Rejoining LGPS

Mister_Paul · 7 January 2018 at 8:05PM

I've been out of the LGPS for just under 5 years. I've started working for a different Local Authority again and requested to transfer my old LGPS pension to the new one. I've been given three standard options. It's options 1 and 2 that I'm interested in, but I don't understand them. Is anyone able to give an idiot's interpretation?...

www .twpf. info/CHttpHandler.ashx?id=24996&p=0

hyubh · 7 January 2018 at 10:39PM

Mister_Paul wrote: »

I've been out of the LGPS for just under 5 years. I've started working for a different Local Authority again and requested to transfer my old LGPS pension to the new one. I've been given three standard options. It's options 1 and 2 that I'm interested in, but I don't understand them.

1) Copy over the service (i.e. employment history for when you were in the scheme) from your old pension record onto your new one, and have its 'final pensionable pay' now become whatever gets to be your final pensionable with your current job. So, rather than your pre-2014 service producing pension at a rate of 1/60 your final pay in your old job, uprated for inflation, it would produce pension at a rate of 1/60 your final pay in your new job. Also, since the service is just being copied over, it keeps its original normal pension age (i.e. 65 rather than your state pension age).

2) Calculate a cash-equivalent transfer value for your old benefits, and use that to purchase additional CARE pension. This additional pension will have the same terms as your other CARE benefits (e.g. with a normal pension age of SPA), and your 'final pensionable pay' will have no relevance to the ultimate value of your pre-2014 service - instead, the CARE scheme credit earned at the point of transfer will be worth the same in real terms at SPA.

3) Keep the old pension where it is.

Under both (1) and (3) you end up with mixed final salary and CARE benefits; in the case of (1) the applicable 'final salary' for pre-2014 service is the one from your new job, in (3) the one from your old one, uprated for inflation. In contrast, with (2) you end up with CARE scheme benefits only.

Conversely, (1) and (2) are alike to the extent you end up with only one pension that has to be taken altogether. In contrast, (3) would mean you could take one LGPS pension before the other. Admittedly (1) and (2) still involve the possibility of flexible retirement, but that requires employer agreement and taking a material step down in pay or hours in order to access part of your pension to date.

Silvertabby · 7 January 2018 at 10:40PM

Option 1 - You can elect to combine your pre 1 April 2014 final salary membership with your new active pension account so that it continues to count as final salary scheme membership.

If you have more than one active pension account (because you have more than one current employment in which you are contributing to the LGPS) you will also, if you decide to combine your benefits, need to decide which active pension account you wish your deferred benefit to be combined with.

If the membership in the final salary scheme built-up before 1 April 2014 was variable time and your ongoing employment is not variable time then, to ensure you get the appropriate level of membership for that period, your pre 1 April 2014 membership from the employment that has ceased is adjusted, using the following formula:

Period of membership x Your annual rate of pay in the variable time employment Your annual rate of pay in the ongoing employment = adjusted period of membership.

If you choose option 1 you must make that election within 12 months of re-joining the scheme and while you are still paying into the scheme.

Option 2 - You can elect to combine your deferred benefit with your new pension account to buy an amount of earned pension in the career average scheme which will be added into your new active pension account.

If you have more than one active pension account (because you have more than one current employment in which you are contributing to the LGPS) you will also, if you decide to combine your benefits, need to decide which active pension account you wish your deferred benefit to be combined with.

Option 3 - You can elect to keep your deferred benefit separate from your new active pension account.

Question 1 - When exactly did you join, when did you leave and what was your pensionable salary at the date you left (will be shown at the top of your deferred benefit statement).

Question 2 - When did you re-join and what is your pensionable pay under the pre 2014 rules (ie, contractual pay only - no non-contractual extras or overtime).

Question 3 - Do you have a crystal ball?

Mister_Paul · 7 January 2018 at 10:49PM

Silvertabby wrote: »

Question 1 - When exactly did you join, when did you leave and what was your pensionable salary at the date you left (will be shown at the top of your deferred benefit statement).

Question 2 - When did you re-join and what is your pensionable pay under the pre 2014 rules (ie, contractual pay only - no non-contractual extras or overtime).

Question 3 - Do you have a crystal ball?

Joined 2000, left 2012 on around 33k.

Rejoined 2017, within 5 years. Same salary.

hyubh · 7 January 2018 at 11:55PM

Mister_Paul wrote: »

Joined 2000, left 2012 on around 33k.

Rejoined 2017, within 5 years. Same salary.

So, lower in real terms? What are your promotion prospects?

Silvertabby · 8 January 2018 at 10:57AM

To elaborate on hyub's answer/question, deferred LGPS benefits increase in value in line with inflation (CPI) whereas your salary may only increase by 1%.

Depending on exactly when in 2012 you left, the CPI uprating means that those benefits are now based on the equivalent salary of at least £34,894 - but could be as much as £35,709. Add on this April's 3%, however, and that comes out as minimum £35,940, maximum £36,780.

Keeping these benefits deferred could also give you better Rule of 85 protections (in respect of your pre 2008 service only) and you would have the option of this this pension (subject to an actuarial reduction for early payment) at age 60.

So, at at 0947 hrs on the 8th of January 2018, the tick is in the 'keep separate' box.

BUT

And this is why I asked you if you had a crystal ball....

Are you likely to be promoted thus leap-frogging your current salary over and above your old salary (remembering that your old benefits will continue to increase in line with inflation if kept separate)?

Are you likely to be made redundant at 55+ ?

If the answer to either of these questions is 'yes', then that's a tick in the box for combining.

Good luck with your decision!

Rejoining LGPS

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free