Leavers Deaths and Retirements
It is the employer's responsibility to tell us about every member who is leaving the pension scheme. There are various ways they can leave the Scheme but in most cases you can use the leavers form or retirement form to tell us about this, either electronically or by post, making sure that you provide all the information we require.
Included in this section are more detailed explanations of the following:
- Voluntary resignation
- Opting out of the scheme
- Transfers
- Normal retirement
- Flexible retirement
- Voluntary retirement at or after age 50/55
- Redundancy or efficiency retirement
- Ill Health
- Death in service - temporary or permanent employees
- Death in service - casual employees
- What you need to do
- How to request retirement estimates
- What we do next
Types of leavers and retirements
Voluntary resignation
Leaving the scheme with less than 3 months membership and no transferred in service
The scheme member has the following choices:
- A refund of contributions - they will usually receive a half to two thirds of their pension contributions back. This is because the HM Revenue & Customs takes 20% or 40% for high earners. We also have to restore full National Insurance contributions to the National Insurance Contributions Office of HM Revenue and Customs.
- They can transfer their pension rights to another scheme
- They can freeze their contributions - Frozen Refund - in case they rejoin the scheme at a later date
Leaving the scheme with 3 months or more scheme membership or transferred in service
The scheme member has the following choices:
- Deferred benefits - A pension and lump sum depending on date of joining will be held for the scheme member until they reach retirement age. These increase with inflation each year. Deferred members will receive a benefit statement every year informing them of the value of their deferred benefits.
- Transfer to another scheme - the member can ask their new employer to transfer their LGPS to buy extra service in their new scheme or transfer to another pension arrangement i.e. a personal pension plan or stakeholder pension.
- Link benefits - if they join another LGPS employer.
Opting out of the scheme
An employee can choose to leave the pension scheme at any time during employment. They need to complete an opt out form in order to do this. If they opt out after 3 months their pension will become a deferred benefit with us. They can transfer it out subject to a different pension provider.
Transfers
Please indicate if the scheme member is transferring to another authority or is transferring under TUPE. Details of the new employer, if known, should be given..
If transferring as the result of TUPE please discuss this with our Employer Relationship Manager Andy Cunningham:
Telephone: 01225 713612
Email: andrew.cunningham@wiltshire.gov.uk
Flexible retirement
As of April 2008, LGPS employers have the discretion to offer flexible retirement to their staff. How your employer completed sections 3 and 4 of our standard discretions policy template will determine under what circumstances (if any) your employer offers flexible retirements. Under the regulations, flexible retirement can be offered subject to the employee either reducing their pay grade or reducing their hours. Employers can add more specific restrictions to this in their policy. For pension purposes, we will make them a pensioner on their current record and we will set up a new record to cover their service on their new terms and conditions. They are able to opt out at any point from accruing more service on their new record.
If the employee does not meet the rule of 85, they will have their benefits reduced unless the employer waives the actuarial reduction. Waving the actuarial reduction will have cost implications for the employer.
Note: If they retire on one post and re-start on a different post with the same employer, this does not technically come under the title of flexible retirement. If they are 60 or over (younger with employer consent), they are free to retire this way regardless of what your discretions policy states about flexible retirement, as this is effectively just a normal retirement.
Normal retirement
The Scheme's normal pension age is 65. If a member continues working beyond age 65 they can stay in the scheme but they must draw their benefits by age 75. Benefits drawn after 65 will be increased. Members who meet the rule of 85 requirements are eligible to receive their full pension before the age of 65, although this is being phased out. Further information about the rule of 85.
Members can choose to retire and draw benefits from age 60, although their value may be reduced for early payment.
Voluntary retirement at or after the age of 50/55 with employer's consent
As part of your Employers Discretion Policy you MUST provide a policy on early retirement and, providing you agree to it, a scheme member can retire at any time after their 50th birthday (if they were a member before 1st April 2008 an this occurs before the 1st April 2010). From 1st April 2010 voluntary retirement will only be possible following the member's 55th birthday. If they are aged over 60 they can retire without employer consent.
All cases of voluntary retirement before the age of 60 will have cost implications for the employer.
Redundancy or efficiency
If an employer decides that a scheme member is retiring on the grounds of redundancy or efficiency we will immediately pay their pension and lump sum providing they are over and joined the pension scheme before 1st April 2008 or if they are aged 55 or over and joined the scheme after 1st April 2008. From 1st April 2010 any member (regardless of their length of service) will only receive full benefits if they are aged 55 or over. This will have cost implications for the employer unless they meet the rule of 85.
Death in service - permanent or temporary scheme members
If a scheme member dies please inform us immediately by phone giving details of the next of kin, and then complete and return a leaver form.
If a scheme member was employed on a part time basis we will also need their part time pay figure in order to pay any death grant.
Death in service - casual scheme members
If a casual scheme member dies on a day of employment, they will be treated as a death in service (as above), otherwise they will be treated as a leaver with deferred benefits. In both cases please complete and fill in a leaver form.
What do you need to do?
Someone who wants to opt out
Ask the employee to fill out an Opt Out form. For new starters these are included in the Starter Pack and they are also available on our website.
If a scheme member has opted out within 3 months, you can refund their contributions through the payroll.
Voluntary resignations
Complete a leaver form and send it to us.
We will send out a decision form and other information to the member.
Normal retirement, Flexible retirement, Voluntary retirement (at or after 50/55), Redundancies (over 50/55) or Efficiency retirements
In ALL cases of retirement, please send the completed retirement form to us as soon as possible. We need to receive all retirement forms at least 3 weeks before the date of the members retirement in order for us to pay their pension benefits on time. For Flexible retirement we also need a starter form (unless they opt-out of the new post).
We will send out all other relevant forms to the member once we have received the retirement form.
Deaths
Inform us immediately and provide details of the next of kin. Complete a leaver form and send it to us.
Giving additional benefits
Depending on what has been agreed under your Employer Discretions Policy you can also give members extra service. There are two ways that you can do this:
- Augmentation
- Under separate Discretionary Payments Regulations (if redundant or retired in the interest of efficiency)
In either case YOU will have to pay any extra cost. Under augmentation you will have to pay the additional capital cost to the Pension Fund. Under Discretionary Payment Regulations you can pay an enhanced severance payment up to 104 weeks pay.
Estimates for retirements
A scheme member may ask you for an estimate of their pension and lump sum and we can provide this information for you. Please use the estimate form on our website and send it to us.
What do we do next?
In all cases of retirement, we send the retiring scheme member a pensions pack. Any lump sum amount is paid into their bank account via BACS. Their pension will be paid on the 25th of the month or earlier if this is not a normal banking day.
Problems and queries
The main problem we find regarding leaver and retirement forms, is the information provided particularly with regards to hours can disagree with the information we hold on our system. Furthermore, often we receive information late or not at all, which can cause significant problems. This highlights the fact the change form needs to be used to tell us about all relevant changes so that the employers record for the member agrees with our pension record for the member. When the information does not agree, we need to raise a query with the employer which can cause considerable delays, such as transferring out the members pension or bringing it into payment.
Another area of difficulty is correctly calculating the Pensionable Remuneration figure (FTE final year's pensionable pay), as required on the leaver and retirement forms. We request that all employers use the "365 Method". A spreadsheet to calculate this for you can be found here.
Wiltshire Pension Fund, Wiltshire Council - Bythesea Road,Trowbridge, Wiltshire, BA14 8JN.
© 2009 Wiltshire Pension Fund.