Do I make my 3 pensions into just 1???

TIGs · 20 March 2017 at 9:46PM

I have had a letter from my pension provider today reguarding my pension/s. I thought I only had one but it seems i have 3, although they are all with the same pension fund. I didn't know this was the case and thought because they were all with the same pension fund they would have just continued when i changed employment.

So i worked for East Riding of Yorkshire council as a programme worker for 11 years until August 2014,
I then moved to a job as a TA for 5 months and continued to pay into the East Riding of Yorkshire council pension fund,
In February 2015 I swapped jobs to a TA at a special school, again continuing to pay into the East Riding of Yorkshire council pension fund.

I believed these to be one pension, well apparently not they are 3 separate pensions.

What i need help with is, they have contacted me to ask if i want to make them into one pension. The lady on the phone said there are pros and cons to this but obviously couldn't advise me what was best to do.

Sorry i've waffled on but any help would be appreciated :money:

hyubh · 20 March 2017 at 10:42PM

TIGs wrote: »

I believed these to be one pension, well apparently not they are 3 separate pensions.

By default, each employment with LGPS membership gets you a distinct pension entitlement, however you then have the option of combining memberships if you want to.

In the case of CARE scheme memberships (so, from April 2014 onwards), combining will make no difference beyond a scenario I'll come to in a bit. For final salary scheme service however (i.e., for membership before April 2014), you would gain by aggregating membership from an employment with a lower rate of pay to a higher rate of pay (allowing for inflation) and lose by aggregating membership from a higher rate of pay to a lower one. This is assuming the memberships being aggregated are not concurrent (i.e. you had two jobs at the same time) - if so, then pro-rating for different rates of pay will produce a situation similar to aggregating CARE memberships.

That said, one scenario where aggregating CARE scheme memberships (or concurrent final salary ones) would matter is if you were to be made redundant between 55 and your normal pension age (which is your state pension age for CARE membership). This is because the redundancy would cause an automatic early retirement without actuarial reduction in relation to your active membership (the employer would pay a 'strain charge' to the pension fund to prevent a reduction). Ergo, if you haven't combined, then this would mean just the membership from your latest employment will become due, unreduced. On the flip side, if there were a voluntary redundancy round and you were interested in applying, having combined memberships may make it less likely you would get it (since the cost to the employer would be greater).

TIGs · 20 March 2017 at 10:49PM

So i would be best keeping my 1st pension as it is and just joining up my 2nd and 3rd?
Hopefully because i work in a school I will not be made redundant but who can tell in this day and age.

Thanks for your help, it might as well all be written in a foreign language for me.

hyubh · 21 March 2017 at 12:20AM

TIGs wrote: »

So i would be best keeping my 1st pension as it is

Assuming the TA jobs were/are at a bottom grade and the information worker post wasn't, then probably.

and just joining up my 2nd and 3rd?

If same grade, then possibly. One small 'benefit' of keeping separate is that you wouldn't have to take both at the same time, were you be in a position of wanting to draw one early... but then it's generally best to take a DB pension at its normal pension age anyway.

kidmugsy · 21 March 2017 at 1:13AM

hyubh wrote: »

One small 'benefit' of keeping separate is that you wouldn't have to take both at the same time

Another might be that it would then be possible to consider transferring one to a money purchase pension and leaving the other as a DB pension thus splitting risks or, if you like, diversifying. That could be particularly useful if you were to want to retire early.

TIGs · 21 March 2017 at 7:43PM

hyubh wrote: »

Assuming the TA jobs were/are at a bottom grade and the information worker post wasn't, then probably.

If same grade, then possibly. One small 'benefit' of keeping separate is that you wouldn't have to take both at the same time, were you be in a position of wanting to draw one early... but then it's generally best to take a DB pension at its normal pension age anyway.

My first and third job were at point 14, but my second job was at point 11. Difference was about 50p an hour i think xx

ps whats a DB pension please :O)

Thanks for all you help guys much appreciated xx

hyubh · 22 March 2017 at 12:30AM

TIGs wrote: »

My first and third job were at point 14, but my second job was at point 11. Difference was about 50p an hour i think

It's not the take-home difference that matters, but the respective rates of pay (in particular, whole-time equivalent salaries), adjusted for inflation to the present day.

ps whats a DB pension please

'Defined benefit', like the LGPS, rather than 'defined contribution', like a personal pension (or indeed, an LGPS AVC) where you have your own investment pot.

Do I make my 3 pensions into just 1???

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