Annual benefits statement guidance notes 2024
Guidance to help members understand annual benefit statements.
Section of Scheme at 31 March 2024
This will be either “Main” if you were in the main section of the Local Government Pension Scheme (LGPS), or “50/50” if you were in the 50/50 section of the LGPS as of 31 March 2024. The last four characters of your National Insurance number have been blanked out for data protection.
Final Salary Pensionable Pay in year to 31 March 2024
Final salary pensionable pay is used for calculating pre-1 April 2014 benefits (if any). It is your full-time equivalent pay for the year ended 31 March 2024 ignoring any reduction due to sickness or injury, ordinary or paid additional maternity, paternity or adoption leave, or paid shared parental leave.
If you work part time, the pay used will be the full time equivalent pay for your post, not your actual pay. It does not include non-contractual overtime or any payments on which you do not pay pension contributions.
For LGPS membership up to 31 March 2008 (80ths):
- annual pension = 1/80 x period of membership x Final Salary pensionable pay
- automatic lump sum = 3/80 x period of membership x Final Salary pensionable pay
- for LGPS membership between 1 April 2008 and 31 March 2014 (60ths)
- annual pension = 1/60 x period of membership x Final Salary pensionable pay.
Career Average Revalued Earnings (CARE) Pensionable Pay in year to 31 March 2024
CARE pensionable pay is equal to the amount of pensionable pay paid to you between 1 April 2023 and 31 March 2024. For each year that you are a member of the CARE scheme, a pension equal to 1/49th of your pensionable pay (if you are in the main section) or 1/98th of your pensionable pay (if you are in the 50/50 section) will be added to your pension account.
If you joined part-way through the year, your CARE pensionable pay is based on your part-year earnings. If you were on reduced contractual pay or no pay due to sickness or injury, or on ordinary or paid additional maternity, paternity or adoption leave or paid shared parental leave, the pay figure should include assumed pensionable pay for those periods (rather than actual pay received for those periods).
Part-time membership before 1 April 2014
If you worked part-time before 1 April 2014, your membership includes how long you have been a member of the LGPS worked out in years and days.
If you worked 17.5 hours per week and the whole time hours for your job were 35 per week, your membership would be reduced by 17.5/35, which is half. You would be credited with one year of membership every two years. Your membership may also be reduced if you work less than 52 weeks per year such as an employee of a school who works during term-time only.
If you are working part-time in your final year, the final pay used to work out your pension is the pay you would have received if you worked whole time.
Your total membership in the final salary scheme may include:
- how long you were a member of the LGPS before 1 April 2014 in years and days, reduced for any period that you worked part time
- membership that was bought by transferring pension benefits from another scheme before 1 April 2014
- membership that was bought by transferring final salary benefits from another public service pension scheme at any time
- extra membership you have bought by paying added years contributions or by converting an in-house added voluntary contribution (AVC) into membership
- extra membership awarded by your employer.
Part-time membership from 1 April 2014
If you are part-time from 1 April 2014 the pay used in calculating your pension will be your actual part-time pensionable pay from 1 April to 31 March each year.
CARE Pension
In the LGPS, the inflation figure used to increase your CARE pension is the annual increase in the Consumer Prices Index (CPI) for the previous September. The CPI is a Government indicator of price inflation. Scheme members are not guaranteed to have an increase every year as this depends on whether there has been a rise or fall in price inflation. In September 2023 the CPI index rose by 6.7%, which means that the value in your pension account will show a 6.7% growth this year.
Eligible Cohabiting Partner
Is a partner you are living with who, at the date of your death, has met all of the following conditions for a continuous period of at least 2 years:
- you and your cohabiting partner are, and have been, free to marry each other or enter into a civil partnership with each other, and
- you and your cohabiting partner have been living together as if you were a married couple, or civil partners, and
- neither you or your cohabiting partner have been living with someone else as if you/they were a married couple or civil partners, and
- either your cohabiting partner is, and has been, financially dependent on you or you are, and have been, financially interdependent on each other.
Tax and your pension
Annual allowance
This is the amount your pension savings can increase in any one year, without you having to pay a tax charge. The annual allowance was increased from £40,000 to £60,000 from 6 April 2023. A reduced annual allowance may apply to members who have taken some pension from their fund. If the annual allowance figures in section five of your benefit statement has a nil or negative value this may mean that you have exceeded the annual allowance for 2023-24.
Who may be affected by the annual allowance
Every scheme member’s pension benefits must be assessed against the annual allowance, the majority will not exceed the allowance limit. For those that do, some are likely to have unused allowance from previous years that they can carry forward. If we think that the increase in your LGPS pension benefits has exceeded the limit for 2023-24 then we will write to you by 6 October.
You are most likely to be affected if:
- you have had a significant increase in your pay;
- you transfer pension rights into the LGPS from a previous public sector pension scheme and
- your salary at Islington is considerably higher than the salary you earned when you left your previous pension scheme;
- you combine a previous LGPS pension benefit that was built up in the final salary arrangements with your current pension account and your salary has since increased significantly
- you pay large amounts of additional contributions.
If you contributed to other pension arrangements during the year 2023-24
We will only automatically write to you if you exceed the £60,000 limit based on the benefits that we look after. If you think you need this information, you must contact us using the contact details on the pension statement. You will need to get similar information from your other pension provider.
Increasing your pension benefits
There are currently two ways you can increase the pension you receive from the scheme.
Buy extra pension - Additional Pension Contributions (APC)
If you are in the main scheme you can buy extra pension up to a maximum of £8,344 per year (this figure will increase each year in line with cost of living). The extra pension you buy will be paid in the same way as your retirement pension. The cost will depend on how much you wish to buy and how long you wish to pay the APCs. To help you work out the cost of buying extra pension you can obtain a quote on the LGPS Member website.
Additional Voluntary Contributions (AVCs)
AVCs are contributions that you can make in addition to your normal LGPS contributions to increase your retirement benefits. You can pay additional contributions to our in-house AVC provider Prudential. The additional contributions are deducted from your salary and paid into a separate AVC pot. AVCs are flexible and you can start, stop, increase or decrease the amount you pay at any time.
You can pay towards an AVC as long as you are:
- actively contributing to the LGPS in the main or 50/50 section
- you are under age 75.
If you pay tax, you will benefit from tax relief on any contributions you make towards your AVC Fund.
For more information, or to commence payment of AVCs you should contact Prudential through their website.
Shared Cost (AVCs)
If you are a Local Government Pension Scheme (LGPS) member and you currently pay additional voluntary contributions (AVCs), you are eligible to take advantage of a new employee benefit that Islington Council has introduced.
Shared Cost AVCs are a cost-efficient way to top up your pension pot, providing flexibility, security and value. One of the main benefits of topping up your pension via the council's AVC Scheme is that you will make savings in Income Tax and National Insurance contributions on the money paid into your pension pot.
You’ll also have the option to amend your contribution amount as and when you need to.
To find out more go to the My Money Matters website (previously AVC Wise).
It is important to remember that an AVC is an investment and depending on which fund(s) you invest in, your money can go down as well as up and you may not get back what you have invested.Be aware of pension scams
Pension scams are hard to spot and are often disguised with credible websites, testimonials and materials which make them appear like the real thing. Fraudsters contact members over the phone or through email and try to convince them to withdraw their pension fund and transfer it to another enterprise with promises of high guaranteed returns and access to their pension before age 55. To help protect yourself from scams the Pensions Regulator together with the Financial Conduct Authority suggest following five simple steps.
- Reject any offers that you didn't ask for and come without any past communication.
- Beware of adverts on social media channels and paid for or sponsored adverts online.
- Check who you’re dealing with before changing your pension arrangements – check the Financial Services Register or call the Financial Conduct Authority (FCA) helpline on 0800 111 6768 to see if the firm you are dealing with is authorised by the FCA.
- Use the Pensions Regulator’s scheme.
- Use the FCA scamsmart website.
If you suspect a scam, report it to the FCA.