Active members paying in
The LGPS is one of the most generous pension schemes in the UK. It is a salary-related, defined benefit scheme and will not be affected by stock market changes or performance of investments. The LGPS 2014 Guide gives an overview of the advantages of the Scheme.
You will automatically become a member of the LGPS scheme unless you are employed on a contract of 3 months or less in which case you need to opt in if you wish to join the Scheme.
The LGPS member site is the national website for all members in England and Wales and contains helpful information for all members.
How much it costs you depends on how much you are paid, but it will be between 5.5% and 12.5% of your pay. Your rate will depend on which pay band you fall into.
The real cost to you will be less because you do not pay tax on the amount you pay into your pension. You may also pay a lower rate of National Insurance. If you work part time or term time you will only pay contributions on your actual pay.
You will receive a statutory notification, previous service form and expression of wish form when your record has been created in the pension administration system. It is also important that you register on to Pensions On Line to view your account, including annual benefit statements.
All employers who are paying into the LGPS have a different contribution rate. Every three years an independent actuary calculates how much your employer should contribute to the Scheme to pay the balance of the cost of providing your benefits in the LGPS. The amount will vary, but generally you contribute approximately one third of the Scheme's costs and your employer contributes the remainder.
Career Average Revaluation Scheme (CARE)
From 1 April 2014, the LGPS became a Career Average Revalued Earnings (CARE) scheme. A CARE scheme calculates pension as ‘Membership x Accrual Rate x Pensionable pay’.
In a CARE scheme the pensionable pay for each year of membership is used in order to calculate a pension amount for that particular year. That pension amount is then increased (revalued) each year in line with inflation. It should remembered that, while your CARE pension might be expected to increase each year, the pension amount could be reduced should there be negative inflation. These individual pension amounts are then added together to arrive at the total pension payable from the scheme.
Following the introduction of the CARE scheme, there are a number of protections are in place for those individuals in the scheme on 31 March 2014. Everything you have built up in the LGPS to 31 March 2014 is fully protected. So you won't lose out on any of the previous benefits you have earned, or the date that you would have expected to be able to receive them without reduction. Only the benefits you build up in the LGPS from 1 April 2014 onwards are based on the rules of the new scheme.
You may be able to transfer your benefits from your previous pension scheme arrangements, including other LGPS schemes.
If you want to transfer a pension into the Scheme you should complete the transfer form in the member download forms. We will provide you with an estimate of what the transfer payment would buy you in the Pension Scheme you can then decide if you want to go ahead with the transfer
You only have 12 months from joining the London Borough of Sutton or Royal Borough of Kingston Pension Scheme to transfer a previous pension.
Deciding whether or not to transfer a previous pension is an important decision.
You should get independent financial advice before making any decision to transfer pension rights into the Scheme.
Increasing pension benefits
As a member of the Local Government Pension Scheme (LGPS) it is possible, subject to certain conditions, to pay additional contributions over and above the standard contributions that you already pay.
The options available are:
Buying Extra Pension - Additional Pension Contributions (APC’s)
You can pay additional pension contributions (APCs) to boost your pension at retirement or to cover lost pension due to authorised unpaid leave or industrial action.
You can find further information on how much you can buy, how much it will cost you, get a quote and complete an application form.
Additional Voluntary Contributions (AVCs)
You can pay additional pension contributions to the in-house AVC scheme with Aviva for Royal Borough of Kingston Clerical Medical London Borough of Sutton.
AVCs are invested separately from the main LGPS Fund. They are deducted through payroll and you therefore receive tax relief automatically on the contributions you pay at your marginal rate. This means that your LGPS contributions and your AVCs are deducted from your gross pay before income tax is calculated.
You can vary or cease payment at any time whilst you are contributing to the LGPS. If you leave local government employment and transfer your LGPS benefits to another scheme you can also normally nominate to transfer your AVC fund as well to your new employer’s AVC scheme.
The Annual Allowance (AA) is the amount by which the value of your pension benefits may increase in any one year without you having to pay a tax charge. This is in addition to any income tax you pay on your pension once it is in payment. If the value of your pension savings in any one year (including pension savings outside of the LGPS) are in excess of the annual allowance, the excess will be taxed as income.
Most people will not be affected by the AA tax charge because the value of their pension saving will not increase in a year by more than £40,000 (17/18 allowance), or, if it does they are likely to have unused allowance from previous years that can be carried forward.
From the tax year 2016/17 the AA is tapered for members who have a ‘Threshold Income’ in excess of £110,000, and ‘Adjusted Income’ in excess of £150,000.
We are obliged to notify you if your LGPS benefits exceed the standard AA by 6 October of the following tax year. However, we are not obliged to inform you if you exceed the tapered annual allowance or calculate how much your tax charge will be.
Here, you can find out more about annual allowance and who is likely to be affected.
Your LGPS pension is payable in full from your Normal Pension Age which is linked to your State Pension Age (but with a minimum of age 65) - find out what these mean using the LGPS glossary of terms. However, you can choose to retire and draw your pension from the LGPS at any time from age 55 to 75, provided you have met the 2 years vesting period in the scheme. If you choose to take your pension before your Normal Pension Age it will normally be reduced, as it's being paid earlier. If you take it later than your Normal Pension Age it's increased because it's being paid later. You must draw your benefits in the LGPS before your 75th birthday. Here, you can find out more about retiring from the LGPS.
Leaving the scheme
If you are thinking of opting out of the LGPS, you may first want to consider an alternative option which is to elect to move to the 50/50 section of the scheme. This allows you to pay half your normal contributions in return for half the standard pension accrual.
Once you have considered this option, if you wish to move to the 50/50 section of the LGPS (instead of opting out of the LGPS) you should complete the Election to Join the 50/50 Section of the LGPS form.
Complain to the scheme
As a member of the LGPS, there may be times when you or your dependants are unhappy with the service you receive from the Pension Administration Team, or you disagree with decisions that have been made about your membership or benefits.
If you have any query or complaint we would welcome the opportunity to discuss the matter with you and attempt to resolve it before you resort to a formal complaint. If you are in any doubt about your benefit entitlements, or have a problem or question about your LGPS membership or benefits, please contact email@example.com or write to us at:
London Borough of Sutton,
Sutton and Kingston Pension Administration Team,
Sutton Civic Centre,
St Nicholas Way,
If you are still dissatisfied you have the right to formally complain under the Internal Dispute Resolution Procedure (IDRP). The Pension Act 1995 requires all occupational pension schemes to make and implement an IDRP to resolve disputes.
If you still remain dissatisfied stage three of the IDRP process moves onto the Pensions Ombudsman for a final and binding determination.
The Ombudsman would normally expect you to have completed stages one and two of the disputes process and have contacted The Pensions Advisory Service (TPAS) before hearing your case. TPAS can be contacted at any time and they provide free advice and information to explain your rights and responsibilities. You can write to: TPAS, 11 Belgrave Road, London, SW1V 1RB. The TPAS helpline number is 0300 123 1047.