LGPS Pension Confusion

liviboy

Hi all,

My mother-in-law works part time for a local authority and contributes to the LGPS.

She has finally gotten round to taking a look into things and is a little confused, and I must say I am as well.

There is a page on the site which shows opening pension and closing pension for different tax years. One would presume, as a DB scheme, that the opening pension would increase each year that she works but it seems to jump about and I've no idea why. I'm sure someone here will know the answer though :-)

So here we go:

[Key: P=Pension, LS=Lump Sum]

Year Opening P Closing P Open LS Close LS

2014 2,198.05 2,432.60 3,660.94 3,607.54
2013 1,899.16 2,140.26 3,607.16 3,564.69
2012 1,668.37 1,858.28 3,684.58 3,529.51
2011 1,487.36 1,585.90 3,611.03 3,502.45
2010 1,643.72 1,442.64 4,370.94 3,502.45
2009 1,433.91 1,625.84 4,301.71 4,323.38
2008 1,343.97 1,363.03 4,031.93 4,089.08

There is also a "Pension Input" column for the same years which reads:

3,699.40
3,815.13
2,883.49
1,468.06
0.00 - [THIS SEEMS A BIT ODD AS SHE WASN'T OFF WORK]
3,092.55
362.11

Any thoughts/ideas/places to see how these figures stack up would be helpful.

She hasn't received a benefit statement in years and years and they aren't available to view on the website.

The only section that is available simply details her Final Salary and CARE benefits which show as follows:

Current Pension Value: £2,842.21
Lump Sum £3,643.62

Pension made up of:

CARE Benefits: £385.28
FS Benefits: £2,456.93

Drp8713

As an active member the closing amounts are likely based on the pay submitted by her employer at the end of each year.

These pay figures are usually done in bulk by large authorities and if she got backdated pay / a bonus in one year that will be why it appears her pension decreased the next year.

The pension input amount is to do with annual allowance and is calulated bt taking 16 times the pension plus the lump sum at the start of the year (adjusted for inflation) compared to 16 times the pension plus the lump sum at the end of the year.

The pay problem above will cause the result to be zero as it thinks the pension has decreased. It has no effect unless she is planning to contribute £40k plus carry forward allowance into a pension in one year.

zagfles

Have her hours changed at all in that period? It looks like most of that time was in the FS pensions as the CARE amount is low. Think most were transferred from FS to CARE in 2014. It doesn't make sense for the FS pension to go down, unless she had a pay cut. But if her hours were cut and the employer didn't inform the pension scheme (which does happen) they can just see it as a pay cut. FS benefits work on full time equivalent salary, then proportioned for part timers.

The pension input being zero in 2009/10 tax year is understandable as the inflation figure used for pension inputs was high.

System

Hi

It does not make much sense.

The pension year is 01/04/2008 - 31/03/2009, so the figures quoted are not pension.

And as stated above are amounts for HMRC purposes. EG: There is an amount each year that your pension can increase by, without necessitating you declaring it to HMRC.

I know of 2 people who got promotion and a hefty increase in salary, this meant that they would probably be taxed on it. There is a spread across more than 1 year for allowances, and the tax bill can be deferred.

So the figures are not exactly the pension that would be paid to the individual, but do reflect the amount likely to be paid.

===========
This is the part to unpick...

Current Pension Value: £2,842.21
Lump Sum £3,643.62

Pension made up of:

CARE Benefits: £385.28
FS Benefits: £2,456.93
============

Current pension... CARE 385.28
Final Salary 2456.93 Lump Sum 3643.62

Which means that she was in the 80 ths scheme, Then the 60 ths and now CARE.

The 80 -ths pension is 1214.40 with an automatic lump sum of 3643.62
The 60 -ths pension is 1242.53 with NO automatic lump sum.
The CARE pension is 385.28 with NO automatic lump sum.

Not that it matters, but most of what follows is true...

The 60 ths scheme ran for 6 years, and for full time it generated exactly 10% of their salary as pension (6/60) 0.01 (*100)%.

This means that if you were on regular hours then by applying the hourly amount it is possible to calculate the pension.

Take the percentage and divide by a full week, IE: 37 hours and then multiply by the hours worked 20 to get 5.405405 % of salary as pension.

If in doubt please ask.

Kynthia

She should be receiving annual benefits statements each year so she needs to find out what she isn't. Ask colleagues if they are sent to home addresses or work addresses and then check HR and the pension administrator hold the correct address for her. I would imagine statements for up to 31st March 2016 are due in the next few months so perhaps she could find out where these will be going and ensure she gets hers. It's important she checks the details on them are correct as if her pensionable pay, reckonable service, martial status, etc are incorrect it has an effect and needs to be queried.

liviboy

zagfles wrote: »

Have her hours changed at all in that period? It looks like most of that time was in the FS pensions as the CARE amount is low. Think most were transferred from FS to CARE in 2014. It doesn't make sense for the FS pension to go down, unless she had a pay cut. But if her hours were cut and the employer didn't inform the pension scheme (which does happen) they can just see it as a pay cut. FS benefits work on full time equivalent salary, then proportioned for part timers.

The pension input being zero in 2009/10 tax year is understandable as the inflation figure used for pension inputs was high.

Hi,

She actually changed roles as her previous role was done away with. She moved to a different role on a slightly reduced salary so this explains that. I wasn't aware that she had switched roles (before she became my mother-in-law :-) )

Thanks for the clarification.

liviboy

johndough wrote: »

Hi

It does not make much sense.

The pension year is 01/04/2008 - 31/03/2009, so the figures quoted are not pension.

And as stated above are amounts for HMRC purposes. EG: There is an amount each year that your pension can increase by, without necessitating you declaring it to HMRC.

I know of 2 people who got promotion and a hefty increase in salary, this meant that they would probably be taxed on it. There is a spread across more than 1 year for allowances, and the tax bill can be deferred.

So the figures are not exactly the pension that would be paid to the individual, but do reflect the amount likely to be paid.

===========
This is the part to unpick...

Current Pension Value: £2,842.21
Lump Sum £3,643.62

Pension made up of:

CARE Benefits: £385.28
FS Benefits: £2,456.93
============

Current pension... CARE 385.28
Final Salary 2456.93 Lump Sum 3643.62

Which means that she was in the 80 ths scheme, Then the 60 ths and now CARE.

The 80 -ths pension is 1214.40 with an automatic lump sum of 3643.62
The 60 -ths pension is 1242.53 with NO automatic lump sum.
The CARE pension is 385.28 with NO automatic lump sum.

Not that it matters, but most of what follows is true...

The 60 ths scheme ran for 6 years, and for full time it generated exactly 10% of their salary as pension (6/60) 0.01 (*100)%.

This means that if you were on regular hours then by applying the hourly amount it is possible to calculate the pension.

Take the percentage and divide by a full week, IE: 37 hours and then multiply by the hours worked 20 to get 5.405405 % of salary as pension.

If in doubt please ask.

That makes a lot more sense than anything on the pension's own "My Pension" website. Even a brief explanation as to what the figures are for would be useful.

Yes, she switched from FS 80s to FS 60s to CARE - quite impressive being able to break down the figures so well :-)

Thanks for the re-assurance of the figures as well.

liviboy

Kynthia wrote: »

She should be receiving annual benefits statements each year so she needs to find out what she isn't. Ask colleagues if they are sent to home addresses or work addresses and then check HR and the pension administrator hold the correct address for her. I would imagine statements for up to 31st March 2016 are due in the next few months so perhaps she could find out where these will be going and ensure she gets hers. It's important she checks the details on them are correct as if her pensionable pay, reckonable service, martial status, etc are incorrect it has an effect and needs to be queried.

She hasn't received any benefit statements since she changed roles. When we were trying to find her pension details I asked if her benefit statements would be available online to which I was told yes...but I now presume that only statements from since she registered for online access will be available. I will ask her to call up to see if it's possible to get the backdated statements re-issued.

System

Hi

So if you get a statement, even an old one, we can interpret that for you, privately perhaps?

So please come back if you need to.

liviboy

johndough wrote: »

Hi

So if you get a statement, even an old one, we can interpret that for you, privately perhaps?

So please come back if you need to.

I absolutely will, thank you :-)