Scottish Public Pensions: Agency Information, followed by links within this section of the site

Pensions in Payment

Links back to NHS Scheme: Retirement

Links back to STSS Scheme: Your Pension Benefits

This section applies to pensioners in both the Scottish Teachers’ Superannuation Scheme (STSS) and NHS Superannuation Scheme Scotland (NHS).

Q When should I expect to receive my Pension Increase letter? (return to top)

A It is anticipated that these letters will be issued towards the end of April 2008.

Q Who decides on the pensions increase each year and when is it done? (return to top)

A The Secretary of State for Social Security makes the Announcement in a draft Pensions Increase (Review) Order which is approved by Parliament usually during March each year. The new rate of increase takes effect from the first Monday after 5 April.

Q Why does my first payslip, for payment due after 7 April 2008, not reflect a full month’s increase? (return to top)

A Your pension this year is increased from 7 April 2008, therefore you will receive an increase in the rate payable only from that date. Your first payment will consist of a number of days at the old rate and the rest at the new rate. Your next payment will reflect your first full increase.

Q If this years Pensions Increase is 3.9%, why has my gross monthly amount not increased by that rate? (return to top)

A Pensions Increase is applied from 7 April 2008 and unless your pension has been in payment for a full year prior to that date, you will only receive a proportionate increase this year.

Q Why is my annual increase less than 3.9%? (return to top)

A Whilst contributing to an occupational pension scheme, you were contracted out of the State Earnings Related Pension Scheme (SERPS). As a result of this, we guarantee to pay you at least as much as you would have received had you stayed in SERPS. This amount is called the Guaranteed Minimum Pension (GMP). This has no effect on your pension if you have not reached state pensionable age. It is important to recognise that the GMP is paid as a component of your pension and not as an addition.

For any pensionable service from 6 April 1988 until 5 April 1997, SPPA will pay an increase, up to a maximum of 3%, on your GMP as part of your annual pension. Any increase over 3% will be paid along with your State Pension by the Department of Work and Pensions (DWP). The increase due on any GMP relating to service prior to 6 April 1988 will also be paid with your State Pension by the (DWP). This explains why your annual pension increase is sometimes lower than the full percentage increase.

Q Why has my pension not increased? (return to top)

A (i) For any pension put into payment before age 55, the increase will not be applied until the 55th birthday, unless the member retired on health grounds, is a widow/widower or is receiving a dependents allowance.

A (ii) If a pension was put into payment after 23 March 2008, no increase will be due until next year.

Q Why has my tax code changed? (return to top)

A We are instructed by HMRC to apply the relevant tax code. If your tax code has changed and you require further information or have any questions about your Tax affairs, please contact:

Scottish Teachers HM Inspector of Taxes, Centre 1, Queensway House, Stewartfield Way, East Kilbride, G79 1AA. Telelphone: 0845 070 3703

NHS HM Revenue and Customs, Ty Glas, Cardiff, CF14 5YA. Telephone 0845 300 3949

You should have your National Insurance number to hand when you make your call.

Other Tax related information: (return to top)

Q. How is my pension affected by the new Lifetime Allowance from 6 April 2006?

A. The Lifetime Allowance came into effect on 6 April 2006 and is set at £1.5 million for the tax year 2006/2007, increasing to £1.6 million for tax year 2007/2008. The Lifetime Allowance is the cumulative value of benefits that can be taken from all registered pension schemes before an additional tax charge is payable. This tax charge is called the Lifetime Allowance charge.

The important point to note is that existing pensions will not be affected by the Lifetime Allowance charge. Neither will state pensions or dependant's pensions which, themselves are not assessed against the Lifetime Allowance.

The only way in which the Lifetime Allowance charge could affect you is if you become entitled to a new pension after 5 April 2006. Existing pensions will be taken into account in assessing any new pension that may put your cumulative value above the Lifetime Allowance. Please note that all existing pensions (excluding state and dependant's pensions) and any new pension coming into payment would need to exceed at least £60,000 per annum to be affected.

If all your existing pensions and any other pensions you may have which have not yet come into payment exceed £60,000 per annum, you may qualify for protection from the Lifetime Allowance charge from HM Revenue and Customs. Details of the protections available are available on the HMRC website www.hmrc.gov.uk/pensionschemes.

If you require to know your revised Lifetime Allowance (LTA) figure for the period 2008/2009 you should apply the following calculation:

New Annual Rate of Pension from 07/04/08 X 25 X 100 = New LTA % £1.65 million

If after calculation your LTA is nearing 100% and you still have benefits to take from other sources, we strongly recommend that you should seek advice from an Independent Financial Adviser

Guaranteed Minimum Pension or GMP’s more fully explained (return to top)

A Guaranteed Minimum Pension or GMP is best explained as follows. The Social Security

Pensions Act 1975, which came into effect on 6 April 1978 provided for the State retirement pension to be related to the earnings on which National Insurance contributions were paid. It consisted of two parts:

1. A basic pension, and

2. An additional earnings related pension known as SERPS, now known as S2P.

Pension schemes that provided an approved alternative to SERPS could ‘contract out’ of this part of the State pension scheme. By contracting out of SERPS members who were under State Pension age paid lower National Insurance contributions. This means that most members who were in employment between 6 April 1978 and 5 April 1997, the date from which the scheme was abandoned, were paying superannuation contributions towards an Occupational Pension instead of paying the full rate National Insurance contributions towards an additional pension from the state. This is what is meant by the term ‘contracted out’.

As a result the SPPA guarantees that at State pension age the benefits from the scheme will be at least as much as the additional pension they would have received from the State had they remained within SERPS and not been contracted out. This is known as the Guaranteed Minimum Pension or GMP.

PRE AND POST APRIL 1988 GMP’S (return to top)

From 6 April 1988 changes in legislation have the effect of splitting the GMP. Therefore service from 6 April 1975 to 5 April 88 becomes the Pre 88 GMP and service from 6 April 1988 until 5 April 1997 becomes the Post 88 GMP. It is important to recognise that the GMP is paid as a component of your pension and not as an addition.

Therefore the percentage increases that the SPPA will pay on your total pension are as follows;

SPPA will not pay any increase on Pre 88 GMP, the increase due on any GMP relating to service prior to 6 April 1988 will be paid with your State Pension by the Department of Work and Pensions (DWP).

SPPA will pay an increase on Post 88 GMP, up to a maximum of 3%, as part of your annual pension. Any increase over 3% will be paid along with your State Pension by the Department of Work and Pensions (DWP).

The remainder of your pension, after the setting aside of the GMP components, will be increased by the annual increase rate, e.g. 3.9% for 2008.

This explains why your annual pension increase is sometimes lower than the full percentage increase as only certain components are increased by the SPPA as the diagram below illustrates.

Organization Chart

There are always a few exceptions to the above, for instance some overseas members may be affected slightly differently, if you think that your increase is incorrect then please write to us and we will check that you are receiving the correct pension.

Important Note (return to top)

This information is intended to provide you with a general guide of the Pensions Increase process. We have taken great care to get the details correct at the time of publication but it does not give a complete and legally binding statement of the law and regulations which govern the Schemes. Nothing in the guide can override the regulations which set out the conditions of entitlement and determine the rate at which benefits are payable.

Tax Simplification (return to top)

For information on changes that take effect from 6 April 2006 please follow this link to our Taxation page. If your are an existing pensioner, there is a further link on the taxation page which gives advice on how the changes may affect your pension.

Pension Advice Notes (return to top)

Pension Advice Notes are not issued on a monthly basis. They are only issued in respect of your first monthly pension payment following retirement, and any month thereafter where there is a change to the gross pension amount or tax code.

Changing Your Personal Details

If you change your home address, name or bank details please complete a Change of Details Form (Pdf 28Kb and return it to us as soon as possible. Failure to notify us of a change to your banking details could result in problems paying your monthly pension payments.

Informing Us of the Death of a Pensioner (return to top)

In the event of the death of a pensioner, we would advise that the following steps be taken as quickly as possible by a relative or legal representative of the deceased.

Please contact the SPPA to notify us of the death. This can be done by either a relative or the deceased’s legal representative. On receipt of this information we will issue the relevant Awards Form. Contact details can be found in Contacting SPPA.
Please send us a Death Certificate.
Please inform us of who the Executors are.
Upon receipt of the relevant Awards Form, please complete and return it to us as quickly as possible, together with Marriage Certificates and/or Birth Certificates for any dependent children.

Although we realise that this is a particularly difficult time for relatives of the deceased, by following these steps we would hope to get widow(er)’s benefits – if applicable - into payment as soon as possible.

Additional Information

If you have any queries relating to Pensions Increase, Tax Matters, the effect of your pension on reaching state retirement age etc please use the following link to the Frequently Asked Questions page on the Scottish Teachers' Scheme of this website or the link to the Frequently Asked Questions page of the NHS Scheme.

Return to Top