Public Sector Pension Transfer Query

propercopper

I hope someone can help with a question on combining (or not) different public sector pensions. Here goes.

I served in the police for around 6 years, which resulted in a pension (from 60 - I'm currently 38) of about £3,800 under the Police Pension Scheme.

I then joined the civil service for about 7 years, which generated a pension of £9,800 per annum from 60 under the Principal Civil Service Pension Scheme.

I'm now in local government, and have just joined the Local Government Pension Scheme.

Should I transfer the Police and Civil Service Pensions into the Local Government Pension Scheme under the public sector transfer scheme or is it better to keep them as they are?

Thanks in advance for any views or assistance.

Loughton_Monkey

propercopper wrote: »

I hope someone can help with a question on combining (or not) different public sector pensions. Here goes.

I served in the police for around 6 years, which resulted in a pension (from 60 - I'm currently 38) of about £3,800 under the Police Pension Scheme.

I then joined the civil service for about 7 years, which generated a pension of £9,800 per annum from 60 under the Principal Civil Service Pension Scheme.

I'm now in local government, and have just joined the Local Government Pension Scheme.

Should I transfer the Police and Civil Service Pensions into the Local Government Pension Scheme under the public sector transfer scheme or is it better to keep them as they are?

Thanks in advance for any views or assistance.

Simple. You should never transfer such "Final Salary" schemes. Just keep them where they are.

This, in simple terms, is because the 'frozen' schemes you have are contracted to give you certain set benefits. Whilst both schemes would quote you a 'Cash Transfer Value', that value would usually be understated and under normal circumstances, no other pension scheme is going to give you the necessary growth to provide the same benefits.

Just keep a note of the scheme administrators, your 'employee number' (or whatever reference), and make sure you keep them updated on address changes etc. You might receive annual statements from them.

globetraveller

thanks. Have been meaning to find out the same thing

jem16

Loughton_Monkey wrote: »

Simple. You should never transfer such "Final Salary" schemes. Just keep them where they are.

Not necessarily the case when moving from one final salary scheme to another. Yes if it's final salary to money purchase.

This, in simple terms, is because the 'frozen' schemes you have are contracted to give you certain set benefits. Whilst both schemes would quote you a 'Cash Transfer Value', that value would usually be understated and under normal circumstances, no other pension scheme is going to give you the necessary growth to provide the same benefits.

In the case of the OP it's an entirely different set of circumstances as the transfers are between members of the Public Sector Transfer Club.

http://www.civilservice.gov.uk/my-civil-service/pensions/Public-Sector-Transfer-Club.aspx

Whether it's a good idea to move can depend on many factors such as the NRD of each scheme plus whether or not you think wage increases will be better than the RPI/CPI index linking of frozen pensions and whether or not you take a wage cut when joining the new scheme.

Janie2008

What is the retirement age for your new pension?, if it is 65 and you transfer you wont be able to take your existing pension at 60.

Cautious_Investor_3

The OP should indeed think about the different retirement ages of the two schemes (the police scheme is lower than the other) and also the accrual rate.

I don't see what would be gained from a a transfer, surely just easier to accept there are two (very generous) pension schemes in place and move on.

The Cautious Investor

jem16

Cautious_Investor wrote: »

I don't see what would be gained from a a transfer, surely just easier to accept there are two (very generous) pension schemes in place and move on.

Could be plenty to be gained if the OP is on a much higher salary within the LGPS than what he was on with the police. (or his job prospects will lead to a higher salary)

Shimrod

jem16 wrote: »

Could be plenty to be gained if the OP is on a much higher salary within the LGPS than what he was on with the police. (or his job prospects will lead to a higher salary)

Which might not be the case given the current climate
Also, assuming the civil service scheme for example is a 60ths scheme, £9800 after 7 years equates to a salary of at least £84000 before allowing for any LEL that may be deducted. With some of the changes proposed, such as a maximum pension for higher earners in Govt schemes potentially the transfer value might be 'lost' if LGPS is included (if the proposals become law, and if I've understood correctly).

jem16

Shimrod wrote: »

Which might not be the case given the current climate

No I agree - it's not clear cut by any manner of means.

However the OP is only 38 and has 22 years to reach age 60 and 43 years to reach age 65.

With some of the changes proposed, such as a maximum pension for higher earners in Govt schemes potentially the transfer value might be 'lost' if LGPS is included (if the proposals become law, and if I've understood correctly).

Not sure what you're getting at here?

Shimrod

One of the many proposals floated by the Government has been a limit on the maximum pension that can be paid out to the higer earners within the Civil Service - so regardless salary the maximum pension a civil servant could get is £60,000 (for example). Not having a direct stake in these proposals (other than as a tax payer!) I've lost track of what has been 'floated' as an idea and what the government may actually attempt to implement.

Based on the figures the OP provided, he already seems to be a high earner, and with at least 22 years working life to go, it would seem to me the OP may hit this upper limit - assuming it applies across the whole of the public sector and not just the Civil Service. If a cap on pensions is introduced, then 22 years at a higher than average salary might be sufficient to reach or exceed that cap, meaning any extra years transferred would have been wasted.

propercopper

Thanks for the really helpful advice. I guess whatever Hutton's Pensions Review says could change things - most likely larger contributions (I currently pay 7.5%, could rise by 3% more) and career average rather than final salary (although I have joined on a salary of £85k, basically the same as I earned in the civil service). I don't anticipate going any further up the career ladder.

What are the factors I need to consider when I get the transfer values from my old schemes?

Is it safer just to preserve the benefits accrued in the other two schemes just in case there is some change to the LGPS which would somehow lower my transferred in value?