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How the Fund works

How the Fund works

You pay contributions to be a member of the Essex Pension Fund and can build up valuable benefits for your retirement.

Your employer also pays into the Fund to ensure there is enough money to pay out pensions for all members in the future.

Joining
the Fund

Auto-enrolment

How your
pension builds up

Membership sections

Your account - Member Online

Annual Benefit Statements

Transfers into the Fund

Opting out

Previous pension regulations

Joining the Fund

Joining the Essex Pension Fund gives you a great way to guarantee an income for when you retire or finish working. It also gives you other important benefits like life cover and ill health protection. The Fund is part of the Local Government Pension Scheme (LGPS) – a national pension scheme for people who work for local governments, in this case within Essex.

How do I join?

Becoming a member is simple – if you aren’t automatically enrolled by your employer, you can ask them about joining the Fund. If you work for the local government and are under 75, you are likely to be eligible to join.

Benefits of joining

There are many benefits of joining, including:

  • The pension you build up will provide you with a guaranteed income when you finish work
  • The cost to be a member is based on a percentage of your pay – see the How much it costs section to find out more
  • Your employer also pays into the Fund to make sure there is enough to pay all members’ benefits
  • When you make contributions, you will likely receive tax relief so it costs less than you think.
  • If you’re away from work, for example, during a period of child related leave , your pension will continue to grow so isn’t affected.
  • When you decide to take your benefits, you can take some as a tax-free lump sum.
  • Once you start to receive your pension, it will be paid for the rest of your life.
  • You’ll leave a survivor’s pension, a dependant’s pension and a death grant may be payable too.

Auto-enrolment

Worker categories

Employers in the UK are required to automatically enrol workers into a workplace pension (subject to certain requirements). This is called automatic enrolment and includes the Essex Pension Fund. If you meet the following criteria, you’ll be auto-enrolled into the Fund:

  • Have a contract of employment of at least three months.
  • Earn over £10,000 a year (or pro rata pay period).
  • Are age 22 or over.
  • Are under State Pension age.

Worker categories

Worker typeHow auto-enrolment could impact you

How your pension builds up

Career average pension

Each year, your pension is calculated using this formula:

Accrual rate x pensionable pay = Pension a year

  • The accrual rate is 1/49
  • Pensionable pay is your basic pay, plus some other extras such as bonus pay, shift allowances and voluntary overtime.

Example

If your pensionable pay for your first year is £20,000, your pension would be calculated as: 1/49 x £20,000 = £408 a year, in retirement

The calculation: 1/49 x £20,000 = £408, depicted in leaves.

Each year, your pension is calculated based on your pensionable pay for that year. So over time, your pension will get bigger. The pension that you build up is also ‘revalued’ each year in line with inflation. This means it is increased by a fixed percentage – this is currently the same as the change in the Consumer Prices Index (CPI). The revalued pension amounts that you build up each year of membership are added together to make your total pension that you get in retirement.

Example

How your pension could build up over three years.

Year one total pension =

£408.16

When you retire, you can choose to take a single tax-free lump sum in exchange for part of your pension. Once your pension benefits come into payment, your pension will increase each year based on the Consumer Price Index (CPI).

If you were a member of the Fund before 2014, your pension benefits may be calculated using different elements. Please see the 'how your benefits are calculated' section for more information.

Membership sections

Main and 50/50 sections

As a member of the Essex Pension Fund, you make contributions between 5.5% and 12.5% of your pensionable pay. Your contribution rate depends on the pay band you’re in. Find out what your contribution rate is in the pay bands section.

The Fund has two sections to choose from:

  • Main section (default): In this section, the accrual rate is 1/49.
  • 50/50 section: In this section, the accrual rate is 1/98. This means you are paying half the contributions compared with the Main section. Because you're paying a lower contribution rate, you will build up half the amount of pension.

Your employer also makes contributions to ensure that there is enough money in the Fund to pay all members' benefits in retirement. To understand how your pension benefits are calculated please visit the how your benefits are calculated page.

Front face angled left view of a table with books about pensions on it.

Your account - Member Online

Take control of your pension

Member Online is Essex Pension Fund’s member self-service portal. At Member Online, you can:

  • View your membership details.
  • Make updates to your personal details.
  • Access your Annual Benefit Statement.
  • Run your own pension estimates.

You can even take control of your retirement by completing your forms online.

Log into Member Online

How to register

If you have received your Member Online registration letters, head to Member Online and follow the instructions (you will need both letters that have been sent to you in order to sign up).

If you haven’t received your registration letter or you have lost them, please email: [email protected]

To ensure we can help, please include your pension reference or National Insurance number (for identification purposes). The team can then send your letters so that you can complete the registration process.

Annual Benefit Statements

How much pension you have built up

Every year we send members an annual pension statement. This outlines how much pension you have built up so far, and what this could be worth at your Normal Pension Age. In addition to the statement, you can watch a video to help you understand your statement and what it means to you on our YouTube channel.

Watch our quick guides to your Annual Benefit Statement:

CARE scheme members

A quick guide to your Annual Benefit Statement

Final Salary and CARE scheme members

A quick guide to your Annual Benefit Statement

Left side view of a terarrium on a rug in a living room.

Transfers into the Fund

Moving a pension

To keep all your pensions in one place, you might want to transfer your other pensions into the Essex Pension Fund. You have 12 months from joining the Fund to request a transfer from a previous pension into the Fund. To request to transfer a pension into the Fund, you need to complete a Transfer Request form.

Once you have sent in a completed form, we will investigate and provide you with an estimate of what the transfer payment would buy you in the Fund. You can then decide if you want to go ahead with the transfer.

Deciding whether to transfer a pension is an important decision. We recommend that you seek independent financial advice before making a transfer.

Previous LGPS pensions

If you have previously been a member of another Local Government Pension Scheme (LGPS) - meaning you are deferred member - please complete the employment history form so we can update our records.

Workbench in a garden with a terarrium on it.

Opting out

Leaving the Fund

You can opt out of the Fund, however you will be re-enrolled every three years if you meet the auto-enrolment criteria.

Refund of contributions

An automatic refund should be paid by your employer if you opt out within three months. You may also be eligible for a refund if you have:

  • Less than two years membership in the Fund.
  • No other LGPS membership.
  • Have not transferred in benefits from another pension scheme.

Only your own contributions would be refundable. Any contributions made by your employer are not unless they were paid into an AVC under salary sacrifice. Where applicable, any refund is subject to 20% tax.

Previous pension regulations

Councillor pensions

If you’re a councillor in England and were a member of the Fund on 31 March 2014, you may retain membership but only until the end of the term of office in which you were serving on 1st April 2014. You can remain a Fund member during your current term of office (the term that covers 31 March 2014) or to age 75 if earlier.

Please note, the Fund is not available to you as a councillor if you were not a member on 31 March 2014. You can find out more about councillor pensions on the LGPS site .

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