Calculating Retirement Benefits
If you have become a member since 1 April 2008...
If you became a member of the LGPS for the first time on or after 1st April 2008 your benefits will be calculated as follows:
Annual Pension: Scheme Membership ÷ 60 x Final Pay
Lump Sum NIL (with an option to convert part of your pension into tax-free cash).
In addition a pension will be paid to your surviving spouse, nominated cohabiting partner or civil partner if you die first. This will be calculated as:
Contingent partner's pension: Scheme Membership ÷ 160 x Final Pay
If you were member before 1 April 2008...
If you have membership of the LGPS that dates back to before 1 April 2008 your benefits will be calculated using 2 different formulae.
For membership prior to 1 April 2008:
Annual Pension: Scheme Membership ÷ 80 x Final Pay
Lump Sum: Scheme Membership ÷ 80 x Final Pay x 3
In addition a pension will be paid to your surviving spouse or civil partner if you die first. This will be calculated as:
Contingent Spouse's Pension: Scheme Membership ÷ 160 x Final Pay
Contingent Civil Partner's Pension: Scheme Membership from 6 April 1988 to 31st March 2008 ÷ 160 x Final Pay
For membership from 1 April 2008:
Annual Pension: Scheme Membership ÷ 60 x Final Pay
Lump Sum NIL (with an option to convert part of your pension into tax-free cash)
In addition a pension will be paid to your surviving spouse, nominated cohabiting partner or civil partner if you die first. This will be calculated as:
Contingent Spouse's Pension: Scheme Membership ÷ 160 x Final Pay
Contingent Nominated Cohabiting or Civil Partner's Scheme Membership from 1st April 2008 to date of retirement ÷ 160 x Final Pay
EXAMPLE, take a member with 20 years of membership, 10 years pre April 2008 and 10 years post March 2008, and a final pay of £20,000. His benefits will be calculated as follows:
|
Annual Pension |
10 / 80 x £20,000 |
£2,500 |
| 10 / 60 x £20,000 |
£3,333.33 |
|
|
Total Pension |
£5,833.33 | |
| Lump Sum | 10 / 80 x £20,000 | £7,500 |
| Contingent Partner's Pension | 20 / 160 x £20,000 | £2,500 |
Please note that a Spouse's, Nominated cohabiting Partner's or Civil Partner's pension is only payable if you die before your husband, wife, cohabiting partner or civil partner and that the term Civil Partner relates to a same sex partner with whom you have registered a Civil Partnership. If you have nominated a cohabiting partner or you have a civil partner, the contingent partner's pension will be based on your membership from 6th April 1988 only.
Your benefits may be calculated slightly differently if you are:
· A man with membership before 1st April 1972;
· A woman with membership before 6th April 1988;
If you are a married man with membership prior to 1st April 1972, your benefits may be calculated slightly differently. Prior to that date a widow's pension was paid for by a "2/80ths" reduction to your retirement lump sum. It was possible to pay extra contributions to avoid this reduction but if you did not pay these additional contributions your service up to 31 March 1972 will be reduced to 89% of its actual length. For example, if you had membership from 1 April 1971 to 31 March 1972 (1 year) it will only count as 325 days (89% of 365). This will effect the calculation of both your pension and your lump sum.
If you are a female scheme member your contingent spouse's pension may only be based on your membership from 6th April 1988 onwards. Your employer has discretion to allow your spouse's pension to be based on your membership before that date (back to 1 April 1972) and they should have a policy statement setting out how they intend to use that discretion available to them under the Scheme regulations. If for any reason you only wish your spouse to receive a pension based on membership from 6th April 1988 you have a right to elect to take that option.
Converting Pension into Additional Tax-Free Cash
It is now possible to elect to convert part of your pension into additional tax-free cash. You are allowed to exchange £1 of pension for an additional £12 tax-free cash up to a maximum of 25% of the capital value of your total "pension pot". You will be provided with details of how this option applies to you before your benefits come into payment, as you will need to decide if you wish to convert any part of your pension into additional tax-free cash before that time.
