Pensions and the cost of living crisis

Considering making changes to your pension? Please read this before you act.

Considering opting out?

The pandemic and rising cost of living is giving lots of people new money worries.

We understand that making contributions to a pension may seem like an unnecessary luxury and that some of you may be considering opting out of the scheme.

If this is something you are considering, make sure you understand what the LGPS gives you:

• A secure pension for life, with annual adjustments in line with the cost of living.
• A tax-free lump sum when you retire
• Ill-health retirement if you have to stop work due to a serious illness.
• Redundancy retirement benefits if you’re made redundant or retired on business efficiency grounds after age 55.
• Death benefits for your family – including a partner’s pension and children’s pensions PLUS a cash lump sum of three times your pay, paid to the person of your choice.

On top of this, your employer pays a large contribution on your behalf (sometimes triple what you pay) into your pension, and therefore contributes substantially towards your standard of living in retirement. We recommend you take financial advice before you opt out of the LGPS.

Reducing your contributions

Did you know you can reduce your contributions and stay in the scheme?

You have the option in the LGPS to pay half your normal contributions in return for half your normal pension. It's called the 50/50 section of the scheme and is designed to help members stay in the scheme when times are financially tough.

Whist contributing to the 50/50 section of the scheme you will retain full ill health cover and death benefits.  If you wish to move to the 50/50 section, you will need to complete an election form and pass this to your employers payroll department so that they can make the necessary adjustments to your pay.

Visit the LGPS member site to find out more.

Pension scams

During this crisis, it’s possible that pension scams will increase.

To protect yourself you should:

• reject offers that come out of the blue
• beware of adverts on social media channels and paid-for or sponsored adverts online
• use the Financial Services Register and warning list to check who you are dealing with
• not click links or open emails from senders you don’t know
• avoid being rushed or pressured into making a decision
• not give out personal details, bank account details, your address or information about your existing insurance policies, pensions or investments.

Be ‘scam smart’ - find out more about how scammers work and get advice on the FCA website.

Help for pensioners on lower incomes

There is a separate welfare benefit for pensioners called Pension Credit. Pension credit provides extra income for people over State Pension age on lower incomes.

In April 2022, it was estimated that about 850,000 households are missing out on Pension Credit because they think it isn’t meant for them. Pension Credit can be worth up to £3,300 a year and you may be eligible even if you have your own home or have savings.

Even if you find out you are only entitled to a small amount of pension credit, it is worth claiming. This is because it may help you qualify for other benefits, such as help with heating bills, housing costs, NHS dental care, council tax, and if you are over 75, a free TV licence.

Take a look at the online calculator to find out what you might get. Claims can be made online on at GOV.UK or by calling the freephone Pension Credit claim line on 0800 99 1234 (textphone 0800 169 0133). If you prefer, you can ask a friend or relative to help or call on your behalf.

Where to find help and advice

MoneyHelper provides help and guidance about managing your money in uncertain times – this includes practical advice about living on a squeezed income and can help if you’re struggling with bills and payments.

You can also get help from the Citizens Advice – it provides information about what help is available from your local council, the Government and other forms of support.

Help with energy bills – the Government has announced it will help all households in Great Britain with energy bills. Extra help is also available for households on lower incomes.