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One question Branch Officers are often asked when there is any suggestion of a strike or other industrial action is "what will happen to my pension?" It is also an issue that management raise, in an attempt to stop people planning to take action. Here are some questions and answers intended to clarify the position.
What is the position?
For every whole day a members is out on strike, the member will lose one days pensionable service. The lost days would not count in any way for pension purposes. Therefore a members would effectively loose 1/365th of an 80th for each and every full strike day.
Example - If a members retired after 25 years service with a pensionable pay of £15000 the pension would be 25/80th x £15000 = £4687.50 and cash lump sum would be three times the pension £14,062.50. If the member lost 6 days through strike action, the loss would be £15,000 x 1/80th x 6/365 = £3.08 per annum + lump sum of £9.24
As can be seen from the example, a strike of a few days would not normally have any significant effect on benefits because benefits are calculated on a daily basis. If the strike was in the last year of service, pensionable pay could be lost. In the above example £15000 x 6/365 = £247
Under theabove example, if the member retired before 65 then the days lost could mean that the rule of 85 would not be satisfied. All thses losses can be easily avoided by either working a few days extra before leaving or simply buying back the lost service.
Buying back service lost through strike action.
It is possible to buy back the service lost, at your own cost, but the rules as set out in the regualtions are quite tight. You must buy back all the days you have lost, not just a proportion. you have to pay both the employer's and employees contribution, which is currently calculated as 16% of the gross pay that you would have received if not on strike. It follows that the amount you pay is based on the method your employer adopts to deduct your pay.
It is likely that many employers will deduct pay based on 1/260th of annual salary for each whole day a member is on strike. For weekly paid staff this could be 1/5th of the weeks wage. For other workers who work less than full time hours then a different formula could apply. An example, a member who works three day week would have 1/156th of annual salary deducted for each day on strike.
However, it should be pointed out that for some employers, this method may not be the basis used due to locally negotiated agreements. It is therefore important that any member checks with their employer concerning the exact terms of payback that applies.
How is the back payment made?
The extra contributions will be deducted from pay. Normally, this is as a single payment, but the emplyer has the discretion to spread it over a longer period. Your employers Pension Office or payroll section should be able to provide a form for people to fill in and send back. THINK CAREFULLY, ONCE YOU HAVE MADE THE DECISION IT CANNOT BE CHANGED.
The administrator for the LGPS usually advises anyone in this position to telephone their payroll section first and get an estimate of what the cost to them would be, before they sign the form. You have 30 days from the date you return (longer if the employer allows) to make up your mind. In most cases, the effect of a short strike on your pension is going to be too small for buying back to be worthwhile, though you might want to consider it if you were involved in lengthy action.
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