Newsletter - December 2022

Rest assured, nothing has changed

When the news reports instability in the world of investment markets it is reassuring to know that your pension is protected. We are part of the LGPS - the Local Government Pension Scheme. This is a defined benefit scheme where benefits are set out in law. Therefore, your benefits are protected from the impact of short-term market instability.

Like all LGPS pension funds we diversify our long-term investors. We securely manage our investments to protect our members’ pensions from short-term changes in market values. You can be assured that the pension you have accrued is safe.

Your pension at your fingertips

‘My Pension’ is an online member self-service portal where you can:

• Update personal information such as your home or email address.
• Amend or add who you want to nominate to receive benefits on death.
• Explore transferring your benefits.
• View your Annual Benefit Statement - keeping you up to date with your pension.
• Look at your deferred pension details and account history.

• Use benefit projectors to calculate the value of your pension:   1) If you retired before, at, or after your normal pension age, or 2) If you were to die prior to receiving your pension.

If you require any assistance with 'My Pension', please contact the specialist helpline on 0300 200 1027 rather than the main pensions helpline (0300 200 1020). 

Summary of the Fund’s activities for Scheme year 2021/22

East Sussex Pension Fund must publish Annual Report and Accounts on or before 1 December after the end of each scheme year (1 April to 31 March). The report details the management and financial performance of the pension fund during the year.

Key highlights for scheme year 2021/22

• The Fund was awarded the Local Government Pension Scheme (LGPS) Fund of the Year (over £2.5bn) at the Local Authority Pension Fund (LAPF) Investment awards 2021*. The Fund was also highly commended for its climate strategy.

• The Fund had £4,688 m of funds under management on 31 March 2022 to meet the accrued benefits. This puts it in a very strong position.

• The investment return for the year to 31 March 2022 was 10.6%. This was an out performance of the benchmark by 0.5%. Returns were outperforming the benchmark in each of the 1, 3 and 5-year periods.

• The membership of the Fund at March 2022 was 81,291 people. Including, 24,514 active, 23,131 pensioner, and 33,646 deferred members. There are also 134 employer organisations in the Fund.

• The Fund fully implemented a major restructure of team resources in recognition of increasing regulatory demands on LGPS Funds. The Fund increased reporting requirements to ensure it has enough resources to put in place its strategies and policies.

• This was the first full year of our Pensions Administration Team fully operating back in-house. Service has remained very good.

• The Fund has taken climate strategy as one of the key focuses of its ongoing work. This aims to develop an in depth understanding of the financial risks the climate emergency poses to the Fund. It is focusing on ways in which the Fund can reduce this risk but also find opportunities to help with the energy transition in a sustainable way.

If you would like to view the Annual Report and Accounts in more detail, please access the report here.

Note: The audit of East Sussex County Council’s accounts for 2021/21 is still to be completed, and so the Audit Opinion on the 2021/22 Statement of Accounts has not yet been issued. The East Sussex Pension Fund Annual Report for 2021/22 has therefore been provisionally published without the Audit Opinion and will be republished once the external auditor has completed their work. The auditor has indicated that the financial statements are fairly and appropriately presented but is not able to formally sign this off at this point.

*The 2021 awards only took place in March 2022 due to the Pandemic

Don’t let a scammer ruin your retirement

Pension scams are on the rise in the UK. The internet and advances in digital communications mean these kinds of scams are getting more common and harder to identify. Recent Financial Conduct Authority research found that a quarter of consumers would withdraw pension savings earlier as a result of the cost of living crisis. This makes consumers more vulnerable to scammers. There are different types of pension scam, but all can lead to the possibility of you losing a lifetime’s worth of savings.

The Government introduced some new pension transfer rules on 30th November last year. These are to help prevent people becoming victims of pension scams. Pension schemes now have new powers to refuse a request to transfer a pension if there is a risk it might be a scam. The changes remove an individual’s automatic right to a transfer. They also require pension schemes to complete several additional tasks to satisfy themselves that a member’s pension benefits are not at risk.

We may contact you to find out more information about the scheme you want to transfer to, how you were contacted and who advised you about the transfer. It is important that you answer our questions as soon as you can. We may stop the transfer if you do not provide the information, or if the Fund believes you are likely to be at risk of a scam.

The Fund may require you to attend a Pension Safeguarding Guidance appointment given by MoneyHelper. Transfers between Public Sector schemes are not affected by this new legislation.

If the changes worry you or you would like more information on scams, then please check out these links.

Useful resources

ESPF website – Avoiding Pension Scams

MoneyHelper – How to spot a Pension Scam

Financial Conduct Authority – How to avoid Pension Scams

If you are looking for free guidance on Pensions please visit the MoneyHelper website.

MoneyHelper brings together the support and services of three government-backed financial guidance providers:

• the Money Advice Service,

• the Pensions Advisory Service and,

• Pension Wise.

Nominating a beneficiary

With an LGPS pension, you have the reassurance of knowing your loved ones will be looked after when you are gone. If you die before taking your pension, it provides a tax-free lump sum to the people you care about most. You can express a wish as to whom you would like to receive this lump sum, by nominating a beneficiary. This is also known as a 'death grant'). The easiest way to do this is via our Member Self-Service Portal ‘My Pension’. By nominating sooner rather than later, it can save your loved ones a great deal of time and effort later on.

You can nominate your:

• spouse or partner,

• son or daughter,

• family member or lifelong friend,

• a charity that is close to your heart or,

• a combination of beneficiaries.

Your pension scheme has absolute discretion over who your death grant goes to. This means it does not form part of your estate for tax purposes. However, they will take your wishes/nomination into account.

Nominate your beneficiary today by visiting our Member Self-Service Portal (My Pension):

Log in – Member Self-Service Portal

Register - Member Self-Service Portal

Alternatively, you can complete the form LGPS DG1.

A reminder to notify HMRC if lifetime allowance protection is lost

The lifetime allowance is the total value of all pension benefits you can have without triggering an excess benefits tax charge. The lifetime allowance will be frozen at £1,073,100 until April 2026. HRMC allowed members with substantial pension posts to apply for protection against these charges. You need to notify HMRC if your protection has been lost. Details of how are detailed in this guidance. 

Your choices if you leave the LGPS before you retire.

If you left your job before retirement and you met the two-year vesting period, you will have deferred benefits in the LGPS. Your deferred pension will increase each April in line with the cost of living. Also, a death grant will generally be paid if you die as a deferred member. Your partner and children may also receive dependants’ pensions.

The LGPS will hold your deferred pension until:

• you choose to take your deferred pension. You can generally take your deferred pension at any time between age 55 and 75. You may be able to take it earlier if you are too ill to work.

• you transfer your deferred benefits to another pension arrangement. See the 'transferring your pension article' to find out more about pension transfers.

Each year we will provide you with a statement showing the current value of your deferred benefits.

We have a dedicated webpage for members who are ‘no longer paying in’. This will delve into further detail on:

• how benefits are calculated,

• what happens on your death and,

• your choices at retirement.

Find out more about deferred benefits here.

Simple, Friendly, Confident

The Local Government Pension Scheme transformed their brand and website earlier this year to improve the user experience for members. There is some fantastic information to support members of the LGPS in England and Wales.

Visit the LGPS member website

A glossary of terms to help navigate the world of pensions

You can now get to grips with pensions and retirement jargon with our handy glossary of some of the most frequently used pension terms in the Local Government Pension Scheme (LGPS).

Access glossary here

Important factors to know about that can affect your decision

These include:

• You must be transferring your pension benefits to an HMRC registered pension scheme
• You must not be paying into the LGPS with another employer. If you have more than one LGPS pension, you will need to transfer these other pensions to your new scheme too
• You must not be receiving payments for your LGPS pension. This does not include a survivor’s pension, following the death of a spouse or partner, or Pension Credit following a divorce or the dissolution of a civil partnership
• Also, aside from transferring Additional Voluntary Contributions (AVCs) the payment needs to be paid out 12 months before your Normal Pension Age. This is linked to your State Pension Age the minimum age being 65.

It is important for you to know that if you do decide to make a full transfer of your pension, you will no longer be entitled to further pension benefits from the LGPS. This includes your spouse, civil partner, eligible cohabiting partner, or eligible children.

When considering moving to another pension scheme, it’s also important to be wary of pension scams. You can read about the signs to spot a scam in the separate article in this newsletter.

For further information about transferring out your pension, please visit the LGPS member website: Transferring your LGPS pension :: LGPS (lgpsmember.org)

How we use your personal data

We hold information (personal data) on you to administer the Pension Fund. Find out how we use your data by accessing the Full Privacy notice here.

We have recently added the following:

We do not use your personal data for marketing purposes and will not share this data with anyone for the purpose of marketing to you or any beneficiary. However, we may use your data to send surveys and other documents to you to help us improve the quality of service we provide. We have also made changes to clarify the situation now that the UK is no longer part of the European Union.

No need to apply for the new underpin

When the LGPS changed from a final salary to a career average pension scheme in 2014,  protections for older scheme members were introduced - known as the underpin. The Court of Appeal ruled that younger members of the Judges’ and Firefighters’ Pension schemes have been discriminated against because the protections did not apply to them. The Government decided that the principles established to remove this discrimination will apply to all public sector pension schemes including the LGPS.

The proposed changes would mean that a revised underpin will apply to members, regardless of their age, who were active in the scheme on 31 March 2012 (with no disqualifying break over five years). Those in scope will receive the better of final salary and CARE for the period 1 April 2014 and 31 March 2022.

If you fit the qualifying criteria and your benefits would be better, the underpin will be automatically applied. You do not need to apply for this.