Local Government Pension Scheme (LGPS)
Welcome to the 2017 issue of ‘Pensioner Focus’.
You will be pleased to know that this year there is a small pension increase; further information can be found on page 2.
Please note that the Pension section telephone number
has changed from 1 April 2017. Should you wish to contact us by telephone please ring:-
Pension Telephone No: 020 8424 1186
We have included the usual round up of pension news, tax updates and pay dates.
Changing your Address and Bank Details
1
Please do remember to let us know if you move house, or if this newsletter didn’t come to the right address. This is important because if we get undelivered mail sent back to us, we will assume you are no longer around and will stop your pension! For security reasons, we cannot make any changes to address or bank details from information provided over the telephone or via email. You must inform us in writing, please try to tell us at least two weeks before pay day to avoid any delays. A change of address/bank form is provided at the back of this newsletter for your convenience.
Pension Pay Dates
Thursday 25May 2017 / Friday 24 November 2017Friday 23 June 2017 / December 2017 - not yet known
Tuesday 25 July 2017 / Thursday 25 January 2018
Friday 25 August 2017 / Friday 23 February 2018
Monday 25 September 2017 / Friday 23 March 2018
Wednesday 25 October 2017 / Wednesday 25 April 2018
1
Pensions Increase 2017 (1.0 %)
The annual pensions increase to pensions effective from 10 April 2017has been set at 1.0%.
You will receive this increase if you:
- are aged 55 years or over
- are receiving a widow’s, widower’s, partner’s or dependant’s pension, or
- retired on ill health grounds direct from active service.
You will receive the full increase if your pension began before 26 April 2016or your pension entitlements were deferred and retained in the Harrow Council Pension Fund with a last day of service prior to 25 April 2016. If your pension began on or after 26 April 2016, a smaller pro-rata increase will be applied to your pension as shown in the table below.
In September of each year the Government measures the rate of inflation during the preceding 12 months. This percentage is then added to your Local Government Pension in April of the following year.You should note that it is not discretionary and therefore Harrow Council does not have the authority to pay any additional increase.
If you have a Pre 1988 Guaranteed Minimum Pension payable (indicated on your pay slip as “GMP”), the Department for Work and Pensions (DWP) is responsible for paying the pensions increase. If you have a Post 1988 Guaranteed Minimum Pension payable indicated on your pay slip as “Alternative GMP”, as this year’s pension increase is 1.0%, this authority will pay the full increase on Post 1988 GMP’s.
If you reach State Pension Age between the periods 6 April 2016 to 31 December 2018 and have a GMP, future pension increases will be paid by Harrow Council. At the time of writing we are waiting for further details from the Government regarding who will be paying the GMP pensions increase forthose reaching State pension ages after 31 December 2018.
Keeping us informed
It’s not easy talking about what will happen after you have gone – especially with your loved ones – but it is something that we should all do. There are times when someone dies, and we wrongly carry on paying their pension. So please do take time to have that difficult conversation, and make sure that someone will take care of your affairs when that day comes.
It is important that whoever is looking after your affairs knows how to contact us to tell us that you have died. They can do this simply by phoning 020 8424 1186. This way we can stop your pension before any wrong payments have been made, and of course put into place any new pensions, such as a pension for a husband, wife or partner who is entitled to one.
So what happens if we don’t find out in time that one of our pensioners has died? In most cases this is due to a simple error, such as someone not knowing about the pension and can simply be put right. But in other cases it is a deliberate attempt to defraud us. Whatever the reason, there are several steps that we take to pick up such cases, as outlined below:-
1)Data Sharing
We take part in something called the National Fraud initiative. This cross checks the records fromkey payroll data from pension schemes, the Department of Works & Pensions’ database and so on, increasing the chances of all the parties finding out when someone has died.
If fraud is suspected, the case is then investigated further.
For more information see
2)Tell us once
London Borough of Harrow along with other LGPS funds also participates in the Department for Work and Pensions (DWP) Tell us Once service. An extract of the membership information contained in the NI Database will periodically be shared with the Department for Work and Pensions (DWP) in order for us to participate in the service. Tell Us Once is a service offered in most parts of the country when an individual registers a death. When the death of an LGPS member is registered, the DWP systems will ensure that the LGPS pension fund is informed of the death, meaning that the member’s records can be processed more quickly and simply than would otherwise be the case.
3) Life Certificates
We may sometimes send you something called a Life Certificate. Every year in line
with Audit requirements, we issue a Life Certificate to a sample of Harrow
Pensioners.
If youreceive one, please complete it and send it back to us as soon as possible, so
we know all is well, and we can carry on paying your pension. If we do not receive the
completed life certificate, the pension will be suspended.
Summary of the
Annual Report 2015-16
Introduction
Management
This report gives a summary of the London Borough of Harrow Pension Fund’s activities during the financial year 2015-16.
The Harrow Pension Fund is administered in accordance with the Local Government Pension Scheme Regulations. The London Borough of Harrow is the administering employer. There are a further 29 admitted and scheduled employers who participate in the Fund.
Both staff and the Council contribute to the Fund, from which pensions and other benefits are paid. Staff contributions and the level of pension entitlements are set out in Government regulations. The scheme is a “defined benefits” scheme where, no matter what happens to the economy and financial markets, your pension benefits are protected and do not depend on the performance of the Fund’s investments.
Membership of the Fund
March 2016March 2015
Employees5,5615,526
Pensioners5,4385,294
Deferred Pensioners6,7006,323
Total membership increased to 17,699 (2015: 17,143).
A deferred pensioner is an ex-employee who has chosen to preserve his/her entitlements until he/she reaches pensionable age
Statement of Investment Principles
Pension Funds are required by the Local Government Pension Scheme Regulations to prepare a Statement of Investment Principles (“SIP”) that outlines the principles and policies followed in the management of the Fund’s assets. The Council, as administering authority, decides on the investment policies most suitable to meet the liabilities of the Pension Fund and has ultimate responsibility for the investment strategy. During 2015-16, these powers were exercised on its behalf by the Pension Fund Committee.
Part of the SIP covers social, environmental and ethical issues. The Council expects that when exercising their delegated duties the fund managers (see below) will take into account any financial impact on the portfolio these issues may have. The fund managers are asked positively to engage and seek to influence companies in which the Fund invests to take account of key social, environmental and ethical considerations. Details on how to access copies of the SIP are given below.
Funding Strategy Statement
The ‘Funding Strategy Statement’ (FSS) is a summary of the Fund’s approach to meeting the pension liabilities. It is not an exhaustive statement of policy on all issues. The Department for Communities and Local Government has stated that the purpose of the FSS is:
- “to establish a clear and transparent fund-specific strategy which will identify how employers’ pension liabilities are best met going forward;
- to support the regulatory framework to maintain as nearly constant employer contribution rates as possible; and
- to take a prudent longer-term view of funding those liabilities.”
The FSS is updated at least every three years in conjunction with the triennial valuations and copies of the Statement updated in March 2014 are available (see below).
Investment Management
The day-to-day management of the Fund’s investments as at 31 March 2016 was carried out by the following 10 external managers:
Manager Mandate
Aviva Investors Global Services UK Property
BlackRock Investment Management(UK) Corporate and Index-linked Bonds
GMO LLC Emerging Markets Equities
Insight Investment Alternatives
Longview Partners Investments Global Equities
Oldfield Partners Developed World Equities
Pantheon Ventures Private Equity
Record Currency Management Passive Currency Hedge
Standard Life Investments Alternatives
State Street Global Advisors Global Equities Passive
All the managers have full discretion in making investment decisions whilst working within Council guidelines. The relative performance of the managers is closely monitored by Council officers and is also subject to review by Councillors at the Pension Fund Committee.
Performance
At the end of March 2016 the value of the Pension Fund totalled £661.0m, £13.8m less than the value at the end of March 2015.Reductions in the market value of investments of £19.5m accounted for most of the change reflecting a disappointing year for the Fund in which almost all the main asset classes realised negative returns. This reduction was partially offset by an excess of income over expenditure of £5.7m arising from the day-to-day activities of the Fund.
The Council uses the investment performance services of State Street Global Services. Their report for the year ending 31 March 2016 showed that the Fund achieved an overall return of -1.9% from its investments, which was 1.4% below the benchmark. For comparison purposes State Street estimated that the average return achieved among other local authority pension fund portfolios in 2015-16 was 0.2%. Harrow’s asset allocation led to an under-performance of 0.6% whilst the disappointing investment performance by some of the managers realised a relative underperformance 0.8%.
Long term performance is more important than single years and over the five years to March 2016, the Fund earned an average of 7.2% p.a., 0.3% below the benchmark.
Pension Fund Accounts
The audit of the accounts has been completed and the external auditor has confirmed that the accounts as presented in the Statement of Accounts give a true and fair view of the financial position of the Pension Fund at 31 March 2016, along with the income and expenditure for that year.
Income and Expenditure
Income / £m / Expenditure / £mEmployees’ contributions / 6.60 / Pensions paid / 26.45
Employers’ contributions / 21.73 / Retirement Grants / 4.07
Transfers from other Schemes / 5.84 / Death Benefits / 0.74
Investment income / 10.42 / Transfers to other Schemes / 3.24
Administration & Fund Management expenses / 4.37
Total / 44.59 / Total / 38.87
The value of pensions in payment continues to grow with the increase in the number of pensioners. Most of the investments are now held within pooled funds in which some of the income and expenses are reflected in the change in market value. The Harrow Pension Fund owns shares in the pooled funds rather than direct holdings in individual equities, bonds and properties.
Investment Distribution
The Fund is invested in a range of investment classes, which reflects a policy of diversification aimed at reducing risks. The following table shows how the Fund was invested at 31 March 2016. The total value of the investments was £659.7m.
Actuarial Review
The Council’s actuary, Hymans Robertson, undertakes an independent valuation of the Pension Fund every 3 years to determine the funding level and the future rate of employers’ contributions.
The last valuation was undertaken as at 31 March 2013 at which point the Actuary determined that the level of assets represented 70.3% of the liabilities. The Actuary also determined that to meet the funding shortfall the level of Council contributions would be the equivalent of 19.9% from 1 April 2014. The levels of contributions for other employers are determined separately and vary considerably from that of the Council. The next valuation is due as at 31 March 2016 and will be implemented from 1 April 2017.
Further Information
The Funding Strategy Statement, the Statement of Investment Principles and the full Statement of Accounts are available on request, or can be viewed on the Council’s web site, Should you have any queries relating to the Pension Fund’s investments please contact Ian Talbot on 020 8424 1450 or e-mail
INCOME TAX ALLOWANCE/RATES2017/2018
Tax Allowance up to £11,500 for the new tax year
Most people are allowed to receive a certain amount ofincome in a tax year before they pay tax, and this is calledpersonal allowance. For the new tax year, the standard personal allowancegoes up to £11,500.
Remember, no more age related allowances
In previous years there used to be age related allowances for people born before a certain date. The Government has deliberately left these unchanged for thelast few years, so that the standard personal allowance would eventuallycatch them up
Other Allowances
There are other allowances too, such as blind person’s allowance of £2,320 a year. A Personal Savings Allowance, this means that basic rate taxpayers will not have to pay tax on the first £1,000 of savings income they receive and higher rate taxpayers will not have tax to pay on their first £500 of savings income.
Income Tax rates and taxable bands2017-18
Basic Rate 20% / £0 - £33,500Higher Rate 40% / £33,500 - £150,000
Additional Rate 45% / Over £150,000
TO: Pensions
3rd Floor, South Wing
Civic Centre
Harrow
Middlesex
HA1 2XF
Name in full______
Pension Payroll Number
CHANGE OF BANK DETAILS
I wish to inform you of my change of bank details from ______(please insert
date). Please pay my pension into the Bank/Building Society Account as detailed below:-
PLEASE COMPLETE EITHER SECTION A OR B
Section AName and full address of Bank (capital letters)
______
Account Name ______
Bank SORT CODE______
Bank ACCOUNT No______
Section BName and full address of Building Society
______
Account Name______
Building Society SORT CODE ______
Building Society ACCOUNT No ______
PERSONAL ACCOUNT / ROLL No ______
NB. Some Building Societies operate current accounts similar to those of Banks, other
accounts require a Roll Number also. If you are not sure of the details, please check with
your branch of the Building Society before completing this form.
Signature______Date______
TO:
Pensions
3rd Floor, South Wing
Civic Centre
Harrow
Middlesex
HA1 2XF
Name in full ______
Pension Payroll Number
CHANGE OF ADDRESS
I wish to inform you of my change of address from ______(please
insert date). Please send all future correspondence to the address as detailed below:-
ADDRESS: ______
______
______
______
POST CODE:______
Signature______Date______
1