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Pension information - active members


The information on this page relates to employees currently contributing to the Local Government Pension Scheme (LGPS) and any employees wishing to join the LGPS.

Information on the following is displayed on this page. Please click on the links below to be forwarded to the relevant sections.

Contribution Rates

Employee Contributions Bandings with effect from 1 April 2018.

Banding is based on your actual salary.

Band

Actual pensionable pay for an employment

Contribution rate for that employment

 

 

Main section

50/50 section

1

Up to £14,400

5.50%

2.75%

2

£14,401 to £22,500

5.80%

2.90%

3

£22,501 to £36,500

6.50%

3.25%

4

£36,501 to £46,200

6.80%

3.40%

5

£46,201 to £64,600

8.50%

4.25%

6

£64,601 to £91,500

9.90%

4.95%

7

£91,501 to £107,700

10.50%

5.25%

8

£107,700 to £161,500

11.40%

5.70%

9

£161,501 or more

12.50%

6.25%

 

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50/50 Option

From 1 April 2014 there is a new option in the LGPS - the 50/50 section. If you elect to move to this section of the scheme you will pay half contributions, but while you are in the 50/50 section you will only build up pension at half the normal rate. You still, however, retain full death in service and ill-health cover whilst in the 50/50 scheme.

You can choose to pay into the 50/50 section at any time by completing an election form, which is available from your employer or from this web site under LGPS Forms and Guides.

The 50/50 section is designed to be a short-term option for when times are tough financially, and your employer is required to re-enrol you back into the main section of the scheme after a maximum of three years. If you want to stay in the 50/50 section after that point you need to confirm this to your employer in writing.

If you are in the 50/50 section and move onto a period of no pay due to sickness then you will be moved back into the main section of the scheme from your next pay period if you are still not getting any pay at that time.

You can choose to move back into the main section of the scheme at any time by completing an election form, available from your employer or from the Pensions web site as detailed above, and you will then start to build up full benefits in the main section of the scheme from your next available pay date.

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Benefit Statements for Active Members

Members will receive an annual benefit statement from the county council pension fund each year, giving details of the current value of pension and the estimated value at your normal pension age, which is your state pension age. These figures are based on the salary/employment details provided by your employer each year. The annual benefit statement will be produced in August each year.

Benefit statements include the current value of your LGPS benefits and a projection of your benefits under the Career Average Revalued Earnings (CARE) arrangement to your normal pension age, along with information about survivor benefits.

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Increasing Your Benefits

There are two ways to increase your pension benefits

Increasing Your Benefits - Additional Pension Contributions (APCs)

You can buy extra pension by paying APCs regularly, over a period of time, or you can buy extra pension by paying in a one-off lump sum. The maximum amount of additional pension you can buy from April 2014 is £6,500 (this figure will increase each year in line with the cost of living).

The amount it costs depends on how much extra pension you want to buy, the age you start paying the extra contributions and the length of time you want to pay them for. Should you take up this option we will require a declaration from your GP that you are in reasonably good health. Any fee your GP may charge for this service must be met by you.

Increasing Your Benefits - Additional Voluntary Contributions (AVCs)

AVCs allow you to pay more to build up extra savings for retirement. From 1 April 2014 your contributions to an AVC arrangement will no longer be limited to 50% of your pay, so you can, if you wish, pay up to 100% of your pay towards an AVC, after allowing for any tax and National Insurance liability or any other existing deductions you may have.

If you are a tax payer, there is an immediate benefit from your pension contributions. You receive tax relief through your pay, which means the Government makes a contribution to your savings.

For example:

  • If you pay tax at 20%, £100 of extra saving only costs you £80
  • If you pay tax at 40%, £100 of extra saving only costs you £60

Any AVC payments you make directly affect your annual allowance total which is currently set at £40,000. Most people will be able to pay AVCs without exceeding the Annual Allowance limit but if you are considering paying a substantial amount in AVCs in any year you should check how the Annual Allowance applies to you by contacting the  Durham County Council Pension Fund.

AVCs can be used to provide an additional tax free lump sum and to buy additional pension either directly in the LGPS or by purchasing an annuity.

If you are interested in paying AVCs you can contact one of our two AVC providers as follows:

  • Prudential 0800 032 6674
  • Standard Life 0845 2785640

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Transferring Previous Pension Benefits into the Fund

Members are able to transfer previous pension benefits into the Durham County Council Pension Fund as follows.

Aggregation

If you re-join the LGPS and have either a deferred refund in respect of a deferred benefit from a previous period of LGPS service, either with Durham County Council Pension Fund or another LGPS fund, your benefits may be joined together. This joining together (or aggregation) will work differently depending on how long ago you were last in the LGPS and the benefit you have in the LGPS.

Deferred refund - if you re-join the LGPS within 5 years of leaving and have a deferred refund your benefits will be automatically aggregated.

Deferred benefit - If you re-join and have a deferred benefit, either with Durham County Council Pension Fund or a different LGPS fund, you will have the choice whether to keep the benefits separate. If you don't choose to keep them separate they will be joined together.

When you started your latest period of service you should have completed a new starter form, giving details of any previous pension entitlements. If you have previous LGPS service we will contact you confirming the options available. The regulations give members 12 months from the date of re-joining to make a decision. Some of our employers however do allow longer so please check with your employer if it is over 12 months since you joined.

Club Transfers

These are transfers from a public service pension scheme (including the LGPS in Scotland or Northern Ireland) where the election to transfer is made within 12 months of joining the LGPS and there has not been a break of more than 5 years since leaving the other public sector scheme. Benefits are transferred under preferential rules known as Club transfer rules.

If you opt to transfer pension rights from a public service pension scheme the amount of extra pension which is added to your pension account will be equal to the amount of pension you had built up in your pension account with your previous pension scheme.

Where a transfer from another public service pension scheme includes final salary benefits those benefits would buy final salary scheme membership in the LGPS provided you have not had a break in active membership of a public service pension scheme of more than 5 years.

Transfers from non LGPS or public sector schemes

If you opt to transfer pension rights from another pension arrangement then a sum of money called a transfer value is offered to buy an amount of extra pension which is added to your pension account. If you transfer your previous pension rights into the LGPS your retirement benefits will be increased. The extra pension is added to your pension account in the scheme year that the transfer payment is received

When you joined your latest period of service you should have completed a new starter form, giving details of any previous pension entitlements. If you have previous pension benefits we will contact you confirming the options available. The regulations give a member 12 months from the date of re-joining to make a decision. Some of our employers however do allow longer so please check with your employer if it is over 12 months since you joined. 

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Absences

Child related leave

You will continue to pay your basic LGPS contributions on any pay that you receive while you are off on child related leave.

Any period of unpaid additional maternity, paternity or adoption leave will not count for pension purposes unless you elect to pay Additional Pension Contributions (APCs) to purchase the amount of pension lost during that period of unpaid absence.

If you wish to purchase the amount of lost pension and make the election within 30 days of returning to work then the cost of the APC is split between you and your employer. You will pay one-third of the cost and your employer will pay the rest.

Strike

If you are absent for a day or more due to a trade dispute the period will not count for pension purposes unless you elect to pay Additional Pension Contributions (APCs) to purchase the amount of pension lost during that period of absence. The amount of pension lost is calculated as the appropriate fraction of your assumed pensionable pay for that period of absence (i.e. 1/49th of your assumed pensionable pay if you were in the main section of the scheme or 1/98th if you were in the 50/50 section).

The cost of purchasing the amount of lost pension for the period of absence would be met fully by you; your employer does not make a contribution to the APC.

Unpaid leave

If you are granted unpaid leave of absence, including jury service, and parental leave, the period will not count for pension purposes unless you elect to pay Additional Pension Contributions (APCs) to purchase the amount of pension lost during that period of absence. The amount of pension lost is calculated as the appropriate fraction of your assumed pensionable pay for that period of absence (i.e. 1/49th of your assumed pensionable pay if you were in the main section of the scheme or 1/98th if you were in the 50/50 section).

If you wish to purchase the amount of lost pension and make the election within 30 days of returning to work then the cost of the APC is split between you and your employer. You will pay one-third of the cost and your employer will pay the rest. This is known as a Shared Cost Additional Pension Contributions (SCAPC). You can pay these additional contributions in a one-off lump sum or through regular payments from your wages.

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How benefits are calculated

The LGPS is a defined benefit scheme which means that your pension is worked out using a set formula.

Membership built up in the scheme before 1 April 2014 will be used to calculate your benefits under the former final salary rules. All membership built up after that date is calculated under the career average rules. This means that for each year in the scheme after 1 April 2014 you will build up a pension based on your pensionable pay in that year. For each scheme year that you are a member a pension equal to a 49th of your pensionable pay will be added to your pension account. Inflation increases will be added to ensure that your pension account keeps up with the cost of living.

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Retirement

Retirement at Normal Pension Age (NPA): This is the same as your State Pension Age. Your benefits in the 2014 scheme are payable from your NPA and will be reduced if taken before that age. (You may have some protection if you were an active member before 1 October 2006).

Retirement at Age 65: This is the normal Retirement Age for benefits built up before 1 April 2014. If you take your benefits at age 65 any benefits built up before 1 April 2014 will be payable unreduced but there will be a reduction to benefits built up after 1 April 2014. (You may have some protection if you were an active member before 1 October 2006).

Retirement before Normal Pension Age: You can choose to retire and draw your pension from age 55. You do not need your employer's consent to draw your pension before your Normal Pension Age. Your pension is normally reduced if it is paid before your Normal Pension Age.

If you built up pension in the LGPS before 1 April 2014 then protections are in place for the Normal Pension Age that applies to those benefits. In addition you may have Rule of 85 protections which mean that you will not suffer an actuarial reduction to some or all of your benefits. You will not receive full Rule of 85 protection if you voluntarily take your benefits between 55 and 60.

In all cases you will need to have at least two years' service in the scheme to have the right to a retirement benefit.

Flexible retirement

It is possible to take flexible retirement with the employer's consent from age 55 where the number of hours worked is reduced or the employee moves into a lower graded post. This is at the discretion of your employer.

Ill health retirement

To qualify for ill health benefits you must have 2 years' service in the scheme. Your employer, based on an opinion from an independent occupational health physician appointed by them, must be satisfied that you will be permanently unable to do your own job until your Normal Pension Age and that you are not immediately capable of undertaking gainful employment.

Ill health benefits can be paid at any age and are not reduced on account of early payment - in fact, your benefits could be increased to make up for your early retirement.

The different levels of benefit are:

Tier 1: If you are unlikely to be capable of gainful employment before your Normal Pension Age
Ill health benefits are based on the pension you have already built up in your pension account at your date of leaving the scheme plus the pension you would have built up had you been in the main section of the scheme until you reached your Normal Pension Age.

Tier 2: If you are unlikely to be capable of gainful employment within 3 years of leaving, but are likely to be capable of doing so before your Normal Pension Age
Ill health benefits are based on the pension you have already built up in your pension account at your date of leaving the scheme plus 25% of the pension you would have built up had you been in the main section of the scheme until you reached your Normal Pension Age.

Tier 3: If you are likely to be capable of gainful employment within 3 years of leaving, or before your Normal Pension Age if earlier
Ill health benefits are based on the pension you have already built up in your pension account at leaving. Payment of these benefits will be stopped after 3 years, or earlier if you are in gainful employment or become capable of such employment, provided you have not reached your Normal Pension Age by then. If the payment is stopped it will normally become payable again from your Normal Pension Age but there are provisions to allow it to be paid earlier. Details would be provided at the time.

Late retirement

If you choose to carry on working after Normal Pension Age you will continue to pay into the LGPS, building up further benefits. When you eventually retire you will receive your pension unless you choose to delay drawing it. You must draw your pension by no later than age 75.

To take account of the fact that you will be drawing your pension after your Normal Pension Age your benefits will be paid at an increased rate, with your pension being increased by 0.014% for each day your benefits are drawn later than your Normal Pension Age.

Please note:

We frequently receive requests from members for quotations when they are more than 10 years away from normal retirement age. Producing a quotation for a member who is age 40 based on a retirement age of 60, does not produce reliable figures. We would ask that members only request quotations if they are over age 55.

Of course if there is a specific reason that someone under age 55 requires a specific quotation we will be happy to provide figures as a one-off. Limiting the number of quotations we process should mean an efficient turnaround for those urgent requests members and employers often require, instead we suggest you refer to your annual benefit statement.

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Redundancy

  • If you are aged 55 or over, your main benefits are payable immediately without any early retirement reductions if your employer makes you redundant or you are retired on the grounds of business efficiency and you have met the 2 years in the scheme rule.
  • If you are under age 55 your pension will be deferred in the scheme until retirement age or you can transfer it to another provider 

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Death Benefits

If you die in service as a member of the LGPS a lump sum death grant of three times your assumed pensionable pay at your date of death is paid, no matter how long you have been a member of the LGPS, provided you are under age 75 at the date of death.

If you have a deferred benefit and / or a pension in payment from a previous period of membership of the scheme, the lump sum death grant will be any lump sum death grant payable in respect of those benefits or the death in service lump sum death grant of three times your assumed pensionable pay, whichever is the greater.

A survivor's pension

An ongoing pension is provided for your spouse, registered civil partner or, subject to certain qualifying conditions, your eligible cohabiting partner. This pension is payable immediately after your death for the rest of their life and will increase every year in line with the cost of living.

For your spouse or civil partner

For membership built up from 1 April 2014 to your date of death the pension payable is equal to 1/160th of your pensionable pay (or assumed pensionable pay where applicable) times the period of your membership in the scheme after 31 March 2014, plus 49/160ths of the amount of any pension credited to your pension account following a transfer of pension rights into the scheme from another pension scheme or arrangement, plus a pension equal to 1/160th of your assumed pensionable pay for each year of membership you would have built up from your date of death to your Normal Pension Age.

For membership built up before 1 April 2014 the pension payable is equal to 1/160th of your final pay times the period of your membership in the scheme up to 31 March 2014.

Children's pensions

The LGPS provides a pension for eligible children on your death. The amount payable depends on the number of eligible children and whether there are any other survivor pensions payable (other than a child's pension).

Contact us
Durham County Council Pension Fund
03000 264 322
Our address is:
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