50 / 50 section

The 50/50 Section - Flexibility to pay less
         

During your membership of the LGPS there may be times when you are in a difficult position financially and consider opting out of the Scheme to save money.

The LGPS now offers you the flexibility to stay in the Scheme at such times and continue to build up valuable pension benefits. You can elect to pay half your normal contributions and build up half your normal pension. This is known as the 50/50 section of the LGPS.

In the LGPS there are two sections of the Scheme, the main section and the 50/50 section. When you join the Scheme you will automatically be placed in the main section where you pay normal pension contributions in return for normal pension build up.

Once you are a member of the Scheme you will be able to elect to move to the 50/50 section, if you wish, by completing the Election to Join the 50/50 Section form. Once you make an election you will start paying half your normal contributions from your next available pay period.

Who can elect for 50/50?
As a member of the LGPS you can elect to pay into the 50/50 section at any time. There is no limit to the number of times you can elect to move between the main and the 50/50 section, and vice versa.

If you have more than one job in which you contribute to the Scheme you must specify in which of the jobs you wish to be moved to the 50/50 section.

What happens to life assurance cover and ill health cover when you are in the 50/50 section?
In the 50/50 section you build up half your normal pension because you are paying half your normal contributions. However, if you were to die in service the lump sum death grant and any survivor pensions would be worked out as if you were in the main section of the scheme.

If you are awarded an ill-health pension under Tier 1 or Tier 2 whilst in the 50/50 section the amount of any ill-health enhancement added to your pension is worked out as if you were in the main section of the Scheme.

How long can you remain in the 50/50 section?
The 50/50 section is designed to be a short-term option for when times are tough financially. Because of this your employer is required to move you back into the main section of the Scheme every three years. This will be carried out in line with your employer’s automatic re-enrolment date. Your employer will tell you when this is and, if you wish, you can move back to the 50/50 section of the Scheme by completing a further election form.

If you are in the 50/50 section and move onto a period of no pay due to sickness or injury then you will be moved back into the main section of the Scheme from your next pay period if you are still not in receipt of pay at that time. This is to your advantage as you will start to build up full pension again, even though you will not be paying any pension contributions.

Whilst in the 50/50 section, you can choose to move back to the main section of the Scheme at any time by completing the Election to Re-join the Main Section form. If you have more than one job in which you contribute to the 50/50 section of the Scheme you must specify in which of the jobs you wish to be moved back to the main section. You will then start to build up full benefits in the main section from the next available pay period after your employer receives your election.

What does my employer pay if I'm in the 50/50 section?
Your employer continues to pay their normal contribution rate (not half their rate) when you are in the 50/50 section of the Scheme.

I am paying extra pension contributions, are these affected if I move to the 50/50 section?
If you move from the main section of the Scheme to the 50/50 section you may have to stop paying extra contributions. This will depend on the type of extra contributions you are paying.

If you are paying:
Additional Pension Contributions (APCs) - buying extra pension only, or
• Shared Cost Additional Pension Contributions (SCAPCs) – buying extra pension only

you will stop paying these contributions when you elect to move to the 50/50 section. Also, when you are in the 50/50 section of the Scheme, you cannot elect to commence payment of APCs or SCAPCs unless it is to purchase an amount of lost pension during certain periods of unpaid absence or maternity/paternity/adoption leave.

If you are paying:
Additional Pension Contributions (APCs) - buying lost pension only, or
Shared Cost Additional Pension Contributions (SCAPCs) – buying lost pension only, or
Additional Regular Contributions (ARCs), or
Added Years, or
• extra contributions to buy-back previous part-time service, or
• extra contributions to buy survivors pension for an eligible cohabiting partner

you will continue to pay these contributions when you elect to move to the 50/50 section until the contract has been paid in full.

If you paying:
Additional Voluntary Contributions (AVCs), or
Shared Cost Additional Voluntary Contributions (SCAVCs)

you will continue to pay these when you elect to move to the 50/50 section, unless you choose to terminate the contract. You can elect to commence payment of an AVC or Shared Cost AVC when you are in the 50/50 section of the Scheme.

Example of the main section compared to the 50/50 section:
This example is based on an employee earning £24,500 per year who pays a normal contribution rate of 6.5% for one year in the Scheme.
           

 

MAIN SECTION 50/50 SECTION

Gross contribution in the main section (for 1 year)
6.5% = £1,592.50

Gross contribution in the 50/50 section (for 1 year)
3.25% = £796.25

Pension build up before revaluation in the main section
(for 1 year)
£500 for each year in Retirement

Pension build up before revaluation in the 50/50 section
(for 1 year)
£250 for each year in Retirement

*Lump sum Life Assurance Cover £73,500

*Lump sum Life Assurance Cover £73,500

*Full ill health cover

*Full ill health cover


* the value of any lump sum life assurance cover payable (three times annual pensionable pay) and ill health cover remains the same regardless of which section of the Scheme you pay into.