Public Sector Transfer

downshifted

I thought the way transfer values worked was that they calculated a TV from your old scheme and told you what it bought in your new scheme? If you had a higher salary in your new employment you would get fewer years in your new pension scheme - but it was supposed to work out actuarially.

I am working in Local Govt. Having moved counties my new job is lower paid than my old one. Essex CC are telling me I should therefore not transfer my pension to Kent CC - unless I think my salary will go up over time to beat my old one (which it won't as I won't be there that long)

Why can't they just give me more years and days to match the value?

dunstonh

Why can't they just give me more years and days to match the value?

Why should they give you more than you are entitled to?

downshifted

Hi dunstonh - thank you for your reply. I didn't think I was asking for more than I am entitled to.

I have been given lower transfer values in the past, in terms of years and days allocated in the new final salary pension scheme, and the argument was that my salary had increased, and so I had equivalent value in the final salary scheme. All I am asking is why that can't work in reverse in the local govt scheme. My salary was less in the new job this time, so surely additional days/years would have resulted in the same pension value in the end?

Loughton_Monkey

For a start, technically, the approach you mention could end up with more than 40/60ths - or more precisely reaching the 40 years with only, say, 36 'actual' years served. This would be a dilemma. Any sentiments about "I won't be there for very long...." cannot hold water (legally) and hence are nothing to do with it.

To transfer 'years' from one employer to another employer at all is a rare (and valuable) priviledge anyway.

The nature of Final Salary schemes is complicated. Imagine that you and I have exactly the same career path for 40 years. Same age. Same pension rules. But totally different employers. You work for your employer for 40 years. I work for one employer for 10 years, and then move to another (at exactly the same salary) and stay for 30 years.

We both have salary (and hence pension year entitlements) that matches to the penny year on year. We both get our 'full' pension retirement, but in my case it is 10/60ths from one employer and 30/60th from another.

Well your pension would be much bigger than mine. This is because at the date of leaving my first employer, no further salary increases are (or need to be) funded for. It follows that if my second employer were to accept the fair and accurate transfer value from the first empoyer, and give me 10 years back service then it would cost the new empoyer literally 10's of £thousands. Although I don't know, I suspect Local Authorities are 'generous' enough to give you 'full' years if you are transferring at equal salary. If this is the case, the cost is on the new authority's scheme.

I suspect they are not willing to give 'extra' back years on the simple premise that it is a strong possibility that your 'final' position, and salary, is likely to be very similar, despite the temporary drop due to the move.

Andy_L

In a "public sector transfer club" transfer then any change in salary is ignored (which in your case is a bad thing due to the salary reduction) and they only consider differences in the scheme rules - since its an LGPS to LGPS transfer that's unlikely to make a difference unless you were on the old scheme and move to the new (worse) version

downshifted

Andy_L wrote: »

In a "public sector transfer club" transfer then any change in salary is ignored (which in your case is a bad thing due to the salary reduction) and they only consider differences in the scheme rules - since its an LGPS to LGPS transfer that's unlikely to make a difference unless you were on the old scheme and move to the new (worse) version

Thanks for this straightforward reply which answers my question. This is the only time I have done a public sector transfer and I was surprised by this rule - which may be good and generous for most people but a nuisance for me on this occasion.

I won't transfer, obviously, so it really just means I will have two very small pensions in payment from different parts of the LGPS (about £250pa each if I leave my current job when planned) so it is really just a matter of expense for them and convenience for me

CAE

If you transferred from one local authority to another, you would be credited with the same years and days in the new authority as you were in the old, as per the regulations. As the LGPS is a final salary scheme your pension benefits will be based on the final salary for the last 365 days of your employment. As your salary has decreased, this would mean that all of your benefits would then be based on your lower salary, giving you lower pension benefits. I guess you wouldn't want this.

By not transferring your benefits, the first part of your pension will be based on your higher salary, and increased in line with CPI from the date of leaving to when the benefits are brought into payment.

The second part of your pension will be based on the lower salary.

Obviously, if you think you salary will increase before you retire then you should transfer, but you have already said that this will not be the case.