50-50 section

Contents

50/50 Section

The LGPS offers the member flexibility to pay half of their normal contribution rate and build up half of their normal pension, so their accrual rate becomes 1/98 instead of 1/49.

This is called the 50/50 section of the LGPS and is designed to help members stay in the scheme as an alternative to opting out.

The member will retain full life and ill-health enhancement cover if they move to the 50/50 section. So, if a member dies in service or retires with a Tier 1 or Tier 2 ill health pension whilst in the 50/50 section, any lump sum death grant (in the case of death in service) and the amount of ill health enhancement granted (in the case of ill health retirement) will be calculated as if the member were in the main section of the Scheme. Dependant's benefits are also unaffected by a member electing to join the 50/50 section of the scheme.

The 50/50 section is designed for members to build up valuable pension benefits during times of financial hardship. Members may also choose to join the 50/50 section of the LGPS if they wish to reduce the annual growth in their pension accrual due to Annual Allowance or Lifetime Allowance limits. All members have the option to elect to join the 50/50 section at any time.

For the current contribution rates, please refer to the Contribution Rates page.

The 50/50 Process

An employee cannot complete a 50/50 option form prior to becoming a member of the main section of the 2014 Scheme. They can then elect to join the 50/50 section, and if they do so before the first payroll is closed, they can be brought into the 50/50 section from the first day of their employment.

If the member elects at any other time, the reduction in contributions would apply from the beginning of the next available pay period.

If a member has more than one job, they can elect for the 50/50 section in one, some, or all of their jobs, and can elect to move between the main and 50/50 sections of the Scheme any number of times.

Any pension built up whilst paying reduced contributions will be calculated at 1/98th of the member's pensionable pay (or assumed pensionable pay where applicable). The employer contributions are not halved and remain payable in full, with the impact accounted for at the next triennial valuation.

The member can request a copy of the 50/50 option form from you or they can download it from the Surrey Pension Fund website to be returned to you to be actioned.

Please complete Section 4 of the form including notification of the revised contribution rate and applicable date, and send a copy to the Surrey Pensions Services at lgps.forms@surreycc.gov.uk

End of Year Information

You are required to maintain a record, per employment, of the section the member was in at year end (or date of leaving if earlier).

You should confirm to Surrey Pension Services in the Annual Return which section the employee was in at the end of the scheme year (or date of leaving), and if they switched sections within the scheme year, the effective date of any switches.

For each section of the scheme, you are required to maintain a record, per job, of the cumulative pensionable pay paid and employee contributions deducted during membership of that section within the scheme year.

The 50/50 section and absence with no pay

If a member is in the 50/50 section and goes onto nil pay due to sickness or injury, or during a period of ordinary maternity leave, ordinary adoption leave or paternity leave, the employee must be moved back into the main section from the beginning of the next pay period if they are still on nil pay at that time.

The employee can choose to make a further 50/50 election which, if made before payroll is closed, would mean continuous 50/50 membership.

The 50/50 section and automatic re-enrolment

If a member is in the 50/50 section, they must be moved back to the main section from the beginning of the pay period following the employers' "automatic re-enrolment date".

The employee would have the right to make a further 50/50 election which, if made before the payroll is closed, would mean they would have continuous 50/50 membership.

Switching to the main section

If a member is moved back to the main section due to absence with nil pay or automatic re-enrolment, the employer will need to notify the Surrey Pensions Services of the applicable date and amended contribution rate.

This also applies if a member informs you that they wish to move back into the main section.

The 50/50 section and existing additional pension contributions

The below contracts must cease if a member elects to move to the 50/50 section:

  • Additional Pension Contribution (APC) contract which is at whole cost to an employee other than those to purchase an amount of pension "lost" due to a trade dispute or during a period of authorised unpaid leave of absence or during a period of unpaid additional maternity, paternity or adoption leave or unpaid shared parental leave,
  • Shared Cost Additional Pension Contribution (SCAPC) contract other than one to purchase an amount of pension "lost" during a period of authorised unpaid leave of absence or during a period of unpaid additional maternity, paternity or adoption leave or unpaid shared parental leave

The below contracts are not reduced to half rate upon commencement in the 50/50 section:

  • An Additional Voluntary Contribution (AVC) or Shared Cost Additional Voluntary Contribution (SCAVC), or
  • An Additional Pension Contribution (APC) contract to purchase an amount of pension "lost" due to a trade dispute or during a period of authorised unpaid leave of absence or during a period of unpaid additional maternity, paternity or adoption leave or unpaid shared parental leave, or
  • A Shared Cost Additional Pension Contribution (SCAPC) contract to purchase an amount of pension "lost" during a period of authorised unpaid leave of absence or during a period of unpaid additional maternity, paternity or adoption leave or unpaid shared parental leave, or
  • An Additional Regular Contribution (ARC), Added Years, Preston part-time buy-back, or Additional Survivor Benefit Contribution (ASBC) contract/arrangement in force prior to 1 April 2014

The contributions under such contracts/arrangements continue to be paid in full i.e. the full percentage rate or flat rate sum due under the relevant contract/arrangement, unless the member elects to end the contract.

Payments under existing ASBC contracts at 31 March 2014 are expressed as a percentage of the member's full time equivalent pensionable pay (2008 Scheme definition of pensionable pay). The contributions should only be deducted on the 2008 Scheme definition of pensionable pay i.e. excluding any pay that is pensionable in the 2014 Scheme, but which was not pensionable in the 2008 Scheme, such as non-contractual overtime.

Payments under existing (Preston) part-time buy-back contracts as at 31 March 2014 continue to be payable as flat sums payable per pay period (not percentages of pensionable pay).

Payments under existing Added Years contracts at 31 March 2014 are expressed as a percentage of the member's pensionable pay (2008 Scheme definition of pensionable pay). The contributions should only be deducted on the 2008 Scheme definition of pensionable pay i.e. excluding any pay that is pensionable in the 2014 Scheme, but which was not pensionable in the 2008 Scheme, such as non-contractual overtime.

Contributions under existing ARC contracts at 31 March 2014 continue to be payable as flat sums payable per pay period (not percentages of pensionable pay).

The 50/50 section and new additional pension contributions

A member electing for 50/50 can take out an Additional Pension Contribution (APC) arrangement or a Shared Cost Additional Pension Contribution (SCAPC) arrangement to purchase an amount of pension "lost" due to a trade dispute or unpaid authorised leave of absence, including a period of unpaid additional maternity, paternity or adoption leave or unpaid shared parental leave.

A member electing for 50/50 can also take out an Additional Voluntary Contribution (AVC) arrangement or a Shared Cost Additional Voluntary Contribution (SCAVC) arrangement.