Changes to Scottish Water & Business Stream Pensionable Pay

For current employees of Scottish Water and Business Stream, future performance related payments will be pensionable. This will start from June 2026 for Business Stream and July 2026 for Scottish Water. 

All Scottish Water and Business Stream employees who are or were contributing members of the three Local Government Pension Scheme (Scotland) funds involved are affected by the change. 

Your pension is safe.

If you’re a pensioner, the payments you receive each month will continue as usual.

If you’re a deferred member, the pension benefits you’ve accrued so far are intact and secure.

All eligible employees receive this payment.

I am retiring in the next couple of months (after August 2027) - what will this mean for me? 

This will not prevent you from retiring at your nominated retiral date and the calculation will be based on the information available at this time. Should there be any changes as a result of this process, your Pension Fund will be in touch when they have more information.  
 
Individual calculations will be available in due course, Due to the age and complexity of these records, it will be some time before we are able to provide an individual assessment of what this means for your pension. It is anticipated that individual calculations will not be available until 2027.    
 
We will keep you updated as we make progress on this jointly with the pension funds.

Why have you changed your pensions policy?

An internal review identified that a limited number of performance related payments, including past and future annual outperformance incentive payments (AOIP) or annual performance related bonus payments, should be included in pensionable pay, in line with LGPS regulations.

Scottish Water, Business Stream and the pension funds are notifying current and former members of the three Local Government Pension Scheme funds involved and their beneficiaries of this change.

We will provide regular updates on our dedicated webpage and individuals will receive communications from their pension fund in due course. It is likely to take some time before the individual calculations are available.

We are reviewing individual records going back over 20 years. It will be some time before we are able to give everyone individual calculations of what this means for their pension benefits. We envisage this will take the rest of this year to work this through. 

The work of updating the records and pension calculations is being managed jointly by Scottish Water, Business Stream and the three Local Government Pension Scheme funds involved. Due to the complexities of reviewing what this means for individual pensions it will be several months and almost certainly 2027 before this information will be available. 

In the meantime, your pension fund will contact you directly if they require any information from you. They’ll also send updates as they have more information. 

Pensionable pay is the part of your pay that counts towards your pension. It is used to calculate how much goes into your pension from you and your employer.

Local Government Pension Scheme (Scotland) regulations require us to include the Scottish Water Annual Outperformance Incentive Payment (AOIP) and Business Stream annual performance related bonus in pensionable pay calculations. There are no exceptions and no individual opt-outs.

This also applies to members in the 50:50 section of LGPS.  It will be some time before we are able to give everyone individual calculations of what this means for their pension benefits.

No. Additional Voluntary Contributions are entirely separate.

No, all three pension funds are administered under Local Government Pension Scheme (Scotland) regulations. Employee contributions and benefits are the same whichever scheme you are a member of.

Will I see any updates in this year’s Annual Benefit Statement?

Each year members who’re paying into or have previously paid into the Local Government Pension Scheme through Scottish Water or Business Stream receive an annual benefit statement. It contains the latest information about your pension including the value of your current benefits and your estimated projected benefits at State Pension Age.

This year’s statement won’t include any information about Annual Outperformance Incentive Payment (AOIP) or annual performance related bonus payments and any change this might make to your pensionable pay.

If I pass away before any pension correction is worked out, will my spouse or dependants still receive any money owed? 

If the Pension Funds find that your pension needs to be increased after reviewing their records, this will apply to both your payments and any benefits for your spouse or dependants. If you die before any adjustments or back payments are made, any amount owed will be included in the benefits paid to your spouse or dependants. 
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I am planning to transfer my pension, what does this mean for me?

This will not prevent you from transferring your pension and the transfer value will be based on the information available at this time. Should there be any changes as a result of this process, your Pension Fund will be in touch when they have more information. 

I have already transferred my pension, what does this mean for me? ​

We’re sorry that we can’t yet give you a clear answer and appreciate that this period of uncertainty may be difficult. Thank you for your patience and understanding while this is carefully considered.   

Should there be any changes as a result of this process, your Pension Fund will be in touch when they have more information.  

Are retired and deferred pension scheme members being informed of this?

Yes. We are writing to all scheme members at the same time.

If you’re a deferred member (you’ve left Scottish Water/Business Stream but haven’t started receiving pension payments yet), the pension benefits you’ve accrued so far are intact and secure and will continue to increase each year in line with inflation.
If it’s found that your deferred pension should be higher, your pension will be adjusted up to the correct level. That means that when you retire and start taking your pension, it will reflect the higher amount.
If you decide to retire before the review is complete, any increase you’re entitled to will still be applied and backdated to the start of your pension.

All eligible employees of Scottish Water and Business Stream, who are part of the LGPS, received the Annual Outperformance Incentive Payment (AOIP), or annual performance related bonus.
If you’re unsure:

• Check your records: Look at your payslips or P60s from your time with the company. AOIP payments started in the early 2000s and would appear as a separate item on your payslip in the years they were paid. If you never saw a an AOIP payment listed, it’s likely you didn’t meet the eligibility criteria

• We’re in the process of reviewing all member records and if you’re impacted, your pension fund will let you know and adjust your benefits.

I have recently left Scottish Water or Business Stream - what does this mean for me? 

We’re sorry that we can’t yet give you a clear answer and appreciate that this period of uncertainty may be difficult. Your pension is secure and the pension funds are well-funded. 

Thank you for your patience and understanding while this is carefully considered.  Your pension fund will send updates as they have more information. 

If I'm retired and receive a lump sum for past underpayments, could this push me into a higher tax band. How will this be handled? 

If your pension is increased after a review, this could affect the tax you pay. Pension schemes must apply the tax code given by HMRC, so they can't adjust this themselves. It may be beneficial for you to contact HMRC directly to discuss your situation once the review is concluded.  

Which regulations apply to Scottish Water and Business Stream? 

We are bound to follow the Local Government Pension Scheme (Scotland) regulations. 

Does my pension deduction come off before or after tax?

Pension contributions are deducted from your pay before income tax.

I want to update the contact details held by my Pension Fund - how do I do this?

You can update your contact details by accessing the online portal for your pension fund, or by contacting them directly.

Please note, if you are a member currently paying into the scheme, you should notify your employer of any changes to personal details, as your employer provides details on a monthly basis which can overwrite changes you make via the portal.