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    • AlanP
    • By AlanP 6th Dec 17, 2:22 PM
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    AlanP
    LGPS & DB Pension Annual Allowance Queries
    • #1
    • 6th Dec 17, 2:22 PM
    LGPS & DB Pension Annual Allowance Queries 6th Dec 17 at 2:22 PM
    My OH hworks in Local Gov't and is in the LGPS with pre-2008, pre-2014 and CARE pension accrued.

    She has been offered a new role, with an LGPS Admitted Body (ex LA organisation spun out as a Trust) on a lower salary.

    She is going to take it as the role appeals to her.

    My query is around the LGPS pension and Annual Allowance.

    There is a realistic chance that although initial salary is lower it could increase to at least the same level, maybe more, within a few years. The plan is to "link" the pension records so that it stays as one pension with pre-2014 service linked to her eventual Final Salary.

    This means that in the 2018/19 Tax Year the growth in the value of her DB benefit will actually be negative!

    I assume you can't have a negative Annual Allowance figure so will it be zero?

    Just trying to work out whether this opens a window of opportunity to add a lot to her linked AVC as at the moment we are up against the £40k annual limit with no carry-forward to use up.

    As a hedge against salary not growing as hoped for can the pre-2008 and/or pre-2014 Final Salary be calculated by "Best 3 out of Previous 10 years" or similar?




    Thanks
Page 1
    • Silvertabby
    • By Silvertabby 6th Dec 17, 2:46 PM
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    Silvertabby
    • #2
    • 6th Dec 17, 2:46 PM
    • #2
    • 6th Dec 17, 2:46 PM
    As a hedge against salary not growing as hoped for can the pre-2008 and/or pre-2014 Final Salary be calculated by "Best 3 out of Previous 10 years" or similar?
    It depends on how your LGPS interprets the rules. The LGPS I worked for would only apply 'best of last 3 years only' in your wife's case, as it was her choice to take the lower paid role. The extra protection of 'best 3 year average over last 13 years' (but with a 10 year protection period) was reserved for those who had had no option but to take a lower salary.

    I would refer your AA query to your wife's LGPS provider. Because it's so complex, they should have a couple of people who specialise in these queries.
    Last edited by Silvertabby; 06-12-2017 at 2:51 PM.
    • hyubh
    • By hyubh 6th Dec 17, 4:34 PM
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    hyubh
    • #3
    • 6th Dec 17, 4:34 PM
    • #3
    • 6th Dec 17, 4:34 PM
    It depends on how your LGPS interprets the rules. The LGPS I worked for would only apply 'best of last 3 years only' in your wife's case, as it was her choice to take the lower paid role. The extra protection of 'best 3 year average over last 13 years' (but with a 10 year protection period) was reserved for those who had had no option but to take a lower salary.
    Originally posted by Silvertabby
    I'd say the 2008 scheme regulations are pretty clear here in stipulating that policy (http://lgpsregs.org/timelineregs/LGPS2008Regs/SI20140044/20071166.htm#reg10).
    • AlanP
    • By AlanP 6th Dec 17, 5:31 PM
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    AlanP
    • #4
    • 6th Dec 17, 5:31 PM
    • #4
    • 6th Dec 17, 5:31 PM
    I'd say the 2008 scheme regulations are pretty clear here in stipulating that policy (http://lgpsregs.org/timelineregs/LGPS2008Regs/SI20140044/20071166.htm#reg10).
    Originally posted by hyubh
    Thanks. If I've read that right then average of the "Best 3 in last 13" would count?

    May be clouded by the fact that it is not the same employer so continuos employment may not apply.

    I should have said the Trust has been running for a good few years now so it isn't a TUPE transfer, it is resign and join new employer.
    • Silvertabby
    • By Silvertabby 6th Dec 17, 6:54 PM
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    Silvertabby
    • #5
    • 6th Dec 17, 6:54 PM
    • #5
    • 6th Dec 17, 6:54 PM
    These regs may seem clear, but there is still 'wriggle room'. Plus the fact that OP's wife has chosen to take a lower paid post with another employer could complicate things.

    To be sure, the only way would be for OP's wife to ask her LGPS provider what they would do under these circumstances.
    • hyubh
    • By hyubh 6th Dec 17, 8:29 PM
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    hyubh
    • #6
    • 6th Dec 17, 8:29 PM
    • #6
    • 6th Dec 17, 8:29 PM
    These regs may seem clear, but there is still 'wriggle room'. Plus the fact that OP's wife has chosen to take a lower paid post with another employer could complicate things.
    Originally posted by Silvertabby
    I honestly don't see how that complicates things - rather, it simplifies things because there is clearly no 'continuous employment' (if there were, e.g. in the case of a school worker TUPE'd to a new academy, then there could be no election to aggregate membership periods). For sure, the final 12 month average, or the best in last 3 years, should ignore any aggregation. But this is different.
    • Silvertabby
    • By Silvertabby 6th Dec 17, 9:28 PM
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    Silvertabby
    • #7
    • 6th Dec 17, 9:28 PM
    • #7
    • 6th Dec 17, 9:28 PM
    All I'm saying is that the LGPS I worked for wouldn't give OP's wife the benefit of the best 3 year average over the last 13 years under these circumstances - just the best of the last 3 single years.
    • hyubh
    • By hyubh 6th Dec 17, 10:32 PM
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    hyubh
    • #8
    • 6th Dec 17, 10:32 PM
    • #8
    • 6th Dec 17, 10:32 PM
    All I'm saying is that the LGPS I worked for wouldn't give OP's wife the benefit of the best 3 year average over the last 13 years under these circumstances - just the best of the last 3 single years.
    Originally posted by Silvertabby
    Good stuff, because all I'm saying is that having a contrary policy would be clearly against the regulations.
    • Fubbly
    • By Fubbly 6th Dec 17, 11:39 PM
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    Fubbly
    • #9
    • 6th Dec 17, 11:39 PM
    • #9
    • 6th Dec 17, 11:39 PM
    Silvertabby, hyubh - Thanks for your replies on this which I found helpful as I've also taken a lower paid job voluntarily, though in my case with the same Local Authority. I had assumed from the regulations that, because it was the same employer, I would automatically have the right to go to "best 3 in the last 13" should I request. Does the individual scheme have the discretion to deny me this? I'm a bit disappointed if that's the case.
    AlanP - I'm no expert but my reading of the regs is that the changing of employers means that the "3 in 13" rule unfortunately doesn't apply for your OH. I'd also be interested in the answer to your main question regarding the effect on the annual allowance of a cut in salary when in a defined benefit scheme.
    • AlanP
    • By AlanP 7th Dec 17, 1:06 PM
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    AlanP
    We will need to get an answer from the administrators by the sounds of it, and will do at some stage. This will probably be after she is in the new role when actual circumstances are clear.

    It will come down to the interpretation of "continuous employment" by the sounds of it.

    Fubbly - I think you would get the "3 in 13" option as you are definitely in "continuous employment" as it is with same LA.
    • Silvertabby
    • By Silvertabby 7th Dec 17, 1:23 PM
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    Silvertabby
    hyubh - a little off track, but 'the rules' also say that the LGPS may offer benefits in the form of a one-off lump sum under triviality rules to members who meet the criteria - but some chose not to (not the LGPS I worked for) because of the difficulties involved.

    One of the main reasons was that not only were any widow's/widower's benefits extinguished by the triviality payment, but that the money in lieu of the spouse's pension was paid to the pensioner as part of the overall calculation. They were therefore covering their sixes against any complaints from widows/widowers who had been expecting a pension on the death of the pensioner spouse.

    Plus, of course, the LGPS relies on a truthful answer from the pensioner re other pension rights.

    The LGPS I worked for asked triviality claimants to sign a declaration re other pension rights - but it was obvious that many people just saw the amount of money offered and didn't read the paperwork properly. If I could count the times I've started the triviality process, smelled a rat, and checked with the claimant to find that they did indeed have other pension rights - sometimes with another Local Authority - but hadn't declared them 'because they thought that we were only asking about their pensions with this scheme'.

    I understand that there may be changes afoot, dependant on the success of a UK wide data base showing other pension rights. That wouldn't resolve the problem of the relinquished spouses pension, though.
    Last edited by Silvertabby; 07-12-2017 at 1:37 PM.
    • Fubbly
    • By Fubbly 7th Dec 17, 9:10 PM
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    Fubbly
    We will need to get an answer from the administrators by the sounds of it, and will do at some stage. This will probably be after she is in the new role when actual circumstances are clear.

    It will come down to the interpretation of "continuous employment" by the sounds of it.

    Fubbly - I think you would get the "3 in 13" option as you are definitely in "continuous employment" as it is with same LA.
    Originally posted by AlanP
    Thanks AlanP, hope it works out for your OH one way or the other.

    All I'm saying is that the LGPS I worked for wouldn't give OP's wife the benefit of the best 3 year average over the last 13 years under these circumstances - just the best of the last 3 single years.
    Originally posted by Silvertabby
    Silvertabby, just to be clear, would your Scheme have ruled this out only because she had transferred to a new authority or was the fact that she had voluntarily downgraded sufficient in itself? Thanks
    • hyubh
    • By hyubh 7th Dec 17, 10:27 PM
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    hyubh
    I've also taken a lower paid job voluntarily, though in my case with the same Local Authority.
    Originally posted by Fubbly
    Was there a gap in being employed by the same LA however...?

    Does the individual scheme have the discretion to deny me this?
    There is no formal discretion here (in the context of formal discretions being a thing in the LGPS).
    • Fubbly
    • By Fubbly 7th Dec 17, 10:45 PM
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    Fubbly
    Was there a gap in being employed by the same LA however...?
    Originally posted by hyubh
    I had no gap in employment

    There is no formal discretion here (in the context of formal discretions being a thing in the LGPS).
    Thanks, that's reassuring. Given the minimal "cost of living" pay rises in recent years that could benefit me greatly
    Last edited by Fubbly; 07-12-2017 at 10:48 PM. Reason: clarity
    • hyubh
    • By hyubh 7th Dec 17, 11:10 PM
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    hyubh
    I had no gap in employment
    Originally posted by Fubbly
    In which case, you have 'continuous employment' for employment law purposes. This may not correspond to what payroll has told pensions however - have you had to explicit elect to combine ('aggregate') memberships, or were you never considered 'deferred' by the pension fund in the first place...?
    • Fubbly
    • By Fubbly 7th Dec 17, 11:21 PM
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    Fubbly
    I've not been asked to combine so I assume I wasn't considered deferred
    • Silvertabby
    • By Silvertabby 8th Dec 17, 9:02 AM
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    Silvertabby
    Silvertabby, just to be clear, would your Scheme have ruled this out only because she had transferred to a new authority or was the fact that she had voluntarily downgraded sufficient in itself? Thanks Posted by Fubbly
    It would be down to the fact that she had chosen to take a lower paid role, rather than just being transferred to another employer.

    If she had transferred to another Local Authority - ie, transferred her benefits from one LGPS to another, then there would be no protections at all.
    • Fubbly
    • By Fubbly 8th Dec 17, 9:54 PM
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    Fubbly
    It would be down to the fact that she had chosen to take a lower paid role, rather than just being transferred to another employer.

    If she had transferred to another Local Authority - ie, transferred her benefits from one LGPS to another, then there would be no protections at all.
    Originally posted by Silvertabby
    Thanks, so in a situation like mine (voluntary change to a lower paid role with continuous emplyment at the same Authority) your employer wouldn't have allowed "3 from 13" option? That does seem to be at odds with the regulations that hyubh linked to.
    • Silvertabby
    • By Silvertabby 9th Dec 17, 10:17 AM
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    Silvertabby
    Thanks, so in a situation like mine (voluntary change to a lower paid role with continuous emplyment at the same Authority) your employer wouldn't have allowed "3 from 13" option? That does seem to be at odds with the regulations that hyubh linked to. Posted by Fubbly
    Yes - but hyubh like rules to be rules, whereas some of the LGPS rules are open to interpretation. The LGPS I worked for was certainly less generous, shall we say, than some other LGPSs. It's worth asking yours what they would do in your situation.
    • Fubbly
    • By Fubbly 9th Dec 17, 1:36 PM
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    Fubbly
    Thanks again, I shall speak to my service, I'm not planning to retire for a while and, like the OP's OH, this would be plan B - still hope to gain promotion from my new role so that my final pay is determined that way.
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