Information for IFAs

In this section:

About the Scheme

Lothian Pension Fund is only able to make cash equivalent transfer value payments when we’re satisfied that a transfer has met the Pensions Regulators’ Guidance.

Members are entitled to make one free guaranteed transfer quotation request from the LGPS administering authority in any 12 month period and, if they wish to go ahead with a transfer, the election to proceed must be made at least 12 months before their Normal Pension Age in the LGPS or, if they are a Pension Credit member, at least 12 months before their Normal Pension Age (NPA is defined by the scheme regulations in force at the time a member leaves the scheme – see about the scheme section below). The current Scheme guide still require to be updated following recent regulation changes.

If a member is already in receipt of a pension from another period of membership with the LGPS in Scotland, section 93 of the Pensions Schemes Act 1993 does not allow a CETV to be paid in respect of another period of membership. In addition, members can only transfer benefits from the LGPS Scotland if they’ve left the scheme and haven’t already drawn benefits from LGPS Scotland (either in their current employment or any earlier employment).

We will only send a guaranteed transfer value when we receive a formal application for transfer from another pension scheme, or formal request from you together with details of the receiving scheme. Discharge forms will only be provided with a guaranteed CETV.

To enable you to advise a member, we will firstly send you an illustrative CETV which won’t be guaranteed. Your client will be able to provide you with their latest benefit statement and annual allowance information which they can access via our My Pension online service. They’ll also be able to provide you with projections if they’re current members. We will not provide information about a member without a current written authorisation from the member.

The LGPS (S) is a statutory scheme; changes to the scheme can only be made through legislation laid down by the Scottish Government. The scheme was contracted out of the earnings related part of the state scheme until 5 April 2016 and re-values GMP at the full rate. The following shows the scheme basis, accrual rates and NPA for each set of regulations with a link to the full regulations.

Regulations Basis Accrual NPA Earliest retiral without reduction
LGPS (Scotland) Regulations 1987. Effective 1/4/1988 Final salary Pension 1/80th. Lump sum 3/80ths. Between age 60 and 65 when notional membership amounts to 25 years Over age 60 +25 years membership
LGPS (Scotland) Regulations 1998. Effective 1/4/1999 Final salary Pension 1/80th. Lump sum 3/80ths. 65 Over age 60 when age and membership together adds up to 85 or more
LGPS (Scotland) Regulations 2008. Effective 1/4/2009. Final Salary Pension 1/60th. No automatic lump sum but can give up pension for lump sum at 12:1. 65 Over age 60 when age and membership together adds up to 85 or more if in scheme before 1/12/2006, otherwise age 65.
LGPS (Scotland) Regulations 2014. Effective 1/4/2015 CARE (but see below) 1/49th of actual pensionable pay per year Equal to New State Pension Age. 65 unless has transitional protection if a member before 1/4/2015

Anyone who was a member on 31 March 2015 and remained a member on 1 April 2015 will have transferred to the new CARE scheme. These members retain a final salary link for their pre-1 April 2015 membership. The final salary used is the “final pay” at date of leaving the scheme. Final pay is the average pay based over a year rather than actual rate of pay on leaving and means the best in the last three years of working.

Anyone joining the scheme from 1 April 2015 joins the current scheme. The earliest retirement date for a member to retire voluntarily is age 55 but a reduction will apply. You can find information of this information within the Scheme guide. The guide includes tables showing actuarial reduction factors which may apply to early retirements.  Please note the TV factors are the transfer commutation factors and are set by GAD, the Government Actuary's Department. They are subject to change.

The scheme is funded by employer and member contributions as well as investments. You can find information on the funding of the scheme on the Investment section and  the latest Fund Actuarial Valuation report.

Frequently asked questions

Are there any charges of penalties?

There is no charge or penalty for transferring out of the scheme. Where a request is for transfer to a scheme where GMP or protected rights cannot be accepted it is possible to transfer only the non protected rights. It is also possible to transfer all rights to such a scheme provided the transferring member is aware of the rights being given up.

Can members transfer to another scheme?

Members have the right to transfer their accrued LGPS benefits to another scheme including a scheme that offers flexible benefits. However, if the total value of their LGPS benefits across all LGPS in Scotland is £30,000 or more then they are required to take independent advice (but not for AVCs), from an authorised independent adviser who is registered with the Financial Conduct Authority (FCA).

If the total value of their LGPS benefits is £30,000 or less (or in respect of a transfer of AVCs), we recommend that members seek independent financial advice before deciding to transfer his/her LGPS pension benefits.

Pension Increase and Revaluation

Pensions from the final salary part of the scheme when in payment or in deferment are revalued yearly by CPI and cannot fall below zero. The CARE part of the pension is revalued yearly by Treasury Orders.

Where the Treasury Order revaluation is below zero a negative revaluation will be applied to current members’ pension accounts accrued that year and to those of any member who left within the year it applies to. Pensions in payment are not devalued but will have no increase.

As we do not know future revaluation and pensions increase rates the Fund will not provide projections beyond the current year.

Contributions

The amount of contributions payable by a member is determined by Regulation 9 of the LGPS (Scotland) 2018 Regulations. Members pay a percentage of their pay based on their pensionable earnings. Employers’ contributions are not based on individual member’s contributions but are determined by the scheme actuary following the triennial scheme valuation. The latest scheme valuation showing how much each employer pays can be found on publications section. We will not provide a breakdown of the contributions paid by a member or employer as the contributions merely fund the scheme and are not used to calculate any benefits payable.

Is there a lump sum paid when the pension is due?

The scheme regulations allow the member to give up pension to provide a bigger tax free lump sum at retirement at the rate of £1 of pension for an additional £12 of lump sum. The scheme allows a member to take up to 25% of the capital value of their accrued rights as tax free cash. Please see Regulation 32 of the LGPS (Scotland) 2018 Regulations.

Are there any discretionary increases?

There are no discretionary increases either in deferment or in payment.

What is the definition of a spouse?

  • In the event of a member’s death, pensions are payable to eligible partners. Eligibility depends on the regulations in force at the time the member left the scheme.
  • If the member left the scheme after 31 March 2009 a partner is a legally married husband or wife (including same sex spouse), a civil partner or cohabiting partner.
  • If the member left between 1 April 1998 and 31 March 2009 a partner is a legally married husband or wife, or a civil partner
  • If the member left before 1 April 1998 a spouse is an opposite sex, legally married husband or wife.

Death benefits

You can find out the deaths benefits payable in the event of a member’s death in the scheme booklet which is available on the publications page of our website. Information is also available on the benefits page of our website under “life cover” and “pension for your dependants”.

Benefits payable on death depend on when the member left the scheme. The following table gives information about death grants and who could get a survivor’s pension.

The actual calculation of a survivor’s pension depends on multiple factors. In general terms up to 31 March 2008 a spouse’s pension would be around half of the members and after that it would be 1/160 of the membership times final pay. The relevant regulations detail the calculations (see link in table above in “about the scheme”).

Death grant regulations
Regulations Death Grant payable if death in deferment Death Grant payable if death of a pensioner Death Grant payable if death in service Survivor's pensions payable
1987. Left scheme before 31/3/1988 See regulation E11 See regulation E11 Not applicable Widows and children’s pensions payable only
1998. Left scheme before 31 March 2009 Equivalent to the lump sum that would have been payable if not for death 5 times the annual pension in payment less any pension paid out. Not applicable Widows, widowers based on post 5/4/88 membership (plus any pre 6/4/88 bought back), children’s pensions. From 5/12/2005, civil partners based on post 5/4/88 membership (plus any pre 6/4/88 bought back
2008. Left scheme before 31/3/2015 5 times the retirement pension that would have been paid if not for death 10 times the annual pension in payment less any pension paid out. Not applicable Widows, widowers, children’s. Civil partners based on post 5/4/88 membership (plus any pre 6/4/88 bought back). Co-habiting partner’s pensions based on post 5/4/88 membership (plus any pre 6/4/88 bought back)
2014. Left scheme after 31/3/2015 5 times the retirement pension that would have been paid if not for death 10 times the pre commutation pension less any commuted lump sum and any pension paid to the member. 3 times actual annual pay based on average of last 3 months pay uprated to 12 months. Widows, widowers, children’s. Civil partners based on post 5/4/88 membership (plus any pre 6/4/88 bought back). Co-habiting partner’s pensions based on post 5/4/88 membership (plus any pre 6/4/88 bought back)

Transferring AVCs

In accordance with the LGPS (S), we allow current members to make AVC payments via either Standard Life or Prudential. A scheme member can take a drawdown of their AVC. AVC’s can also be transferred at any time before the age of 75. The member does not need to have left the scheme. However, AVC payments must stop before a transfer can take place. A new AVC contract can be taken out once the transfer has been completed. Anyone who is not a current member of the Scheme, but still holds an AVC fund, can also transfer anytime up to age 75.

If a member wishes to transfer their AVC fund value, they should make a request to us in writing providing details of the receiving scheme. Members aged 55 or over can take UFPLS (i.e. taking 25% of the AVC value tax free and the rest taxable). For information about UFPLS please ask the member to contact their relevant AVC provider. You should note that a member has the option to take all their AVC fund value tax free at retirement along with their main scheme benefits.

Members can change their AVC investment choices with their chosen AVC provider at any time. Members have access to their AVC accounts via the provider’s website’s. It is also possible to transfer funds from one provider to another. You can find more information on AVC’s on our member section of our website.