Transfer, freeze etc

Mee

My sister has sent me some documentation and asked me for some advice regarding her pension situation. I've explained that I'm clueless when it some to that area, but thought that some MSEs might be able to offer a few pointers.

She's worked for the Legal Aid Board/Legal Services Commission for a decade or more and is paying ADCs. LSC is about to or has merged with the Ministry of Justice . She's unsure whether to freeze her pension, transfer to the PSCPS Premium although I think she would have to by Oct 2012 anyway. Plus she's unsure she will have a job after 2012 (redunancies have loomed for sometime).

The documentation suggests that both are final salary schemes, PSCPS require 3.5% to LSC's 6.5 members contributions (currently!). The Governments Actuary Departments comparison table suggests that the LSC pension is better interms of Ill Health Retirement, Dependentt's ST pension, Lump sum death benefits, Refunds to unmarried members at retirement, in all other areas they're the same or PSCPS is better.

Any advice I can pass on would be much appreciated.

snowcat53

The first thing your sister must do is get a quote as to what the new scheme would offer in service credit for her years in the old scheme. Is this a TUPE transfer? If so then a bulk transfer of pension rights may be offered which may be better than individual terms.

Then compare the relative benefits of the schemes carefully. Are they both 60ths or 80ths? Is the standard retirement age the same?

How old is your sister? Is she over the age limit when redundnacy would allow her to take early unreduced pension? (read the scheme rules)
How likely is it that her pay will increase above inflation between now and retirement ?

Mee

snowcat53 wrote: »

The first thing your sister must do is get a quote as to what the new scheme would offer in service credit for her years in the old scheme. Is this a TUPE transfer? If so then a bulk transfer of pension rights may be offered which may be better than individual terms.

Then compare the relative benefits of the schemes carefully. Are they both 60ths or 80ths? Is the standard retirement age the same?

How old is your sister? Is she over the age limit when redundnacy would allow her to take early unreduced pension? (read the scheme rules)
How likely is it that her pay will increase above inflation between now and retirement ?

Thanks for the points and questions. She's in her early 40s, so I don't think retirement is an option. I have the documentation she sent at home so will check some of those issues ... Thanks

Mee

snowcat53 wrote: »

The first thing your sister must do is get a quote as to what the new scheme would offer in service credit for her years in the old scheme. Is this a TUPE transfer? If so then a bulk transfer of pension rights may be offered which may be better than individual terms.

Then compare the relative benefits of the schemes carefully. Are they both 60ths or 80ths? Is the standard retirement age the same?

How old is your sister? Is she over the age limit when redundancy would allow her to take early unreduced pension? (read the scheme rules)
How likely is it that her pay will increase above inflation between now and retirement ?

Thanks again for your response and my apologies for the late follow-up.

Are they both 60ths or 80ths?
PCSPS Premium v LSC : Nominal retirement pension to member 1/60 (x final salary) v 1/80 (xfinal salary); lump sum: by commutation: single factor £12/£1 v 3/80; Spouse's pension: max 45 yrs reckonable service v max 40 yrs.
Not sure her pay will keep pace with inflation.
Not sure about TUPE - there's no mention of it in the documentation, but will ask her to check.
The LSC will be transferring to MoJ on 1.10.2012 subject to Parliamentary approval.
She's unsure whether to transfer before or after, or just freeze her LSC pension.

Thanks

snowcat53

This sounds like it should be a TUPE transfer or at least the public sector ‘code of practice equivalent - cant seem to post link but you can google it

{The Statement of Practice is intended to ensure that "where TUPE does not apply in strict legal terms to certain types of transfer within the public sector, the principles of TUPE should be followed"}.

If so then there should be a proper bulk transfer offer for existing pension rights into the new scheme, (or one can leave them where they are) but given the move is over a year away it is not surprising there is little info yet. She should do nothing (and i'm sure she wont be able to anyway until the transfer happens). When she gets the offer she can make an informed decision about whether to move her existing years or not

She should contact her HR dept and ask them to confirm they will be abiding by the code of practice and ask for more info on processes and timescales etc. Also contact her union (or if she isn’t in one, join one now , as she should be able to get help after the first 6 months)

Mee

Thanks so much for your help and advice. I'm sure this will help her enormously.

snowcat53

Here is a link I tried to post before
http://www.gad.gov.uk/services/Staff%20Transfers/

which also links to the docs

"Government policy is to provide some protection for public sector employees’ pension arrangements on the compulsory transfer of employment to a private sector employer, or to another public sector body. In broad terms, there are two main aspects to this policy:

• Future service – Employees should be entitled to accrue pension benefits in respect of service after the transfer of employment which are considered to be “broadly comparable” to those which the employee would have accrued had they remained in their public sector scheme.

• Past service – Employees should normally have the opportunity to participate in a bulk transfer arrangement in respect of their existing (accrued) pension rights.

For a pension arrangement to be assessed as being “broadly comparable” to a public sector pension scheme, it does not need to offer identical benefits. However, it must offer the same range of benefits, with the same (or greater) overall value."