LGPS Early Retirement Wannabe
Comments
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Kier administer our pension scheme and have a myownpension website where you can register and get a calculation of your pension from the current date or any day into the future, which is quite nice. However, when my wife tried to register a month before she took severance they told her she couldn't because she would no longer be a member even though she said she was deferring her pension. They said she can always request an estimate once a year for free. That seems daft to me and a waste of resources.0
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Kier administer our pension scheme and have a myownpension website where you can register and get a calculation of your pension from the current date or any day into the future, which is quite nice. However, when my wife tried to register a month before she took severance they told her she couldn't because she would no longer be a member even though she said she was deferring her pension. They said she can always request an estimate once a year for free. That seems daft to me and a waste of resources.
Going forward, your wife should receive an annual benefit statement as at 31 March of each year (although they won't be issued until later in the year). This will either be available to look at on line, or will be issued as a paper statement - depends on how your LGPS provider operates.0 -
Silvertabby wrote: »This was becoming more common as at the time I retired a couple of years ago.
The employer costs due in respect of an unreduced pension at 55 (bearing in mind that OP's wife wouldn't have any R85 protections then as 55 + 18 = 73) would have been very substantial.
Thanks for the replies and apologies for gong off topic. I am not eligble for 18 months but VER is still offered at my LA. Hopefully this won't change.0 -
Hi All
This is my first post on MSE and this topic is very pertinent to my current situation.
My employer (Natural Resources Wales) will be running a voluntary exit scheme in 2018/2019. I was under the impression that it would not be suitable for me as my pension strain costs for receiving an unreduced pension would be around £110,000.
I will be 57 at the time of the VES with 31 years pension contributions and thus eligible for immediate payment of my pension. I thought that if being made redundant through VES or business efficiency then under LGPS rules I would have to take my pension unreduced.
From the comments here it appears that I would have the option to take the VES and elect to have my pension paid at the standard reduced rate for my age?
If I have understood this correctly then this would result in no pension strain costs as they would be being met by me through the reduced pension?
This would then mean I get the full VES lump sum payment and hopefully make me more likely to be accepted for VES.0 -
Another question regarding LGPS pension, AVC scheme and voluntary severance:
My plan is to retire at 60, take my pension under the 85 rule where my pre-March 31st 2008 pension is unreduced and take my AVC as a TFLS if that is still allowed. However, if a voluntary severance scheme was available around that time or maybe a year earlier I might be able to get accepted for voluntary severance and defer my pension for a year and live off the severance money. If I was to do that am I able to continue paying into the AVC and get the tax break on contributions until I take the main scheme benefits a year later? Or would I just have to leave the funds invested and take with my main benefits when I choose to take them?0 -
bioboybill wrote: »Yes, according to the rules you are correct, and I pointed that out to my union at the time. However, what our employer did was that they asked those applying whether they would accept the deal with a reduced pension, or whether they wanted payment of an unreduced pension. They made it clear that if the extra cost of an unreduced pension was more than the severance payment you would be refused. Hence my wife accepted the severance on the basis of a reduced pension and was allowed to go. Everybody asking for the unreduced pension they were entitled to was told they were "critical to the business" and refused.
I have asked my LGPS pension administrator (Capita) about taking an unreduced pension as a result of redundancy and they replied with this "Under Reg 30(7) b you cannot do it. The benefits would not be reduced and there will be a cost and the employer would be billed for it. "
I also asked my scheme provider, Environment Agency Pension Scheme, and they have given me a different answer "Unfortunately this query is something you would have to discuss with your employer, as although we could process your pension as a voluntary retirement to ensure reductions are applied, we are not able to advise how that would affect any possible redundancy payment."
Can anyone throw any light on how other LGPS member have been able to get a reduced pension when getting redundancy? I could really do with having no strain costs.0 -
MakeMoneyWork wrote: »I have asked my LGPS pension administrator (Capita) about taking an unreduced pension as a result of redundancy and they replied with this "Under Reg 30(7) b you cannot do it. The benefits would not be reduced and there will be a cost and the employer would be billed for it. "
I also asked my scheme provider, Environment Agency Pension Scheme, and they have given me a different answer "Unfortunately this query is something you would have to discuss with your employer, as although we could process your pension as a voluntary retirement to ensure reductions are applied, we are not able to advise how that would affect any possible redundancy payment."
Can anyone throw any light on how other LGPS member have been able to get a reduced pension when getting redundancy? I could really do with having no strain costs.
This trend started a couple of years ago, when some of the smaller employers (usually schools) offered their staff 'redundancy' deals which only applied to the actual redundancy payment itself. If the pension fund member was over 55, they would have access to their benefits but on normal retirement terms - ie, reduced for early payment. They got round it by calling it something other than redundancy.
The larger employers - ie, the actual Councils - didn't do this. Redundancy meant redundancy.
Very slightly off piste, the £95K public sector cap doesn't seem to have been applied yet, but it must be imminent. Briefly, this means that exit payments - which will include the employer's fund strain as well as the redundancy lump sum - cannot exceed £95K.
£95K sounds a lot but would be easily do-able in the case, say, of someone on an only slightly higher than average salary, with many years service, who is made redundant at 55+. The plan is that the redundee would have to choose between the redundancy lump sum or the unreduced pension (or a combination of both) which would keep them below the cap.0 -
My wife was only on £12K a year with 18 years service and aged 56 and they reckoned the strain cost of paying her an unreduced pension was about £85K. I have no idea where they came up with such a high sum since her unreduced pension was only going to be about £3600 a year and a lump sum of about £3K! BTW, does anybody know the answer to my question a few posts above (post16), where I ask whether I could defer my pension for a year and continue to pay into the Pru AVC and get tax breaks in the event of severance, or whether I would just have to stop payment and leave AVC sat there, as the AVC funds are only payable at the same time as my main pension?Silvertabby wrote: »This trend started a couple of years ago, when some of the smaller employers (usually schools) offered their staff 'redundancy' deals which only applied to the actual redundancy payment itself. If the pension fund member was over 55, they would have access to their benefits but on normal retirement terms - ie, reduced for early payment. They got round it by calling it something other than redundancy.
The larger employers - ie, the actual Councils - didn't do this. Redundancy meant redundancy.
Very slightly off piste, the £95K public sector cap doesn't seem to have been applied yet, but it must be imminent. Briefly, this means that exit payments - which will include the employer's fund strain as well as the redundancy lump sum - cannot exceed £95K.
£95K sounds a lot but would be easily do-able in the case, say, of someone on an only slightly higher than average salary, with many years service, who is made redundant at 55+. The plan is that the redundee would have to choose between the redundancy lump sum or the unreduced pension (or a combination of both) which would keep them below the cap.0 -
My wife was only on £12K a year with 18 years service and aged 56 and they reckoned the strain cost of paying her an unreduced pension was about £85K. I have no idea where they came up with such a high sum since her unreduced pension was only going to be about £3600 a year and a lump sum of about £3K
Your wife would only have had minimal Rule of 85 protections (pre 2008 service only) so the overall reduction would have been over 40%. £85K does sound a bit high- but I've been retired for a couple of years now so it's possible that the factors have changed.BTW, does anybody know the answer to my question a few posts above (post16), where I ask whether I could defer my pension for a year and continue to pay into the Pru AVC and get tax breaks in the event of severance, or whether I would just have to stop payment and leave AVC sat there, as the AVC funds are only payable at the same time as my main pension?
I would say no, but it's worth speaking to the Pru direct just in case things have changed.0 -
Thanks for the reply Silvertabby. |Looks like I won't be getting voluntary exit any time soon as my strain costs are £110,000. I managed to get the factors from our scheme (Environment Agency Pension Scheme) actuary.
Years to Funded Retirement Date (FRD) Early Retirement Reduction (ERR)
0 (or past FRD already) 0.00%
1 4.28%
2 8.37%
3 12.29%
4 16.04%
5 19.64%
6 23.07%
7 26.36%
8 29.51%
9 32.53%
10 35.41%
11 38.18%
12 40.82%
13 43.35%
14 45.78%
15 48.10%
Also based on the following Cost Factors (CF)
Cost Factor:
Age next birthday Males Females
51 20.91 21.90
52 20.54 21.56
53 20.17 21.21
54 19.78 20.86
55 19.39 20.49
56 18.99 20.12
57 18.58 19.75
58 18.17 19.36
59 17.74 18.97
60 17.32 18.57
61 16.89 18.17
62 16.46 17.77
63 16.02 17.36
64 15.59 16.94
65 15.16 16.53
The calculation is as follows
Annual Pension x ERR % X CF
Lump Sum x ERR % / 20
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