Re-employment

Income tax

Your new employer will usually use the basic allowance for a single person when assessing your tax liability. This will usually lead to an underpayment of tax.

To avoid this, you should ask your new employer to operate code BR (basic rate) and you should notify HMRC of your new employment by sending the employer's name and address, quoting the PAYE reference (the relevant codes are detailed under Payment information) by calling 0845 3000 627.

HM Revenue and Customs
PAYE & SA Processing
PO Box 1970
Liverpool
L75 1WX

Compensatory Added Years (CAY)

If you start a new job where you are eligible to join the LGPS, and were awarded Compensatory Added Years (CAY) by your former employer, which is paid with your LGPS pension or as a separate pension, there may be an abatement or clawback of these added years.

This depends on whether the total service exceeds the amount permitted. If you do become re-employed, then you should seek further advice from Pensions Services concerning the CAY part of your pension.

Pensions payable to surviving dependants

If you leave a partner when you die, they may be eligible to receive a pension. The rules for this depend on when you left the local government employment for which you are now receiving a pension.

Your retirement letter showed a partner's pension which was relevant for your circumstances at the time. So if you have subsequently changed your marital status (i.e. re-married or entered into a civil partnership) then please let us know, as the benefits payable to your new partner may be different.

We do not need to know if you have been widowed (unless you have re-married), or if you are single, or if you have been married to the same person since you left.

Partner's pensions are based on 1/160th of your relevant scheme membership, the general perception is that your partner will receive ½ of your pension if they survive you. However, this is not always the case because:

  • scheme membership before 1 April 2008 has provided pension of 1/80th (the partner pension calculation for this service is 1/160th)
  • scheme membership since 1 April 2008 has provided pension of 1/60th not 1/80th (but the partner pension calculation for this service has remained at 1/160th)
  • partner's pensions are not always based on all of your scheme membership (typically, but not always, for relationships entered into after you left employment, and sometimes for service awarded in respect of either an ill health enhancement or Compensatory Added Years)
  • inflationary increases are linked to the state pension, so your partner may receive some of the overall payment with their state pension and not from the LGPS (if you have contracted out service between July 1990 and April 1997)
Relevant scheme membership

In many cases, a partner’s pension is based on all of your membership of the scheme. However there are some important exceptions:

  • If you are male and married your partner after you left employment, then your widow's pension is based on your membership in the scheme after 6 April 1978
  • If you are female and married your partner after you left employment, then your widower's pension is based on your membership in the scheme after 6 April 1988
  • If you are female and left employment before 1 April 1998, your widower's pension will be based on your membership in the scheme after 6 April 1988
  • If you left employment before 1 April 2008 and leave a civil partner, then their pension is based on your service after 6 April 1988
  • If you left employment after 1 April 2008 and have nominated a cohabiting partner to receive a partner's pension, this pension will be based on your membership after 6 April 1988 (unless you have previously paid contributions to include all your membership)
Inflationary increases

Your pension is adjusted each year in line with inflation. The current measure of inflation is the Consumer Prices Index (CPI) measured in September each year.

Because of the way in which the LGPS interacts with the state pension scheme, some of the inflationary increase may be paid with your state pension, rather than with your LGPS pension.

This is also the case for partner's pensions, and will particularly affect partners of people who left employment after 24 July 1990 and have membership in the scheme before 6 April 1997.

The partner's pension will still be based on the relevant scheme membership, but because part of the inflation will be paid with the state pension, the actual amount paid by the LGPS to your partner may be less than half of what you were receiving.

Further information