The questions and answers that followed our "Planning your retirement" presentation.
Q: How much does my employer invest into my pension please?
A: As the Local Government Pension Scheme is a defined benefit scheme, the percentage our employers pay is calculated by our Actuary every 3 years. This percentage rate can vary depending on the employer. The amount your employer contributes goes towards ensuring Derbyshire Pension Fund can meet the benefit payments owed to members as they fall due. The amount employers contribute does not get paid directly into members’ pension benefits. For more information, please visit our Actuarial valuations webpage.
Q: How can I calculate how much my pension will be worth? I have also paid into an AVC with Prudential for 18 months, how can I see its current value?
A: To know how much your pension is approximately worth from a specific date, please use the ‘Benefit Projectors’ available on your My Pension Online account. My Pension Online does not hold your AVC value with Prudential. If you wish to know this information, please contact Prudential directly who can issue a most recent statement. If you are not yet registered for My Pension Online, or would like a formal estimate, you can complete our Voluntary Retirement Estimate Request form, which can be located on our webpage. This estimate can include your latest AVC value on request. For more information regarding your AVC, please contact Prudential directly Local Government Pension with AVCs | Prudential.
Q. What does 1/49 accrual rate mean?
A: In the LGPS, a 1/49 accrual rate means that each year you build up an annual pension amount equal to 1/49th of your pensionable pay for that year. This calculated amount is then added to your pension account, revalued annually with inflation, and the sum of all these revalued amounts makes up your total annual pension at retirement. A 1/49th accrual rate relates to the Career Average Revalued Earnings (CARE) scheme which was introduced from 01/04/2014. Pension benefits accumulated up to 31/03/2014 were part of the Final Salary scheme which is calculated differently. For more information regarding How your pension is worked out, please visit the link provided.
Q: I have a son with a disability, does this mean they would be eligible for a proportion of my pension when I die? I am divorced so don’t have a partner for it to go too.
A: They may be eligible to receive a child/dependant’s pension when you die, if it meets one of the relevant criteria:
- is under 18
- is under 23 if they are in full-time continuing education
- has a permanent physical or mental impairment and is dependent on you at the time of your death
This is something which would be assessed on the event of your death rather than nominating them for a child/dependant’s pension beforehand. Any further information regarding this can be located on our webpage Your pension when you die.
Q. Is there any financial cost to my employer if I flexibly retire at age 55 with no requirement for my employer to make up my pension, and therefore presumably no strain cost?
A: There can be a shortfall cost for members who apply to take flexible retirement before the age of 60 due to Rule of 85 protections. Flexible retirement is an employer discretion, so please contact your Line manager in the first instance, who can arrange for either your Payroll team or HR team to contact our Fund. We can then provide estimates for your employer’s consideration.
Q. If I leave work (retire) in September and take my pension, but then DCC employees are then awarded a pay rise in October ‘to be backdated to April’, would I still benefit from that pay increase?
A: You are able to apply to your former employer to request that you receive this pay award. Some employers have different discretions on whether they will allow for this. If it is approved and you receive this pay award from your former employer, then they will communicate this to us, and we would calculate a revision of your pension based on the new figures. Following this revision, we will be in contact to confirm the new annual pension that you will receive as well as pay any arrears.
Q. If I leave and preserve my pension, but after 2 years, for example, I need the money, can I take my pension or will I have to wait till Normal Pension Age?
A: I can confirm that our deferred members can apply to access their pension benefits any time between the ages of 55 to 75. Our deferred members can use the ‘Deferred pension payment’ projector to obtain estimates. This is available on My Pension Online in the following location: Your dashboard > Pension benefits > Benefit projectors. Our deferred members can apply to take payment their deferred pension benefits through the Deferred benefits request form. If you were to take your benefits before your Normal Pension Age, they will normally be reduced. The LGPS reduction factors can be found on the LGPS member website.
Q: How do the changes in my hours impact my CARE and Final Salary pension components?
A: You can find out more about how your pension is affected by part time and full time hours on our Changes in hours webpage. There are a couple of examples on the webpage which the difference between final salary and CARE.
For benefits built up on or before 31 March 2014, if you change your current working hours, your pension benefits built up to 31 March 2014 under the final salary arrangements are still based on your full time equivalent pensionable pay when you leave the scheme (i.e. your final salary). So, a change in your hours won’t affect the pre-April 2014 part of your pension benefits. Changing your hours would, however, impact your CARE pension as this is based on your pensionable pay in a scheme year. If you have received less pay due to a reduction in hours, you will have accrued a lower pension amount. If you would like more information please visit How your pension is worked out.
Q. Is the Final Salary scheme benefits based on your salary at the point that scheme ended on 31/03/2014 or your final salary when you leave employment / retire?
A: Your pension benefits that were built up in the final salary section of the scheme (up to 31/03/2014) will be based on your full-time equivalent salary at the point that you retire or left the post that those benefits are linked to. Further information on this can be found on our page How your pension is worked out.
Q. Why did the Final Salary scheme change from an accrual rate of 80ths to 60ths?
A: The LGPS changed its accrual rate from 80ths to 60ths as part of a broad reform on public sector pension schemes. The change was made to make the scheme more sustainable due to the rising costs from increased life expectancy and other factors.
Q. Does my pension forecast that I can see on My Online Pension include the state pension?
A: Any members’ LGPS benefits with Derbyshire Pension Fund does not include information regarding your State Pension. You can find out more information about your State Pension on the government website: https://www.gov.uk/check-state-pension
Q. I'm being TUPE'd over to EMCCA by end of March 2026, can I draw on my Derbyshire Pension and still TUPE to EMCCA?
A: TUPE is the Transfer of Undertakings (Protection of Employment) Regulations 2006 and is a law which protects employees’ rights when the service they're delivering is transferred to a new provider and they're transferred to that employer. Sometimes this can be when a service is outsourced to a private company.
Although your local government pension is not covered by TUPE, the government has put measures in place to ensure that your pension is protected.
If you are transferring to another employer that provides the LGPS, you will automatically remain in the LGPS.
- to continue your membership of the LGPS. For this to happen, your new employer would need to be admitted as a scheme employer in our fund, or
- to provide a broadly comparable pension scheme where the benefits are at least as good as, or better than the LGPS. The pension scheme they're offering would need to be approved by the Government Actuary’s Department (GAD).
If members are aged 55 or over when they TUPE, they can choose to take payment of the benefits they have built up to the TUPE date and then continue paying into their new employment. If this is something you are interested in doing, please complete our Enquiry form and a member of our Team will be happy to help.
Q. If over 60 and meet the 85-year rule, is there any financial shortfall for the Council if asking for flexi-retirement?
A: As Flexible retirement is an employer decision, please have a chat with your manager in the first instance, who can arrange for either your Payroll Team or HR Team to get in touch with our Fund. We can then provide estimates for your employer's consideration, including any applicable shortfall costs. Each member’s situation is unique due to rule of 85 protections, so our estimates help employers in the decision-making process.
Q. If it is voluntary redundancy would my pension benefits be claimable unreduced?
A: If you are of an age where you can claim your benefits, have at least 2 years LGPS membership and you finish on the grounds of voluntary redundancy, compulsory redundancy or business efficiency, then your LGPS benefits will be payable unreduced. We’ll write to you with your payment options once your employer notifies us, as your pension is payable immediately from your leaving date and cannot be deferred. Further information on this can be found on our page Redundancy and business efficiency.
Q. I have a Derbyshire County Council pension accrued from 2019-2022. I rejoined the council earlier this year, starting a new role. Would I be able to add this 'pot' to the previous one, and if so, would there be any financial benefit to this?
A: If our members have less than a 5-year gap between their employments, pension records are usually joined together with the option to keep them separate. You can find out more about this on our Multiple LGPS memberships webpage. If you would like us to investigate your personal circumstances, please complete our Enquiry form and we’ll be happy to look into this further for you.
Q. I have children, but I am divorced. If I was to retire for 1 year and then pass away, for example, does any of my pension go to my children or will it be lost?
A: If you were to be retired for 1 year and then pass away, then there would be a death-grant lump-sum payable to those that you have nominated using our Expression of Wish form. This form can be found on our website. You can nominate anyone on this form, provided that the percentages add up to 100%. There could also be an annual pension payable to those that are eligible. To find out whether your children might be eligible to receive a child/dependent's pension, please visit our website.
Q. If you take flexible retirement are benefits reduced?
A: Flexible retirement benefits are typically reduced due to early payment, but the Rule of 85 can protect a portion of your benefits if you were a member before October 1, 2006. However, the rule of 85 does not apply to benefits accrued after that date. Please have a chat with your manager in the first instance if you are interested in flexible retirement, and they can ask for an estimate from our Fund to support their decision making.
Q. Hi, if I leave work before 55 what happens to my pension?
A: If you leave the LGPS before age 55 with at least two years of service, you'll have Deferred benefits, which are your pension benefits held and protected until you decide to claim them, typically between age 55 and 75 (this age will increase to 57 in April 2028). If you have less than two years of service, you may be eligible for a refund of contributions. Your deferred pension will increase each April in line with the cost of living. You may also have the option to transfer the value of your LGPS to another pension arrangement. More information regarding this can be located on our website.
Q. Does redundancy retirement depend on length of service?
A: You will need to have at least 2 years of membership in the LGPS in order to qualify for a retirement on the grounds of redundancy. If you have less than 2 years’ worth of membership, then you will be offered a refund of your contributions or the option to transfer your benefits out to a different pension arrangement.
Q.If you die shortly after retiring, what happens to the pension ‘pot’? Does it go into the a person’s estate?
You can find out more information about death benefits as a ‘pensioner’ on our website: Your pension when you die.
There are 3 possible payments from the Fund after you die:
- A lump sum (only payable if you are under 75 when you die) payable to someone you have nominated via the Expression of wish form.
- A survivor’s pension only payable to your spouse, your registered civil partner, your eligible co-habiting partner (subject to certain conditions and only if you were a contributing member on or after 1 April 2008)
- An eligible child's pension if, when you die, your child is under 18, under 23 if they are in full-time continuing education or has a permanent physical or mental impairment and is dependent on you at the time of your death.
Q. If i worked full time up till September 2008, but then worked part time after that, does my current wage now affect my final salary pension component? Do I need to go back to full time before retiring to gain the benefits up until 2008?
A: You can find out more about how your pension is affected by part time and full time hours on our Changes in hours webpage. There are a couple of examples on our website which explain the difference between final salary and CARE. If you change your current working hours, your pension benefits built up to 31 March 2014 under the final salary arrangements are still based on your full time equivalent pensionable pay when you leave the scheme (i.e. your final salary). This means that any change to your hours won't affect the pre-April 2014 part of your pension benefits.
Q. How do I find out more information about AVCs / APCs to determine the benefits / whether it's worth it, and decide how much to additionally contribute?
A. Information about additional voluntary contributions and additional pension contributions can be found on our website here: Increasing your benefits. Although we're unable to provide financial advice, the Financial Conduct Authority has a register you can search for authorised financial advisors: https://www.fca.org.uk/firms/financial-services-register
Q. If I take my pension at age 60 does it lose the cost of living increases every year?
A: I can confirm that LGPS pensions are reviewed each April in line with price increases. Changes to pensions are based on the Consumer Price Index (CPI) and its measure of inflation as at the previous September. If there is an increase in the CPI, the government will confirm the increase, and we will apply it our members pensions from the first Monday after 5 April. You can find out more about this on our Changes to your pension webpage.
Q. Can I take my 25% tax free lump sum element in stages, say each year across the first three years of retirement?
A: As the LGPS is a defined benefit scheme, you are unable to take your lump-sum as part of a flexible drawdown. This means that when you claim your benefits, you will take your annual pension and lump-sum together. There is currently no facility available in the LGPS that allows for you to take your lump-sum in stages, it can only be taken as a one-off payment following you claiming your benefits.
Q. If you take out an APC, are you able to increase the monthly contributions as salary increases?
A: When a member chooses to apply for Additional pension contributions (APC) as a monthly deduction, an application form is generated. This includes the regular cost to the member before tax relief. As part of the application, members must agree that the deduction will continue for the duration of the agreement period, unless they elect to stop payments. This means that the monthly deduction cannot be increased, however our members have the flexibility to choose to pay into more than one APC or AVC.
Q: Are there any benefits to paying APCs monthly vs an annual lump sum?
A: We are unable to advise on whether to purchase APCs through a lump-sum or by paying a monthly amount. This will depend entirely on your own circumstances as to what is best for you. For more information on APCs, as well as the links to the extra pension calculator, please visit our webpage Additional pension contributions.
Q. Can my children inherit my pension?
A: Your children may be eligible to receive an annual pension on the event of your death, provided they meet the eligible criteria. To find out whether your children might be eligible to receive a child/dependent's pension, please visit the webpage Your pension when you die. You can also nominate your children to be the beneficiaries of any death-grant lump-sum that may be payable on the event of your death. In order to do this, you will need to have completed the Expression of Wish form that can be found on our webpage Forms and guides.
Q. Is it advisable to continue investing the pension lump sum after the full-term retirement?
A: Although we're unable to provide financial advice, the Financial Conduct Authority has a register you can search for authorised financial advisors: https://www.fca.org.uk/firms/financial-services-register. There are rules around pension recycling, which you can read more about on the Unbiased website: Pension recycling: what is it and what are the rules? | Unbiased
Q. What's the difference between an AVC and a shared Cost AVC?
A: Additional voluntary contributions help you build up a pot of money which is used to provide additional benefits to your LGPS pension. You can choose to pay anywhere from £1 to 100% of your salary. All local government Pension Funds have an arrangement with an AVC provider. Our nominated AVC provider is the Prudential.
Some of our Fund employers offer Salary Sacrifice Shared Cost AVCs (SSSCAVC) as an option to their employees. This is also known as ‘salary sacrifice AVC’. If your employer offers a SSSCAVC option, this is an arrangement between you and your employer. These schemes allow you to save national insurance contributions as well as income tax if you agree to a reduction in your salary. This means your take home pay increases slightly when compared to paying AVCs in a standard way. Please contact your employer directly to find out more about SSSCAVCs.
Q. How does my AVC fund feature when requesting an 'estimate' to the value of your pension fund?
A: Our Fund does not include AVCs in pension estimates as per standard process. This is because AVCs are an investment-based product, meaning the fund's value depends on the performance of the underlying investments, so the value can go up and down. However, if this is something you would like to obtain to support your retirement planning, please complete sections 1-2 of our Fund’s Voluntary retirement estimate request form, then email your form to your employer’s payroll team. In your email, please let us know that you would like a provisional value of your AVC including in your estimate.
Q. Is it correct that if i want a forecast for flexible retirement, my Line Manager has to do this on my behalf?
A: That is correct, if you are wanting a forecast of your pension figures if you were to leave on flexible retirement, then you will need to request this through your manager or HR department. The reason for this is because it is your employer's discretion as to whether they approve a flexible retirement. If your employer approves your application, then they will send us a notification and we will issue your estimate. Further information can be found on our webpage, Flexible retirement.
Q. Where can I see my projected total pension pot based on my current contributions?
A: My Pension Online has benefit projectors available for our active and deferred members. These can be accessed in the following location: Your dashboard > Pension benefits > Benefit projectors. The active member projector is called the ‘Voluntary retirement projector’ and the deferred member projector is called the ‘Deferred pension payment’ projector. The projectors will show you the maximum amount of annual pension you can take and corresponding automatic lump sum. They also include slider bars to help you understand how much of your pension you can convert into a tax-free cash lump sum ahead of your retirement. You can convert up to 25% of the value of your pension into a lump sum alongside a lower annual pension. The projectors also allow you to submit multiple dates of leaving, so you can get an idea for the changes in your pension from different dates. Please note these projectors are for illustration purposes only.
Q. How can I calculate my death grant payable?
A: We’ll pay a lump sum death grant if you die as an active member of the LGPS. The lump sum is three times your actual pensionable pay at your date of death. This is paid no matter how long you've been a scheme member. You can find your death in service lump sum amount on page 3 of your latest annual benefit statement. Where statements are available for our members, they have been loaded to My Pension Online in the following location: Home > Your dashboard > Documents > My documents
Q: How do you nominate a lifelong survivor to receive your pension, and can this be a different person to your death grant?
A: The nominations that you make through the Expression of Wish form will only relate to any death-grant lump-sum that may be payable. On the event of your death, we will investigate whether there is an eligible partner/dependant that may be due a survivor's pension. You are unable to nominate someone beforehand to receive these benefits. Further information on this can be found on our webpage, Your pension when you die.
Q. There is talk that Rachel Reeves is going to Tax, Tax free lump sums in the budget. Is this a fact and would it affect the LGPS
A. At this moment in time, we are only able to act on what is currently in the regulations. As per current LGPS regulations, you can claim up to 25% of the total value of your benefits as a tax-free lump-sum. If the regulations are changed at a later date regarding this, then we will be in touch with members to confirm what effects this will have.