Moving jobs - what to do with LGPS?

Hi Morph3us,

I’ve expanded on this a little.

Whilst the LGPS has been going through changes, it is likely that you have accumulated pensionable service expressed as 1/80th pension plus 3/80ths cash. So, if you managed exactly 3 years pensionable service and your pensionable salary was £20,000 p.a., your pension would have been £750 p.a. at the date you left plus a cash lump sum of £2,250. (The pension is 3 x 1/80 x £20,000; the cash lump sum 3 x 3/80 x £20,000). Your Leaver's Statement of Entitlement will confirm your pension details.

In fact the LGPS, along with most other public sector schemes provides your pension benefits as though accumulated on a daily basis i.e. for each complete day you were a member of the scheme. So, if your pensionable service ran for 2 years 11 months and 5 days, then that’s exactly what you’ll be credited with as your ‘membership’ of the scheme.

Why is this important? Well in many private sector schemes, pensionable service may be expressed within the Scheme Rules as complete months or complete years, for example (there are many different methods used by different schemes and these are just two examples). If you completed 3 years and 11 months in a scheme that provided pensionable service only in complete years, then the 11 months service wouldn’t count unless you could negotiate the extra 1 month’s service when you left or when you retired.

Hence, you can see that the LGPS uses a very favourable method and this is a valuable element of the scheme. Each day of your pensionable services will have counted towards your pension benefit.

The pension figures quoted above as an example, would be increased each year by the annual increase in the Retail Price Index (if my memory serves me right I think LGPS uses the RPI figure quoted each September). This is particularly good if inflation is high.

Don’t forget that LGPS provides spouse’s and dependants’ benefits too on your death both before and during retirement.

And, as previous respondents have commented, the LGPS is a member of the Public Sector Transfer Club which gives very favourable treatment of transferring pension benefits between employers that are members of the club if you are employed in the public sector elsewhere in the future.

This doesn't mean that you shouldn't continue to regularly review your pensions in the future. There may come a time when your circumstances are right to consider a transfer if this were to meet with your needs.

Hope this helps.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser.

Just to pick up on a point from Andy L, refund of contributions can now only be made from the LGPS if you have been a member for less than three months.

Pension benefits from 1st April 2008 accrue at 1/60ths for pension with no automatic entitlement to a Lump Sum. However as we are now only in July it will not make a significant difference to the figures quoted by MikeJones.