Local Government Pension Scheme

Local Government
Pension Scheme
administered by FIfe Council
NOW is the time to be
planning for your future,
so you need to consider
a pension.
CHOOSE the Local Government
Pension Scheme (LGPS) and have
a head start.
THAT is because the LGPS is
provided by your employer who pays
a large part of the cost. (see note 1)
THE LGPS is an important part of
your employment package and is a
valuable BENEFIT on top of your pay.

LET’S look at the cost and benefits of joining
the LGPS that apply from 1 April 2013.
The cost of being a member of the LGPS is LESS
than you might think.
HOW MUCH it costs depends on how much you
are paid. There is a five tier contribution system,
with contributions based on how much of your pay
falls into each tier.
If you work part-time, your contribution rate will be
worked out on the whole-time pay rate for your
job, although you will only pay contributions on the
pay you actually earn.
The table for the allocation of rates for 2013/14 is:
Whole Time Pay
On earnings up to and including
£19,800
On earnings above £19,800 and
up to £24,200
On earnings above £24,200 and
up to £33,200
On earnings above £33,200 and
up to £44,200
Contribution
Rate (%)
5.50%
7.25%
8.50%
9.50%
On earnings above £44,200 12.00%
The pay ranges will be increased each April in line
with the cost of living.
Let’s take a look at someone who works
full-time at a pay rate of £22,000.
They’ll pay 5.5% on their pay up to £19,800,
and 7.25% on the next £2,200. That gives an
overall contribution rate of 5.7% - around £97
per 4 weekly in contributions.
If they were working part-time, the contribution
rate would still be 5.7% - that’s because the
whole-time rate for their job is still £22,000.
However, the amount of their contributions
would be based on their part-time earnings
therefore, an employee working 18 hours per
week, or 50%, would pay around £48.50 per 4
weekly.

IT COSTS EVEN LESS if you pay tax and
National Insurance as you get tax relief on your
contributions and pay a lower rate of National
Insurance.
THE LGPS is one of the best ways to plan for
retirement with an excellent range of benefits
that both full-time and part-time employees
can enjoy.
THESE INCLUDE, after 2 years in the scheme:
• A tiered ill health retirement package if you have
to leave work at any age due to permanent ill
health. This gives graded levels of benefit based
on how likely you are to be capable of gainful
employment after you leave, with a higher level
of benefit for those more seriously ill.
• Early payment of benefits if you are made
redundant or retired on business efficiency
grounds and you are aged 55 or over.
• The right to voluntarily retire from age 60 years,
even though the Scheme’s normal pension age
is 65. You can even retire from as early as age
55 years, provided your employer agrees.
• Flexible retirement from age 55 years if you
reduce your hours, or move to a less senior
position and, if you are under age 60 and your
employer agrees, you can draw some or all of
your benefits – helping you ease into retirement.
• If you choose to voluntarily retire, or take flexible
retirement before age 65, your benefits would
normally be reduced to account for them being
paid for longer.
• You can even stay in the LGPS if you carry on
working beyond age 65, although you have to
draw your benefits by age 75. Benefits drawn
after age 65 attract additional increases.
There is also:
• Life cover from the moment you join, with a
lump sum of 3 years pay being paid if you die in
service.
• Cover for your family, with a pension for your
husband, wife, registered civil partner (see note
2) or nominated co-habiting partner (see note
3) and for eligible children if you die in service or
die after leaving with a pension entitlement.

WHEN YOU RETIRE
you can look forward to:
A pension for life that increases with the cost of
living and you can exchange part of your annual
pension for a one off tax-free cash payment.
Even More
It’s a final salary scheme, which means your
benefits are normally based on your final year’s
pensionable pay and the number of years you
have been a member of the scheme.
How are benefits worked out?
For each year in the scheme you receive a pension
of 1/60th of your final year’s pensionable pay.
And, if you want to take a tax free lump sum, for
each £1 of pension you give up you get £12 of
lump sum. You can take up to 25% of the capital
value of your pension benefits as a lump sum.
Here’s how it’s worked out: Full-timers
Mrs A is 65 and has 20 years full time
membership in the scheme.
Her final year’s pensionable pay is £15,000
Her annual pension would be:
20 years x 1/60 x £15,000 = £5,000
If she decided to give up £1,000 pension for a
cash lump sum, then:
Her reduced annual pension is:
£5,000 less £1,000 = £4,000
To give a tax-free lump sum of:
£1,000 x 12 = £12,000

Here’s how it’s worked out: Part-timers
Your membership is reduced to reflect parttime
working but full-time pay is used in the
calculation.
Mr B is 65 and also has contributed to the
scheme for 20 years. However he has always
worked 50% in his job with the same rate of pay
as Mrs A.
His annual pension would be:
20 years x 50% x 1/60 x £15,000 = £2,500
Mr B’s membership is adjusted to reflect the
part-time hours he works (20 years x 50%).
If he decided to give up £500 pension for a cash
lump sum, then:
His reduced annual pension is:
£2,500 less £500 = £2,000
To give a tax free lump sum of:
£500 x 12 = £6,000
If Mr B’s hours had changed during his
membership of the scheme, his benefits would
be calculated to reflect the change.
You can look forward with confidence
with the LGPS, because:
• contributions you pay today will provide you with
retirement benefits based on your pensionable
pay in the year you leave. This means the
pension you build up during employment keeps
pace with rises in your pay.
• after retirement, your pension increases with the
cost of living.
• your benefits are secure. They are set out in law.
and you can:
• pay more to increase your benefits.
• ask to transfer previous pension rights into the
scheme.

Something to think about...
When it’s time for you to retire will the State
retirement pension alone offer the security you will
need, or want?
You can find out about your state pension and
how to request a state pension forecast from, The
Pension Service at www.thepensionservice.gov.uk
You can also request a state pension forecast by
telephoning the State Pension Forecasting Team
on 0845 300 168.
Who can join?
The LGPS covers local government and other
organisations that have chosen to participate in it.
To be able to join the LGPS you need to be under
age 75 and, if you are employed by an admission
body, you can only join if your employer nominates
you for membership of the scheme.
If you start a job in which you are eligible for
membership of the LGPS, you will automatically
be brought into the scheme, unless your contract
of employment is for less than 3 months in which
case you can opt to join by completing the
membership form.
If you are brought into the scheme you have the
right to opt out. However, you cannot complete
an ‘Opt out Form’ until you have started your
employment.

Instructions for joining
Fife Council Employees
You will be issued with pension pack which will
contain a ‘Membership Form’. If you wish to
join the pension scheme you must complete and
return this form. This ensures an accurate pension
record is set-up for you. You also have the right to
opt out of the pension scheme. See details below
All other employees
Your employer will give you the option to join the
pension scheme. If you decide to join you must
complete a ‘Membership Form’.
Any employee who wishes to opt out of the LGPS
can access an ‘Opt out Form’ under ‘Forms &
Publications’ in our mini-site. This can be found on
FISH or at www.fifedirect.org.uk/LGPS.
Check your payslip to make sure you if you
opted in, that pension scheme deductions are
being taken off, or if you opted-out, to make
sure no deductions are being taken.
Want to know more?
This leaflet gives a brief outline of the LGPS as it
applies from 1st April 2009. If you want to know
more, or if you have membership in the scheme
before 1st April 2009 and would like to know how
benefits built up before then are worked out, you
can get information from:
• www.fifedirect.org.uk/lgps
• www.lgps.org.uk
And you can get a full Scheme Guide from the
Payroll/Pension Team. Contact details are on the
back page of this leaflet.
As previously stated, this leaflet is a brief guide to
the LGPS and does not cover every circumstance.
In the event of any dispute over your pension
benefits, the appropriate legislation will prevail. The
leaflet does not confer any contractual or statutory
rights and is provided for information purposes
only.

Notes
1. Increases or decreases in the cost of providing
the scheme may, in the future, need to be
shared between members and employers,
in accordance with guidance from Scottish
Ministers.
2. A civil partnership is a relationship between two
people of the same sex (“civil partners”) which
is formed when they register as civil partners of
each other.
3. In order to nominate a co-habiting partner, your
relationship must meet certain criteria.
Fife Council Pension Team
Contact Details.
For more information contact the
Payroll / Pension Team on 01592 583278, or
pensions.section@fife.gov.uk
Or write to
Payroll / Pension Team
Pension Section
Fife Council
North Street
Glenrothes
Fife
KY7 5LT
Published May 2013