Annual Benefit Illustration
for Mr A Sample
2013
The Local Government Pension Scheme
Your Annual Benefit Illustration
I am pleased to provide you with an illustration of your pension benefits as
at 31 March 2013. You will notice that we have redesigned the illustration
this year; this has allowed us to make significant savings to the pension
fund without compromising the information that is provided to you.
This benefit illustration provides the following information:• an indication of the value of your benefits from the Local Government
Pension Scheme (LGPS) at 31 March 2013 and at age 65, including
standard and converted benefits, and details of the death grant payable
• details of the pensionable membership used in these calculations
• the names of those you have nominated (if any) to receive payment of
any death grant
• information on the proposals for the new LGPS from 2014
If you have any questions concerning the information shown, please
first read the explanatory notes within your illustration. If, after reading
these notes, you still have a question then you can contact us using the
information at the end of this booklet.
Yours sincerely
Yours sincerely
Patrick Luscombe
Pensions Manager
1
Pensions
Your Details
Name:
Mr A B Sample
Date of Birth:
10/10/1966
National Insurance No: NI125487965
Payroll No:
AB214587
Pensionable Pay
as at 31/03/2013*:
£000.000
Hours as at 31/03/2013*:
38
*If your hours and/or pay have changed since 31 March 2013 this will not be shown.
Pensionable Pay
The figure used in this illustration is an estimate based on the contributions
you have paid during the year ending 31 March 2013. If you are a part time
employee the figure used is the pensionable pay you would have received if
you worked full time. If you are not contracted to work 52 weeks a year, this
has also been taken into account.
Hours
The hours quoted are your hours of employment as at 31 March 2013.
The illustration of the benefits that you could receive at 65 has been based
on the accrual of future membership assuming you continue to work the
latest hours we hold.
2
Pensions
Current Value
Value of your LGPS Benefits as at 31/03/2013
Standard
OR
with Maximum
Conversion
Total Membership (1)
Pension
Lump Sum (2)
Value of your LGPS Benefits as at age 65
(not applicable if aged 65 or over at 31/03/2013)
Standard
OR
with Maximum
Conversion
Total Membership (1)
Pension
Lump Sum (2)
Value of your LGPS death grant as at 31/03/2013
Death Grant (3)
The figures and projections on this statement are based on the information
held on our records as at 31 March 2013 and the scheme regulations
currently in force. From 1 April 2014 the scheme is changing - please see
page 16 for further details. These changes WILL have an impact on the
figures quoted at age 65 (if applicable). Whilst every care has been taken
in producing the figures, they should not be seen as a definitive statement
of the benefits payable and they may not take into account the maximum
level of benefits allowed by HMRC.
3
Notes relating to the numbered points shown on
the illustration
[1] Membership
This is the total membership up to 31 March 2013 used for the calculation
of your benefits. It will include any membership transferred from another
pension scheme where you have been notified that your membership has
been transferred.
Periods of part time membership will be proportioned by the hours worked.
Therefore if you worked for 2 calendar years at 18.50 hours per week (half time
where whole time week is 37 hours) your pensionable membership will be 1 year.
Membership shown at age 65 assumes that you remain in the scheme until
that date on the latest hours that we hold.
If you are paying additional contributions to provide additional membership
and / or pension the illustration includes the proportion you have paid for at
31 March 2013. The full amount of membership and / or pension is included in
the values at age 65.
If you pay Additional Voluntary Contributions (AVC’s) to Equitable Life,
Standard Life or the Prudential these are not included in this illustration. Yearly
updates are sent under separate cover.
[2] Lump Sum
If the lump sums quoted in the standard calculations at 31 March 2013 and
at age 65 are the same value, this is because you are no longer awarded an
automatic lump sum for membership from 1 April 2008. If you only have
membership after 1 April 2008 your lump sum will be nil. Regardless of the
lump sum quoted you will be given the option at retirement to convert part of
your pension into an additional lump sum.
[3] Death Grant
Should you die whilst a current scheme member the death grant is equal to 3
times actual pensionable pay over the final year of membership. For part time
employees this is based on your part time pensionable pay. The amount quoted
in the illustration reflects your circumstances as at 31 March 2013.
The death grant is not automatically paid to your next of kin. It is possible for
you to nominate whoever you wish to receive the death grant and wherever
possible payment, will be made in accordance with your wishes. You will see
that your benefit illustration states who is currently nominated. If you haven’t
already made a nomination, or wish to amend your existing nomination, then
please complete the Expression of Wish form included in this Illustration. 4
Your Membership Details up to 31 March 2013
This section shows your scheme membership, inclusive of completed
transferred in service from any previous pension entitlement, as well as
breaks in membership. If a break is shown, i.e. ‘**’ it could be for the
following reasons:
Strike / Absence / Maternity / Paternity / Adoption Leave
Employer
From
To
Due to space restrictions the lines of membership shown are limited.
5
The membership shown is normally split when you change employers or
your hours of employment. However, occasionally the Pension Section will
split your membership for its own internal processes. This will not impact
on you in any way.
Calendar Length
Years / Days
Part Time Hours
or proportion
Membership to be used in
the calculation of benefits
Years/Days
However, all membership is included in the retirement values in the illustration.
6
Explanatory notes to help you understand your
Benefit Illustration
Your illustration shows the value of your benefits as at 31
March 2013 and at age 65 based on the current pension
regulations. However, I must emphasise, that it is still
possible for you to retire from age 60 with the immediate
payment of your benefits.
If you are within 6 months of your anticipated retirement age
and would be over 60 at that time, you should request an
estimate, via your employer, to ensure you receive details of
all the options available from the Pension Scheme.
Value of your LGPS benefits as at 31/03/2013
This shows the benefits that you have earned in the scheme as at 31 March
2013. The calculation uses your total scheme membership at that time and
a pay figure calculated from your pension contributions up to 31 March
2013.
If you were aged over 60 at 31 March 2013, the benefits shown will include
any reductions that may apply for early retirement.
If you were aged 65 or over at 31 March 2013, the benefits shown include
an increase for delaying your retirement beyond age 65.
Value of your LGPS benefits at age 65
This is an illustration of the benefits that you could receive at age 65
and assumes that you remain in the scheme until that date on the latest
hours that we hold on your record. However this is based on the current
regulations. Please see details of the new scheme from 1 April 2014 on page 16.
7
How your LGPS benefits are calculated
Your standard benefits are calculated as follows:-
For membership before 1 April 2008:Annual Pension = Membership to 31/03/2008 x Pensionable Pay x 1/80
Automatic Lump Sum = Annual pension x 3
For membership from 1 April 2008 to 31 March 2014:Annual Pension = Membership from 01/04/2008 x Pensionable Pay x 1/60
Automatic Lump Sum = nil
Standard or converted benefits
You may choose, at retirement, to have payment of standard benefits OR to
convert part of your pension to provide a larger lump sum. This illustration
quotes both sets of figures. No action is required by you now.
When you retire, you will be provided with a form by your employer, on
which you may choose whether to have standard OR converted benefits. For every £1 reduction to your pension, an additional £12 lump sum will be
awarded up to a maximum of 25% of your ‘fund value’. For example: If you choose to convert £100.00 of pension you would be
provided with an additional £1200.00 lump sum. You can choose to convert
less than the maximum amount quoted in the illustration but you cannot
exceed the maximum.
8
There are H M Revenue and Customs (HMRC) rules which restrict the
amount of tax free cash that can be taken in this way. For the purpose of
this illustration these limits have not been taken into account. In the event
of you electing to convert pension to lump sum at retirement these limits
will be applied.
You are not able to give up lump sum to provide additional pension.
Your pension is subject to income tax in line with tax codes supplied by
HMRC. Any lump sum payable from the scheme is not subject to income
tax.
It should be noted that any survivor benefit will be unaffected as a result of
any conversion.
Survivor Benefit
As we do not keep up to date records of status for every individual it is not
possible to provide accurate details of survivor benefits in the event of your
death.
I must emphasise that the provision of spouse’s and registered civil partner’s
benefits remains an automatic entitlement of the scheme.
Nominated cohabiting partner benefits are payable where a valid
nomination has been made and all the appropriate criteria are met.
Any scheme member who has already nominated a cohabiting partner to
receive a benefit will have been sent an acknowledgement. No details are
included in this illustration.
The nominated cohabiting partner benefit is based upon membership from
6 April 1988.
Expression of Wish Form
You may complete an Expression of Wish form indicating to whom you wish
the payment of any death grant to be made. This could be one person, a
number of people, or even an organisation such as a charity. However Kent
County Council, as the Authority responsible for administering the Pension
Scheme, has absolute discretion as to who any death grant is paid.
9
Local Government Pension Scheme Regulation
Expression of Wish for Payment of Death Grant (ABI)
If you die whilst a current member of the Local Government Pension
Scheme, a death grant equal to 3 x your actual pensionable pay is due –
no matter how long you have been a member of the Scheme.
You may complete an Expression of Wish indicating to whom you wish
the payment of any death grant to be made.
Please read the following notes before completing the form.
• Kent County Council, as the Authority responsible for administering the
Pension Scheme, has absolute discretion as to whom any death grant
is paid (thus ensuring that there is no liability for Inheritance Tax on this
payment). Generally the council will pay to the nominated beneficiaries
shown on the Expression of Wish. However, the Council is required to
consider all relevant information in reaching the decision about whom
it will pay and consequently, and in exceptional circumstances it will
consider payment to beneficiaries, other than those, specified on the
Expression of Wish form.
• If no Expression of Wish has been completed payment of any death grant
due will be made at the absolute discretion of the Authority.
Please turn to page 13 for further notes
10
Expression of Wish Form
Your Details
Name
Date of Birth
NI Number
Address
Your Current Nomination Details
Spouse
Child
Dependents
Please remove the centre page and return to:
Kent County Council, Pensions Section, 2nd Floor Brenchley House,
Week Street, Maidstone, Kent ME14 1RF
Photocopies of this form are acceptable.
11
Nominee No 1
Surname or Body
First Names
Relationship to you
Address
Proportion of death grant
%
Nominee No 2
Surname or Body
First Names
Relationship to you
Address
Proportion of death grant
%
If you wish to nominate more than 2 people please provide full details on
a separate sheet. N.B. The total percentages must add up to 100%
Signature
Date
Please do not forget to sign and date the form.
12
• You may nominate any person, whether or not they are related to you
or are financially dependent on you. You may also nominate a company,
charity, club or a society if you so wish.
• You may choose more than one nominee. However, if you do so you must
state what share of the death grant payment each nominee is to receive.
The total share must add up to 100% of the death grant payment.
• You cannot use this form to make conditional nominations “i.e. 50% to x if
y dies before him”.
• Your nomination may be revoked by writing to the Pensions Section. A
subsequent nomination may then be made using a further nomination
form which can be obtained www.kentpensionfund.co.uk
• If at the date of your death your nominee is a minor (i.e. under 18 years of
age) Kent County Council will be unable to make payment of any death
grant due unless a trust or some other suitable arrangement has been set
up.
The names of those you have nominated to receive any death grant payable
are shown on page 11. Should you wish to change your nomination or
make a nomination, if you have not already done so, please complete and
return the Expression of Wish Form.
Please do not forget to sign and date the form.
13
Nominations
The Expression of Wish and Nominated Cohabiting nominations are two
different entitlements and a separate form must be completed for each, if
relevant.
Nominated Cohabiting Partner
The scheme provides a survivor’s pension for a nominated cohabiting
partner. To be eligible to make a nomination all of the following conditions
must have applied to both you and your nominated cohabiting partner for
a continuous period of at least 2 years on the date the nomination form is
signed:
• both you and your nominated cohabiting partner are, and have been,
free to marry or enter into a civil partnership, and
• both you and your nominated cohabiting partner have been living
together as if you were husband and wife or civil partners, and
• neither you nor your nominated cohabiting partner have been living
with someone else as if you or they were husband and wife or civil
partners, and
• either your nominated cohabiting partner is financially interdependent
on you or both of you are financially interdependent on each other
If you wish to nominate a cohabiting partner please request
a form from your Personnel Department or visit our website
www.kentpensionfund.co.uk/ncp. If you are married or have registered a
Civil Partnership you do not need to complete a cohabiting partner form.
14
Financial Planning for Retirement Courses
These courses are held throughout the year and include a presentation by
a representative from the Pensions Section concerning all aspects of the
benefits payable from the Local Government Pension Scheme. This covers
such issues as the calculation and payment of benefits.
Following this session there will also be an Independent Financial Advisor
present who will be talking about the financial considerations of retirement
such as should you commute income into cash, State Benefits, taxation,
Inheritance Tax planning and the implications of long term care.
If you are interested in attending one of these courses, the dates of
which are shown below, and are within 18 months of your proposed
retirement date, then please telephone 0300 041 3488 or e-mail
[email protected] or visit our website www.kentpensionfund.co.uk
and complete the booking form.
8 January 2014
11 February 2014
13 March 2014
10 April 2014
20 May 2014
19 June 2014
16 July 2014
12 August 2014
18 September 2014
8 October 2014
11 November 2014
16 December 2014
15
Local Government Pension Scheme
Proposals from April 2014
Listed below is a summary of the current key proposals. These changes will
only apply if you are contributing to the scheme on 1 April 2014 and will
only affect service that is built up from that date, therefore any service that
you already have before April 2014 will not be affected
• The scheme will change from final salary to Career Average Revalued
Earnings. The Consumer Price Index (CPI) will be used as the revaluation
method.
• The Accrual rate will become 1/49th instead of 1/60th as it is at the
moment.
• The normal scheme pension age will be 65 or later if your State Pension
Age is after this date.
• Pension contributions will be based on actual pay therefore noncontractual overtime and any additional hours will be included.
• It will be possible to choose a low cost option of membership by paying
50% of the standard contributions in return for 50% of the standard
retirement pension. However the full value of some benefits will be
retained such as the death in service lump sum. This option will be
known as the 50/50 option.
• It will still be possible to give up part of your pension to provide a Lump
Sum. This will be at the rate of £1 pension for £12 Lump Sum.
• The Death in Service lump sum will remain as 3 times pensionable pay
Once details of the actual changes are available we will be contacting all of
our scheme members. However should you wish to view further details on
the proposed changes please visit www.kentpensionfund.co.uk/reform
16
Annual Allowance
What is the Annual Allowance?
The annual allowance is the amount by which the value of your pension
benefits can increase in any one year without you having to pay a tax
charge. The annual allowance for 2012/13 was £50,000.
If the increase in your pension benefits exceeds £50,000 then a three year
carry forward rule allows you to carry forward unused annual allowance
from the last three years.
From 2014/15 the limit will reduce again to £40,000.
Does this affect everyone?
It usually only affects those who have a significant increase in their pay,
where they combine sizeable periods of LGPS membership or pay large
amounts of additional contributions.
The increase in every member’s pension benefits will have to be assessed
but the majority will not reach the £50,000 limit. If we think that the
increase in your LGPS pension benefits has either exceeded the limit for
2012/13 or are coming close to it then we will write to you.
What if I have contributed to other pension arrangements during
the year 2012/13?
The assessment covers any pension benefits you may have in all taxregistered pension arrangements where either you, or your employer, have
paid contributions during the year 2012/13. As we will not be aware of your
other pension arrangements we will not automatically write to you and so
if you think you need this information you will need to contact us, using
the contact details at the end of this booklet. You will need to obtain similar
information from the other pension provider.
Where can I find out more information?
More information regarding Annual Allowance can be found at on our
website www.kentpensionfund.co.uk
17
Lifetime Allowance - Fixed Protection
In addition to the Annual Allowance, on retirement, the total of an
individual’s pension benefits are assessed against the Lifetime Allowance
that is applicable at that time. This allowance is also being reduced from
£1.5m to £1.25m from 6 April 2014. The Lifetime Allowance is only likely to
impact high earners who have a substantial amount of membership in the
scheme.
If you believe you may be affected by this reduction you can apply to HMRC
for a form of protection called fixed protection. For more information on
fixed protection, including a Lifetime Allowance checking tool, please go to
the HMRC website at www.hmrc.gov.uk. The deadline for applying for this
protection is 5 April 2014.
Kent County Council Superannuation Fund
Report and Accounts
For information about the management of the Kent Pension Fund including
details of the latest Pension Fund Report and Accounts please visit our
website.
www.kentpensionfund.co.uk/accounts
18
Contact Us
For queries regarding your Annual Benefit Illustration:-
H
08458 247 901 (Benefit Illustration Helpline –
Monday to Friday 09:00 to 17:00)
This helpline will be available until 15 November 2013 – for any queries after this date please contact us by e-mail or in writing.
Cwww.kentpensionfund.co.uk
[email protected]
b
The Pensions Section, 2nd Floor Brenchley House, Week Street,
Maidstone, Kent. ME14 1RF
For information regarding your State Pension:-
H 0845 3000 168 – Department of Work and Pensions (DWP)
Cwww.gov.uk
www.kentpensionfund.co.uk
The website has information that you may find useful as a current member
of the Kent Pension Fund.
You will find information about the Local Government Pension Scheme,
details about investment policies, the annual report and accounts as
well as publications including the Scheme Guide and other leaflets.
19
Pensions
Notes
20
Pensions
Notes
21
Notes
22
Mr J Sample
1 The Street
1 The Town
Maidstone
Kent
ME1 1NR