The local government reorganisation for Northamptonshire and your pension
On 1 April 2021, your job will have transferred from your current employer to either North Northamptonshire Council (NNC) or West Northamptonshire Council (WNC) under your current terms and conditions.
I’m already an active member of the Local Government Pension Scheme (LGPS)
If you’re an active member of the LGPS on both 31 March and 1 April 2021, your pension will transfer automatically to your new employer. You’ll need to decide if you’re happy with this or if you’d rather we kept your pensions separate. As you’re moving to a new employer, you’ll also have some options available to you.
You should have been sent a newsletter to help you make informed decisions about whether to combine your LGPS pensions or to keep them separate, as well as the other options available to you. There’s information about the effect each option would have on your pension in different circumstances, including some worked examples.
I’d also like some figures to help me decide
If you’d like to compare what your pension benefits may look like if you combined them or kept them separate, you can use our benefit projectors on your online pension account and the modeller on the LGPS members’ website.You can use our projectors to work out the estimated value of your combined pension when you retire. If you want to then compare this to the overall value if you kept your pensions separate, you will need to add the current value of your pension (taken from your online pension account) and add this to a projection taken from the modeller on the LGPS members’ website.
Here’s some questions and situations which you must think about before you make a decision to separate your pensions:
What ‘final pay’ will be used?
If you were a member of the LGPS before 1 April 2014, please read pages 4-5 of our newsletter for some examples on what ‘final pay’ will be used to work out your final salary pension for if you decide to combine or separate your pensions.
Changes in pay and pensions tax
If your pay drops
If you’re paying into the LGPS and built up pension before 1 April 2014 and have a drop or freeze in your pensionable pay because of a decision made by you or your employer, your final salary pension benefits may lose some value.
However, if you were a member of the LGPS before 1 April 2014, you may have some protections for your pension. This is explained in our ‘How a reduction in pensionable pay affects your final salary pension benefits’ factsheet. You can find this on our forms and resources page .
If your pay goes up
If you’re paying into the LGPS and you benefit from a significant, above inflation pay increase in any year, you may have to pay an annual allowance tax charge.
This can affect anyone who has a significant pay increase, not just high earners. Please see our ‘Is my pension taxed?’ page for more information.
What about my additional contributions?
If you’re currently paying Additional Pension Contributions (APCs), Additional Voluntary Contributions (AVCs), or have an Added Years contract, please read pages 7-8 or our newsletter to see how the decision to combine or separate your pensions will affect your additional contributions contract. You can also find more information on AVCs and APCs on the ‘I would like to increase my benefits’ page of our website.
What if I’m made redundant?
If you’re aged 55 or over, with at least 2 years LGPS membership please read pages 8-9 of our newsletter for some examples on what would happen with your pensions if you decide to combine or separate them and you were made redundant. You can also find out some more information about redundancy and your pension on the ‘What are my retirement options?’ page of our website.
What if I retire early due to ill health?
If you’ve qualifying service of 2 years or more and want to know what would happen to your benefits if you combined or separated your pensions if you had to retire early due to ill health, then please read pages 10-11 of our newsletter.
An ill-health retirement is a retirement before normal pension age under the grounds of ill-health. To be eligible for an ill-health pension, your employer must initiate the ill-health process and certain conditions must be satisfied. It is only possible to receive an ill-health pension if you are currently an ‘active’ member (a scheme member currently paying in pension contributions) of the LGPS who is dismissed on the grounds of ill-health. Therefore, if you voluntarily leave your employment you do not qualify for an ill-health pension.
Please speak to your employer should you wish to explore an ill health retirement pension application.
What if I take my pension early?
If you’re aged 55 or over, with at least 2 years LGPS membership please read pages 11-12 of our newsletter for some examples on what would happen with your pensions if you decide to combine or separate them and you took your pension early. You can find more information on early retirement on the ‘What are my retirement options?’ page of our website.
Other areas to think about
Please read pages 13-15 of our newsletter to find out how the following may also affect your decision on combining or keeping your pensions separate:
- cost of living increases
- death in service lump sum
- transferring in a previous pension – a transfer in pack is on the forms and resources page of our website under ‘Joining the scheme and transferring in previous benefits’
- transferring your LGPS pension to another pension scheme
There’s a time limit to some of the decisions you can make so it’s important that you read the newsletter and keep it safe, so you’re aware of the options available and can make an informed decision.
If you’re happy with your LGPS benefits transferring to your new employer you do not need to tell us, this will be done automatically. If you’d like to keep them separate, you’ll need to complete and return the form that was on the back of the covering letter so that it’s received by us no later than 31 March 2022. If you can’t find your letter we’ve saved a copy to your online pension account.
I’ve opted out of the LGPS or am an active member of the 50/50 section of the LGPS
Your new employer must contractually enrol you into the LGPS on 1 April 2021, even if you have previously opted out. If you’re in the 50/50 section of the scheme they must enrol you back into the main section. The LGPS provides valuable benefits. Not only do you get a guaranteed pension, you also get life cover and ill health protection. Please see the ‘I’m thinking of joining’ page for more information.
If you’d still like to opt out or to rejoin the 50/50 section, please fill in the relevant form from the active members’, forms and resources page. Forms should be returned to your new employer’s payroll team dated on or after 1 April 2021.