Guide to the Scheme

Not only are you part of a great pension scheme, you don't have to do anything to join it. If you are eligible you will be automatically included when you start your job.

You can check whether you're eligible as well and find out how to opt-out and what happens to your pension if you leave.

Joining the Fund

Odds are you're eligible to join the Fund so read on for further information.

If you are eligible you will be included automatically as a member of the Fund. Membership is not compulsory and you can opt out if you wish.

Eligibility

You will be included in the Fund when you start your job with a participating employer provided that:

  • You are a full or part-time new employee of a participating employer who allows new entrants
  • Your contract of employment is for at least 3 months
  • You are at least 18 years of age (otherwise you will join when you reach 18 years of age)
  • You are under the age of 75
  •  Contact your employing Manager or the Pension Fund Administrator for more details

Opting Out

It's such a great scheme we can't imagine why you'd want to opt out. But just in case you want to, here's how.

You can opt out of the Fund if you give us at least one month's notice. You will need to complete an opting out form.

Think carefully

Please consider the benefits you will be giving up very carefully before deciding to opt out, especially if you have dependants. You may want to take independent financial advice before making a decision.

If you do decide to opt out you will need to consider alternative arrangements for your retirement. You will automatically be included in the State Second Pension (S2P), but you can also set up an individual arrangement such as a personal or stakeholder pension with an insurance company.

Your employer will not make contributions towards these pensions.

Entitlements

If you decide to opt out you will be entitled to the same benefits from the Fund as if you had left employment on the date of opting out. You will receive your pension benefits once you retire.

Rejoining

You may want to rejoin the Fund at a later date but will only be able to do so if:

  • Your employer agrees
  • You are in good health (we may require evidence)

 

Leaving Service

Leaving service before your normal pension date? No need to panic about your pension; you have a number of options about what do to with it.

Leaving
If you leave your job voluntarily before your normal pension age then you may be able to choose one of the following options:

  • A refund of contributions if your total qualifying service in the Local Government Pension Scheme is less than two years
  • An early retirement pension if you are aged 55 or older
  • A deferred pension
  • A transfer to another approved pension arrangement

If you are made redundant before your normal pension age, and are over 55 years of age with at least two years’ qualifying service, your pension benefits will be released from the day after leaving.

Deferred pensions
If you are no longer employed by one of the participating employers but have chosen to leave your benefits in the Fund, your pension is known as a deferred pension.

The amount of deferred pension is calculated as 1/80 x pensionable service before 1st April 2008 x final pensionable pay, plus 1/60 x pensionable service after 31st March 2008 and before 1st April 2014 x final pensionable pay, plus your CARE pension accrued from 1st April 2014.

In addition a deferred lump sum is calculated as 3/80 x pensionable service before 1st April 2008 x final pensionable pay.

The scheme’s normal pension age is State Pension Age with a minimum of 65 and you usually take your pension then but you may be able to take it from age 55. Your pension may be reduced if taken before normal pension age.

You will need to ensure that you keep the Fund office advised of your current address and contact us at least three months before you reach normal pension age. At that time, you will need to decide whether to claim your pension from normal pension age or to defer it. If you defer your pre April 2014 pension past age 65 or your post April 2014 pension past normal pension age it is increased for late retirement. This increase is in addition to annual pension increases which are also applied to your pension.

Transferring out
You can transfer the value of your pension benefits to another approved pension such as a:
  • New employer's scheme
  • Personal pension
  • Stakeholder pension

You can choose to transfer at any time before you take your retirement benefits, up to one year before your normal pension age.

The transfer value is the cash equivalent of your deferred pension. This amount will be paid to your new pension provider, who will advise you of the benefits you get by making the transfer. The amount paid is calculated by the Trustees on the advice of the actuary.

If you enter employment, within five years of leaving the Hackney Pension Fund, which gives you the right to rejoin the Local Government Pension Scheme before you have begun to receive your pension benefits, and you did not opt out of the Hackney Pension Fund on or after 11th April 2015, you may elect to transfer your benefits to the new Authority’s pension fund. In this case your pre April 2014 accrued pensionable service would be transferred on a day for day basis and your post 2014 CARE pension at your date of leaving the Hackney Pension Fund would get active service Treasury Order increases.

Refund of contributions
If you have less than two years' pensionable service, and have not transferred any other benefits into the Local Government Pension Scheme, you may be entitled to a refund of your own contributions.

If you were a member of the Fund prior to 6th April 2016, you would have been contracted out of the State Second Pension (S2P) until 5th April 2016 and paid National Insurance contributions at a reduced rate. If you receive a refund it will be necessary to reinstate you into the S2P and a statutory deduction is made from your contributions as your share of the cost.

As your contributions are deducted from your salary before tax has been taken, HM Revenue & Customs reclaims some of that tax at a special rate, currently 20 per cent. This is also deducted from your refund of contributions.

The employer's contributions cannot be refunded.

 

Previous Pension

If you are rejoining and had a pension with the Local Government Pension Scheme in England & Wales (LGPS) before, you can link them up. We can also tell you who to contact to trace other past pensions.

If you have a deferred pension with us and are rejoining the Fund, or have a deferred pension from membership of the LGPS with another Authority, you can link it to your current membership.

If you have a deferred refund from membership within LGPS, or you have a deferred pension from a concurrent employment, this will automatically be linked to your current membership.

Get more details from the Pension Fund Administrator.

Other pension schemes

If you have benefits from other pension schemes you may be able to transfer them into the Fund.

You may be able to transfer benefits from:

  • Previous employer's scheme
  • Personal pension
  • Stakeholder pension
  • Free-standing AVC scheme

Any transfer payment received from a previous pension arrangement that does not participate in the Transfer Club will secure additional CARE pension in the Fund.

Transfers from other Public Service schemes, or schemes that participate in the Transfer Club, may secure additional pensionable service that would give final salary benefits or additional CARE pension, depending on the particular circumstances.

Lost track of benefits under a previous scheme?

If you have lost track of your benefits under a previous employer's scheme you can contact the Pension Tracing Service who will provide you with the address of the scheme administrators. They can be contacted at:

The Pension Service 9
Mail Handling Site A
Wolverhampton
WV98 1LU

Telephone: 0345 6002 537

Contributions

The table below applies for the Local Government Pension Scheme (LGPS) contribution bandings and employee contribution rates from 1st April 2017. Please ensure that your employees are placed in the appropriate banding according to their ACTUAL pensionable pay, including contractual and non-contractual overtime and bonuses, not their full time equivalent (FTE).

Band

Actual Pensionable Pay Range

Employee Contribution rate (Main Scheme)

Employee Contribution rate (505/50 Scheme)

1

Up to £13,700

5.5%

2.75%

2

£13,701 to £21,400

5.8%

2.9%

3

£21,401 to £34,700

6.5%

3.25%

4

£34,701 to £43,900

6.8%

3.4%

5

£43,901 to £61,300

8.5%

4.25%

6

£61,301 to £86,800

9.9%

4.95%

7

£86,801 to £102,200

10.5%

5.25%

8

£102,201 to £153,300

11.4%

5.7%

9

£153,301 or more

12.5%

6.25%

Unless the process for allocating the appropriate contribution rate from the above bands has been automated on the payroll system, you are required to determine the appropriate contribution rate for each member and notify this to payroll.

Any reduction in pensionable pay due to sickness, child related leave, reserve forces leave or other absence from work are to be disregarded when determining the contribution rate.

You can re-assess the appropriate band where there is a material change in an employee’s pay in the year which may move them into a different pay band, either higher or lower.

Therefore you can use fixed or variable bandings -

  • Fixed banding – need to make an assessment of the member’s likely actual pay at the start of the year

  • Variable banding – banding fluctuates throughout the year with actual pay.

If you choose to use the variable banding, you will need to liaise with your payroll provider to arrange an automated process where possible. You must also inform your employees in writing at the start of the year, which method you will be using to assess their contribution bands and inform them of their right to appeal, and how to appeal, against their banding. As an employer in the Fund, the method you have chosen, should be formally adopted and be included in your discretion policies.

You will also be aware that members of the LGPS can opt into the 50/50 section of the scheme (providing they are already in the main section of scheme), whereby they are able to pay half the main scheme contribution rate. You will need to ensure the appropriate contribution rate is applied to those members actual pensionable pay from the next pay period following their election to opt to 50/50.

Please ensure that your payroll provider is able to apply the relevant contribution rates in respect to those members who opt into the 50/50 section of the scheme:

If you have any queries concerning the contents of this guide, please do not hesitate to contact Equiniti on 01293 603085.

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Pension Paydays

Your pension payment will be credited to your bank account on the 25th of each month (or the last working day preceding this if the 25th falls on a bank holiday or weekend).

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