age is before 1 April 2016 we only pay up to 3% increase of the post 1988 GMP element.
The table below shows that pension increase is paid on the different parts of the pension and who is responsible for paying it:
|
Part of the pension
|
How much pension increase
is paid
|
Who is responsible for
paying it
|
|
Basic LGPS pension, less pre
and post 1988 GMP amount
|
Total % increase
|
Bedfordshire Pension Fund
|
|
Pre 1988 GMP amount
|
Total % increase
|
DWP
|
|
Post 1988 GMP amount
|
3% or total % increase if lower
than 3%
Any remaining % over 3%
|
Bedfordshire Pension Fund
DWP
|
Contributions
The contributions payable by a member is determined by Regulation 9 of the LGPS 2013 Regulations. Members pay a percentage of their pay based on their pensionable earnings.
Employers’ contributions are not based on individual member’s contributions but are determined by the scheme actuary following the triennial scheme valuation.
The employer contribution rates can be found on our website. We will not provide a breakdown of the contributions paid by a member or employer as the contributions merely fund the scheme and are not used to calculate any benefits payable.
Tax free lump sum
The scheme regulations allow the member to give up pension to provide a bigger tax free lump sum at retirement at the rate of £1 of pension for an additional £12 of lump sum. The maximum lump sum is the lowest of:
•25% of the capital value of your benefits
•£268,275
•£268,275 less the total lump sums you have already taken.
Survivor’s pensions
In the event of a member’s death, a survivor’s pension may be payable to their spouse/civil partner or cohabiting partner. An estimated amount of the survivor’s pension will be provided on any pension estimates issued and can also be obtained onMy Pension Online.
The cohabiting partner would need to meet the following criteria:
•they were free to marry each other or to enter into a civil partnership, and
•they had been living together as if they were spouses, or civil partners, and
•neither cohabiting partner had been living with someone else as if they were spouses or civil partners, and
•the cohabiting partner was financially dependent on the member, or they were financially interdependent on each other.
The above must be met for a continuous period of at least 2 years prior to the member’s death. If the member left the scheme before 1 April 2008, then a cohabiting partner is unable to claim the survivor’s pension.
Death grants
Benefits payable on death depend on when the member left the scheme.
Death in service
3 times actual annual pay based on annualised average of last 3 months pay
Death from deferred pension
Left scheme before 1 April 1988
Please contact the fund directly for information
Left scheme before 1 April 2008
Equivalent to the lump sum that would have been payable if not for death
Left scheme after 31 March 2008
5 times the retirement pension that would have been paid if not for death
Death of a pensioner
Left scheme before 1 April 1988
Please contact the fund directly for information
Left scheme before 1 April 2008
5 times the annual pension in payment less any pension paid out
Left scheme between 1 April 2008 and 31 March 2014
10 times the annual pension in payment less any pension paid out
Left scheme after 31 March 2014
10 times the pre commutation pension less any commuted lump sum and any pension paid to the member