The Regulations changing the Local Government Pension Scheme (LGPS) will come into force with effect from 1 April 2014.
On the main UNISON web site’s News section is an important update covering where we are on the Transitional Regulations that will set out the protections on benefits earned before April: LGPS transitional regulations update.
This is therefore a last-chance reminder that anyone who has currently opted out of the LGPS MUST rejoin immediately if they want to ensure the earnings link protection on any final salary benefits they have earned up to April 2014 (there may be some protection for those who opt back in within five years of opting out). If the cost of the contributions is the problem then they should be reminded that from April there is an option to pay half their normal contribution rate for half the pension. They should approach their employer pension department and ensure that the forms to rejoin has been returned and received before the end of this month. If they are not actively contributing to the scheme then any benefits they earned before they opted out that fall outside the proposed five-year window protection to opt back in, will go up in line with prices (currently Consumer Prices Index), not earnings.
Anyone thinking of paying Additional Voluntary Contributions (AVCs) to maximise tax-free lump sum payment when they retire so they don’t have to exchange so much of their pension for cash at the relatively poor exchange rate of only £12 cash for £1 pension should elect to start paying the contributions BEFORE April 2014. If members elect to pay AVCs after April then when they retire they are likely only to be able to take part of their AVC fund as a cash sum (currently 25% of the value) and the remainder they will have to buy extra pension at whatever the annuity rates will be in the future from a pension provider like an insurance company. Members, especially those near retirement, should consider paying AVCs if they can afford it and approach their employer pensions department for details of the AVC arrangement operated by their employer/LGPS fund. They can as an alternative buy extra pension in the LGPS.
Thanks to UNISON’s national office for this update