The Local Government Pension Scheme – the basics

Right now, it probably feels like you’re in one of the toughest jobs going.

A huge 84% of school leaders admit they’re stressed – according to a recent survey by Education Support.

So, we fully understand the pressures you’re under.

Yet it’s also important to make time for yourself every now and again. Thinking about things like retirement could help you feel better about the future, and boost your mental wellbeing.

Retirement is your reward

Sure, retirement may feel like the last thing on your mind right now. For a while it was for John Ivens, an executive head teacher from London, until he realised just how important it is to prepare.

“Retirement wasn’t something I’d thought about since I started working – I’d had my head in the sand,” admits John. “I had no idea about pensions, how mine were doing, or how prepared I was for retirement. Then I thought it was about time I did.”

Here to help you build your future

For further support with his retirement plans, John turned to NAHT Personal Financial Services – provided by Skipton Building Society. Since 2006, they’ve helped school leaders, like you, prepare for retirement – through no obligation financial advice.

John feels Skipton has helped to improve his outlook on retirement, “I feel much better about the future now,” he beams. “I have a better idea of how much money I should need. I’m actually in a better financial position than I thought.”

A chance to think about your goals

To save time, John had an online review through Skipton’s video link service.

“This was very useful,” adds John. “I also found the process of booking an appointment really easy.”

Skipton’s reviews are a chance to talk about your retirement. Help you develop a clearer picture of what you want from it – and see if your goals could be achievable.

With retirement creating new opportunities, John is looking forward to this phase, “I don’t see it as being the end, where I’ll be sat doing nothing” John explains. “I’d like to see more of my grandchildren – who live in Norwich.

“I’m also inspired by my dad who, at the age of 73, impulsively bought a house in France. He spent the next 19 years there – and it was the happiest time of his life.”

Making you aware of your options

Through his adviser, Asif, John discovered ways to improve his current plans. He was able to go through old defined contribution pensions he’d taken out with previous employers.

“For decades I had four pensions sat doing nothing,” he adds. “Asif recommended putting them in one place – where they might do something better in the future.”

“I was completely unaware of some of the options available. Asif was great –and very clear when talking through my options, as well as the risks involved. His advice was delivered in a way I understood – and wasn’t overwhelming.”

No pressure promise

You’re under no obligation to act on Skipton’s advice. “Asif was a very good listener and didn’t try to push me into anything,” John explains. “He merely made suggestions and provided recommendations that were right for me.”

There’s no upfront charge to hear Skipton’s recommendations. A charge will only apply if you decide to act on their advice. And Skipton will give you the time you need to decide what’s right for you.

John concludes, “I found the process very simple, very successful – and I feel a lot better for speaking to Skipton. It’s reassuring to have this service available through the NAHT – I’d certainly recommend Skipton to other head teachers.”

Want a free initial consultation?

This friendly chat will find out if financial advice, from Skipton Building Society, might be a valuable step for you. Skipton offer financial advice to anyone with a lump sum of at least £20,000 or £500 per month to invest, or £400 per month for pension related investments. For existing pensions(s), you’d need a minimum of £50,000.

Important information.

Our recommendations are likely to include stock market-based investments. These are not like bank and building society savings accounts as your capital is at risk and you may get back less than you invested. The value of your investments and any income from them may fall as well as rise. Please note, Skipton cannot offer advice on Pension Transfers from Defined Benefit schemes.

The Local Government Pension Scheme (LGPS) is a valuable part of the pay and reward package for non-teaching staff in schools. In the first of a twopart series, NAHT head of advice KATE ATKINSON explains the framework and background of the LGPS.

The framework

The LGPS is a statutory pension scheme, which means it was established by Acts of Parliament and administered in line with statutory instruments (or regulations) issued by the Department for Communities and Local Government (DCLG).

The LGPS is administered locally by pension funds across the country, and these pension funds decide how pension contributions are invested. A local pension board helps each pension fund administer the LGPS and comply with the LGPS rules.

Contributions

As a scheme member, you pay contributions to the LGPS. Your employer pays the balance of the cost of providing your pension benefits. This makes the LGPS a ‘defined benefit’ pension scheme, which means the amount you receive in retirement is based on how many years you’ve been a member of the scheme and the salary you earn. You do not have to worry about how well the underlying contributions perform to receive your pension promise. Employees contribute roughly one-third of the scheme’s costs, and employers pay the rest. The LGPS is a ‘funded’ scheme, which means each fund has a ‘pot’ of money from the contributions paid that is invested to provide the benefits promised. However, as noted above, if the fund performs poorly, the scheme will still be obligated to provide you with your pension promise.

An independent actuary calculates how much your employer should pay into the scheme every three years. The actuary takes investment returns into account when setting how much your employer must pay.

Information requirements

Your pension fund must provide basic information about the LGPS when you join. Your pension fund must also provide this information if you request it, so you can ask for copies if you have lost this.

You must also receive an annual benefit statement. Your benefit statement is a yearly summary of your pension entitlement. It tells you about the entitlement you have built up at the time the statement is issued and what it could be in the future. Keep your benefit statement safe – it may help you when making decisions about your retirement. Your pension fund must tell you if any material changes are made to the LGPS rules. It is worth keeping an eye on any material changes that are notified to you to ensure that you understand how your pension operates. It is important to note that material changes can’t be made to ‘accrued benefits’ – that is, the benefits in the scheme you have already built up on a particular basis. However, changes can be made to the scheme for ‘future accrual’, which means that benefits can build up (or accrue) differently in the future.

What else do I need to know?

In the next issue of Leadership Focus, we will look at how benefits build up in the LGPS, the discretions that employers can exercise and how to make a complaint if something goes wrong.