Can I reduce my contributions for when times are tough? Yes - via the 50/50 option



Watch the 'Contribution and flexibility to pay more or less' video



 
Running alongside the main LGPS a new facility called 50/50 has been introduced. This allows you to reduce your main scheme contributions to pay half the contribution you would pay in the main scheme and in return you will receive half the pension amount in their pensions account.
 
It is designed to be an alternative to opting out during tough financial times. 50/50 is not designed as a permanent alternative to the main scheme as it would not be a viable long term option. 

How does the 50/50 option work?

When you are in the 50/50 option you save 50% on your contributions but you receive only 50% of your pension that you would have received in the main scheme - please see the example below for more details.

Jennifer: Receptionist in a local fitness centre

Jennifer works full-time and her actual pay is £24,500 a year, her contribution rate in the main section of the scheme is 6.5% (see contribution table in the 'How much does it cost?' tab)

Jennifer however, is finding it difficult financially since she has moved into her new house and she has decided to elect to take up the 50/50 option.

Main section compared to 50/50 section for one year in the Scheme for Jennifer

Main Section

50/50 Section

Gross Contribution in the main Scheme (for 1 year)

Gross Contribution in the 50/50 section (for 1 year)

6.5% = £1,592.50

3.25% = £796.25

Pension build up before revaluation in the main scheme (for 1 year)

Pension build up before revaluation in the 50/50 section (for 1 year)

£500 for each year in Retirement

£250 for each year in Retirement

Lump Sum Life Assurance Cover

Lump Sum Life Assurance Cover

£73,500

£73,500

Jennifer would pay less in contributions in the 50/50 section – 3.25% instead of 6.5% and she would build up half the pension in the 50/50 section, £250, payable every year in retirement, compared to a pension of £500 if she was in the main section.

But remember, the value of any lump sum life assurance cover payable (three times annual pensionable pay) remains the same regardless of which section of the scheme Jennifer pays into.

Why not try the Pensions Account Modeller to see how opting for the 50/50 option would impact on the benefits you build up in your pension account

 

How long can I stay in the 50/50 option?

You can stay in the 50/50 option for as long as you choose but your employer will bring you back into the main scheme usually every three years. You can stay in the 50/50 option for as short as one month and you can choose 50/50 as often as you need to.

If your circumstances change you can elect to revert to the main scheme at any time by informing your employer and you will immediately start to build up full benefits as soon as you begin to pay the full contribution rate again. 

How do join the 50/50 option?

An election to join the 50/50 section must be made in writing to your employer. You will be moved to the 50/50 section from the next available pay period after your employer receives your signed election.

If you have more than one job you can elect for the 50/50 section in one, some or all your jobs.  If you are in the LGPS with more than one employer, a separate election for must be completed and returned to each employer.

You cannot complete a 50/50 election prior to becoming a member of the main section and you can rejoin the main section anytime

Election to join the 50:50 section form

This form can be used as your election. Please return to your employer. 

If you would like to move from the 50/50 section to the main section of the scheme please submit this form.

The LGPS is currently conducting a very short survey on the 50:50 section element of the scheme, please follow the link below to take the survey and find out more about the 50:50 option.

50:50 Section Survey

  


 For more information see the 'LGPS 2014 Leaflets and Guide' tab on the left hand side