We're only able to make cash equivalent transfer values payments when we're satisfied that a transfer has met the Pensions Regulators’ guidance.
Members are only entitled to make one free request for a guaranteed transfer quotation from the Local Government Pension Scheme (LGPS) administering authority in any 12-month period. If they wish to proceed with a transfer, the election to proceed must be made at least 12 months before their Normal Pension Age (NPA) in the LGPS or if they're a pension credit member (NPA is defined by the scheme regulations in force at the time a member leaves the scheme).
If a member is already in receipt of a pension from another period of membership with the LGPS in England and Wales, section 93 of the Pensions Schemes Act 1993 does not allow a cash equivalent transfer value (CETV) to be paid in respect of another period of membership.
Also, members can only transfer benefits from the LGPS if they have left the scheme and have not already taken benefits from LGPS either in their current employment or any earlier employment.
Your client will be able to provide you with their latest benefit statement and annual allowance information. They can use My Pension Online to estimate their pension and produce projections including actuarial reductions.
We do not correspond directly with financial advisors. Information you require will be provided to our member who may then pass it on to you.
Information about the LGPS which you require is available on the LGPS Regulations and Guidance and LGPS members websites.
The LGPS scheme
The LGPS is a statutory scheme. Changes to the scheme can only be made through legislation laid down by Parliament. The scheme was contracted out of the earnings related part of the state scheme until 5 April 2016 and re-values guaranteed minimum pension (GMP) at the full rate.
Scheme basis, accrual rates and NPA for each set of regulations
| Regulations LGPS(S) | Basis | Accrual | NPA | Earliest retirement without reduction |
|---|
| 1987 (Effective 1 April 1988) |
Final salary |
Pension 1/80th
Lump sum 3/80ths
|
Between age 60 and 65 when notional membership amounts to 25 years |
Over age 60 +25 years membership |
| 1998 (Effective 1 April 1998) |
Final salary |
Pension 1/60th
No automatic lump sum but can give up pension for lump sum at 12:1 |
65 |
Over age 60 when age and membership together adds up to 85 or more |
| 2008 (Effective 1 April 2008) |
Final salary |
Pension 1/60th
automatic lump sum but can give up pension for lump sum at 12:1 |
65 |
Over age 60 when age and membership together adds up to 85 or more if in scheme before 1 October 2006, otherwise age 65 |
2014 (Effective
1 April 2014) |
CARE |
1/49th of actual pensionable pay per year |
Equal to New State Pension Age. |
65 unless has transitional protection if a member before 1 April 2015 |
Anyone who was a member on 31 March 2014 and remained a member on 1 April 2014 will have transferred to the new scheme. These members retain a final salary link for their pre 1 April 2014 membership.
Final salary pay is usually the pensionable pay of the member in the year up to when they retire or leave the scheme. But if 1 of the 2 previous years' pay is higher, that year can be used instead under best of last 3 rules.
If a member had an earlier higher period of pay, and it was within 10 years of leaving or retiring, they may be able to apply to their employer to have their former higher pay used as their final salary pay. For more information please see the ‘reductions in pensionable pay factsheet’ attached to this page.
Anyone who joined from 1 April 2014 can find out more information about the current pension scheme.
You can find a guide to the LGPS in our forms and guides section. The booklet includes tables showing actuarial reduction factors which may apply to early retirements.
The scheme is funded by employer and member contributions as well as investments. Find out more about how the fund’s investments are managed.
You can also view the latest actuarial valuation report.
No charge or penalty for transferring out of the scheme
Where a request is for transfer to a scheme where GMP or protected rights cannot be accepted it is possible to transfer all rights to such a scheme provided the transferring member is aware of the rights being given up.
Transferring accrued LGPS benefits to another scheme
Members have the right to transfer their accrued LGPS benefits to another scheme including a scheme that offers flexible benefits. However, if the total value of their LGPS benefits across all LGPS in England and Wales is £30,000 or more, then they are required to take independent advice (but not for AVCs), from an authorised independent advisor who is registered and authorised by the Financial Conduct Authority to carry on the regulated activity in Article 53E of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.
Seek independent financial advice if the value of LGPS benefits is £30,000 or less
If the total value of their LGPS benefits is £30,000 or less (or in respect of a transfer of AVCs), we recommend that members seek independent financial advice before deciding to transfer their LGPS pension benefits.
Pensions increase and revaluation
Pensions from the final salary part of the scheme when in payment or in deferment are revalued yearly by CPI and cannot fall below zero. The CARE part of the pension is revalued yearly by Treasury Orders.
Where the Treasury Order revaluation is below zero a negative revaluation will be applied to current members’ pension accounts accrued that year and to those of any member who left within the year it applies to. Pensions in payment are not devalued but will have no increase.
Contributions
The amount of contributions payable by a member is determined by Regulation 9 of the LGPS 2013 Regulations. Members pay a percentage of their pay based on their pensionable earnings. Employers’ contributions are not based on individual member’s contributions but are determined by the scheme actuary following the triennial scheme valuation.
The latest scheme valuation showing how much each employer pays can be found on the Investments section of our website. We will not provide a breakdown of the contributions paid by a member or employer as the contributions merely fund the scheme and are not used to calculate any benefits payable.
Pension commencement lump sum
The scheme regulations allow the member to give up pension to provide a bigger tax free lump sum at retirement at the rate of £1 of pension for an additional £12 of lump sum. The scheme allows a member to take up to 25% of the capital value of their accrued rights as tax free cash. Please see Regulation 33 of the LGPS 2014.
Discretionary issues
There are no discretionary increases either in deferment or in payment.
Definition of spouse
In the event of a member’s death, pensions are payable to eligible partners. Eligibility depends on the regulations in force at the time the member left the scheme. If the member left the scheme after 31 March 2008 a partner is a legally married husband or wife (including same sex spouse), a civil partner or cohabiting partner. If the member left between 1 April 1998 and 31 March 2008 a partner is a legally married husband or wife, or a civil partner. If the member left before 1 April 1998 a spouse is an opposite sex, legally married husband or wife.
Death benefits
You can find out the deaths benefits payable in the event of a member’s death in the scheme booklet which is available on the forms and guides page. Benefits payable on death depend on when the member left the scheme. The following table gives information about death grants and who could get a survivor’s pension. The actual calculation of a survivor’s pension depends on multiple factors. In general terms up to 31 March 2008 a spouse’s pension would be around half of the members and after that it would be 1/160 of the membership times final pay. The relevant regulations detail the calculations.
Death grant regulations
| Regulations LGPS(S) | Death Grant payable if death in deferment | Death Grant payable if death of a pensioner | Death Grant payable if death in service | Survivor's pensions payable |
|---|
1987
Left scheme before 31 March 1988 |
See regulation E11 |
See regulation E11 |
N/A |
Widows and children’s pensions payable only |
|
1998
Left scheme before 31 March 2009
|
Equivalent to the lump sum that would have been payable if not for death |
5 times the annual pension in payment less any pension paid out |
N/A |
Widows, widowers based on post 5 April 1988 membership (plus any pre 6 April 1988 bought back), children’s pensions. From 5 December 2005, civil partners based on post 5 April 1988 membership (plus any pre 6 April 88 bought back |
|
2008
Left scheme before 31 March 2015
|
5 times the retirement pension that would have been paid if not for death |
10 times the annual pension in payment less any pension paid out |
N/A |
Widows, widowers, children’s. Civil partners based on post 5 April 1988 membership (plus any pre 6 April 1988 bought back). Co-habiting partner’s pensions based on post 5 April 1988 membership (plus any pre 6 April 1988 bought back) |
|
2014
Left scheme after 31 March 2015
|
5 times the retirement pension that would have been paid if not for death |
10 times the pre commutation pension less any commuted lump sum and any pension paid to the member |
3 times actual annual pay based on annualised average of last 3 months pay |
Widows, widowers, children’s. Civil partners based on post 5 April 1988 membership (plus any pre 6 April 1988 bought back). Co-habiting partner’s pensions based on post 5 April 1988 membership (plus any pre 6 April 1988 bought back) |
Transferring additional voluntary contributions (AVCs)
In accordance with the LGPS, we allow current members to start new additional voluntary contribution (AVCs) payments via Prudential, but older contracts could be with Clerical Medical, Equitable Life, Prudential or Standard Life.
At present, a scheme member can only take a draw down of AVCs if they are transferred to another pension scheme which allows such drawn down. AVCs can be transferred at any time before the earlier of their date of retirement in the LGPS or age of 75. The member does not need to have left the scheme, however AVC payments must cease before a transfer can take place.
A new AVC contract can be taken out once the transfer has been completed. Anyone who is not a current member of the scheme but still holds an AVC fund can also transfer anytime up to the earlier of their date of retirement in the LGPS or age 75.
If a member wishes to transfer their AVC fund value, they should make a request to Derbyshire Pension Fund in writing providing details of the receiving scheme.
Members can change their AVC investment choices with their chosen AVC provider at any time. Members have access to their AVC accounts via the provider’s website.
Links to useful documents