Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • BigMank
    • By BigMank 12th Mar 17, 10:25 AM
    • 13Posts
    • 2Thanks
    BigMank
    Lgps
    • #1
    • 12th Mar 17, 10:25 AM
    Lgps 12th Mar 17 at 10:25 AM
    Hi
    My wife worked for a Local Authority for 14 years. She left in 2009, and February 2017 she will be 60 years of age.
    Can she take the pension that she has accrued with the Local Authority and invest it elsewhere, or does she have to keep it where it is.
    She is in full time employment, but has basically had a 6 year pension gap.
    Any help would be much appreciated.
    Regards
    Keith
Page 1
    • Suffolk lass
    • By Suffolk lass 12th Mar 17, 11:08 AM
    • 1,282 Posts
    • 15,737 Thanks
    Suffolk lass
    • #2
    • 12th Mar 17, 11:08 AM
    • #2
    • 12th Mar 17, 11:08 AM
    The Local Government Pension Scheme is a defined benefit scheme. This will limit your ability to withdraw it and invest elsewhere.

    Because she left in 2009 it is possible that she can draw it from age 60 under reserved rights - you (she) would need to check. My understanding is that the 2010 raising of minimum pension age from 50 to 55 (normally ten years before scheme pension age - and unless exceptional circumstances apply, anything before the normal pension age results in reductions in benefit because of the longer term the pension will be drawn for) triggered many public sector pension schemes raising their normal pension age from 60 to state pension age.

    DB schemes are not normally portable except within the public sector under club rules. These would not necessarily favour your wife. You will find that the accrued benefit for the 14 years she was in the scheme will have been index linked for each year (although CPI has been relatively low since 2009). The starting point is for her to request an up to date pension statement and clarifying at what age she could begin to draw it without actuarial reduction, to inform your decision-making.
    MFiT T4 #2 update 25.95% after Q5
    Save £12k in 2017 #64 - £4340.03/£4583.33 (39.45%/41.66%) after May - my annual target is £11,000 (Save £12k in 2016 thread £10,488.04/£10,000)
    OS Grocery Challenge 2017 budget of £3,600 £3000 (reduced from Apr) - 40.12/41.67% including stores after May
    Reading and learning about investing...
    • hyubh
    • By hyubh 12th Mar 17, 11:42 AM
    • 1,780 Posts
    • 1,279 Thanks
    hyubh
    • #3
    • 12th Mar 17, 11:42 AM
    • #3
    • 12th Mar 17, 11:42 AM
    My wife worked for a Local Authority for 14 years. She left in 2009, and February 2017 she will be 60 years of age.
    Can she take the pension that she has accrued with the Local Authority and invest it elsewhere
    Originally posted by BigMank
    She can transfer out to a money purchase arrangement, yes. However, she will likely require financial advice to do so (unless the LGPS pension is very small). Further, it will unlikely be a good thing to do - LGPS CETVs are currently calculated on a basis that doesn't give rise to the sorts of multiples being found with private sector DB schemes at present. (In fact, it typically understates the value of scheme benefits even on internal LGPS terms, meaning lower transfer values than otherwise.)

    Why does she what to 'invest it elsewhere'? It's already a great investment where it is.
    • Silvertabby
    • By Silvertabby 12th Mar 17, 12:13 PM
    • 1,126 Posts
    • 1,270 Thanks
    Silvertabby
    • #4
    • 12th Mar 17, 12:13 PM
    • #4
    • 12th Mar 17, 12:13 PM
    Based on the information you have given your wife can take her LGPS pension benefits at 60, but with a small actuarial reduction for early payment (she's too young for full R85 protections).

    She could ask for an estimate now, which should tell her the earliest date she can take her benefits unreduced. She then has the option of taking them at 60 or leaving them until they can be paid in full.

    She could also ask for a CETV (cash equivalent transfer value) so she can look at all of her options - but, as hyubh says, the LGPS transfer calculation factors aren't as high as some private schemes.

    ADD: Reductions will only apply to post 2008 service, and so will be minimal. Probably not worth deferring beyond age 60.
    Last edited by Silvertabby; 12-03-2017 at 1:00 PM.
    • xylophone
    • By xylophone 12th Mar 17, 12:55 PM
    • 21,631 Posts
    • 12,440 Thanks
    xylophone
    • #5
    • 12th Mar 17, 12:55 PM
    • #5
    • 12th Mar 17, 12:55 PM
    You say that she is "employed elsewhere" - is no pension scheme offered?

    If not, one soon will be?

    http://forums.moneysavingexpert.com/showthread.php?t=5616532

    She can check when she will be able to draw an unreduced LGPS pension.

    https://www.lgpsmember.org/arl/already-left-when.php


    Has she obtained a new state pension statement?

    https://www.gov.uk/yourstatepension?utm_source=Mail-Online&utm_medium=Partnership&utm_campaign=GTKY
    • Nick_C
    • By Nick_C 12th Mar 17, 12:58 PM
    • 2,796 Posts
    • 3,767 Thanks
    Nick_C
    • #6
    • 12th Mar 17, 12:58 PM
    • #6
    • 12th Mar 17, 12:58 PM
    You would be hard pressed to find a pension as good as LGPS. I would need £800K to buy an annuity that was as good as my pension!
    • BigMank
    • By BigMank 12th Mar 17, 5:08 PM
    • 13 Posts
    • 2 Thanks
    BigMank
    • #7
    • 12th Mar 17, 5:08 PM
    • #7
    • 12th Mar 17, 5:08 PM
    She is 60 years of age in Feb 2018, sorry and thanks.
    • kidmugsy
    • By kidmugsy 12th Mar 17, 8:05 PM
    • 9,321 Posts
    • 6,114 Thanks
    kidmugsy
    • #8
    • 12th Mar 17, 8:05 PM
    • #8
    • 12th Mar 17, 8:05 PM
    She is 60 years of age in Feb 2018, sorry and thanks.
    Originally posted by BigMank
    Does she want to retire from her present employment at 60 or would she be happy to work on?
    • lazyred
    • By lazyred 15th Mar 17, 12:28 PM
    • 9 Posts
    • 1 Thanks
    lazyred
    • #9
    • 15th Mar 17, 12:28 PM
    • #9
    • 15th Mar 17, 12:28 PM
    Based on the information you have given your wife can take her LGPS pension benefits at 60, but with a small actuarial reduction for early payment (she's too young for full R85 protections).

    She could ask for an estimate now, which should tell her the earliest date she can take her benefits unreduced. She then has the option of taking them at 60 or leaving them until they can be paid in full.

    She could also ask for a CETV (cash equivalent transfer value) so she can look at all of her options - but, as hyubh says, the LGPS transfer calculation factors aren't as high as some private schemes.

    ADD: Reductions will only apply to post 2008 service, and so will be minimal. Probably not worth deferring beyond age 60.
    Originally posted by Silvertabby

    The protection upto 2008 is still depenedent on meeting the Rule of 85 requirements. In 2018 age= 60 and years = 23 (14 years to 2009 plus 9 years defferred), = 83. So it will be 2019 before the R85 protection applies.
    • PensionTech
    • By PensionTech 15th Mar 17, 2:32 PM
    • 710 Posts
    • 926 Thanks
    PensionTech
    DB schemes are not normally portable except within the public sector under club rules
    Not so: most DB pensions can be transferred out to other DB or DC schemes, albeit DB to DC transfers usually require advice. Public sector DB to DC transfers are prohibited except in the case of funded schemes like the LGPS, which has as much freedom to transfer out as a private sector DB scheme.

    This is not to say it is a good idea to transfer the LGPS out - it almost certainly isn't - but it is certainly possible.
    I am a Technical Analyst at a third-party pension administration company. My job is to interpret rules and legislation and provide technical guidance, but I am not a lawyer or a qualified advisor of any kind and anything I say on these boards is my opinion only.
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

3,552Posts Today

7,934Users online

Martin's Twitter