Transfer from 80th to 60th LGPS scheme (TPS -> NHS)

snaffle_2

I have previous pension contributions in the Teachers Pension Scheme providing final salary benefits on a 1/80th basis. I have now started working for the NHS and joined their new pension scheme which is based on 1/60th benefits.

I would anticipate that my NHS final salary will be a good bit higher than my final Teachers salary even taking into account inflation etc so is it a no brainer that I should transfer my previous pension contributions to the NHS?

Are there any other factors to take into account when deciding whether to transfer? I understand the two schemes both provide excellent benefits and are fairly similar barring the 1/80th 1/60th differences.

I've not had an estimate yet of what my contirbutions will get in the NHS scheme should I wait to get that to decide?

tawl_2

find out if both schemes participate in the public sector transfer club.

normally when you leave service, you lose the salary linkage to your final salary pension and when you want to transfer the benefits over to a new scheme, if everything is the same, you end up with less benefits as the new scheme will have to re-instate that salary link again. unless...

if both schemes are in the public sector transfer club, there is an agreement between schemes in the club to ensure that members are not worst off and retain the salary linkage.

although both benefits are different, the additional benefit you get from the transfer is done on a principle of equivalence i.e. the cost of benefit should be the same under both schemes. In your case, you will get additional pensionable service worth less than what you built up in the previous scheme but it's calculated using a higher accrual rate of 1/60th (assuming everything else is the same).

Andy_L

They are both club schemes

Your TPS membership probabally has a retirement age of 60 compared to the NHS's 65.

Anecdoatally, when I moved form an "1/80ths, 3xLump Sum, NRA 60" (Civil Service) scheme into the NHS I got an extra ~15% service to make up for the worse terms.

If you leave you TPS where it is you get (unlimited) RPI increases on it's value: if you transfer it you only get pay increases.so you need to consider if you are likely to outpace inflation with future pay rises or not or whether the increased salary makes up for it

snaffle_2

Thank you both for your comments.

TPS has an age 60 payout whereas under the new NHS scheme I'll retire at 65.

I guess what I'm hoping / assuming is that as they are both club pension schemes the benefit differences get ironed out in the transfer with an adjustment - sounds like what you had Andy and the principle of equivalence point you are making tawl if I understand that correctly? I'm not really worried about the difference in retirement ages as long as the transfer takes that into account. I've not yet had an estimate what my transfer will buy to know for sure yet.

Given they are both club schemes I'm therefore wondering if the only issue to consider is the pay issue v inflation? If all goes to plan, due to this career change, my salary in 5 years time will be about 40% higher working in the NHS than I would have got had I stayed in teaching and progressed there up the pay-scales. This is a bit of an assumption and might be affected by NHS pay freezes etc but hopefully eventually it'll come out much better salarywise for me.

With that pay difference, is it given this will out perform RPI - as best as can be guessed and therefore a no brainer to just transfer?

Andy_L

Thats about the size of it, although that's not advice as we're not allowed to give financial advice here :-)

snaffle_2

Andy_L wrote: »

Thats about the size of it, although that's not advice as we're not allowed to give financial advice here :-)

Thanks!! Your 'opinion' is noted!

Its just great to have someone to discuss and check understanding with as most people tend to glaze over when you mention pensions!