Lgps

pieropan

Just a quick query-I reach 60 in 4 years and can draw my LGPS deferred benefits which will be an annual pension circa £1k pcm and a lump sum of £25k. I read on a previous post that I might be able to convert the lump sum into extra LGPS pension as it is income I am interested in.Not sure if I read that correctly ?
Have written to my local administrator but it will take months to get an answer-any advice would be appreciated.
many thanks
Pieropan

xylophone

http://www.lgps.org.uk/lge/core/page.do?pageId=101785
Is this relevant to you?

pieropan

Thanks Xylophone for the link.It does not answer the query as it details the reverse scenario of turning pension into lump sum .
rgds
Pieropan

littlelad

You need to be an 'active' contributing member of the scheme to buy extra pension locks of £250 through Additional Regular Contributions. Take it you've left the scheme as you described your pension as deferred?

SallyG

When I took my small deferred/forgotten LGPS pension I was advised I could take the whole as income - ie not take any as a tax free lump sum - taking the tax free lump sum is usually a worse deal if what you need is long term guaranteed income.
They wrote to me to give me the options - telling me what my pension income would be if I took the maximum tax free cash allowable and what the income would be if I took no tax free cash.
At the time I needed ready cash - looking back on it regular guaranteed income would have been a wiser choice.

kidmugsy

pieropan wrote: »

I read on a previous post that I might be able to convert the lump sum into extra LGPS pension as it is income I am interested in.

Someone on another thread recently said that the LGPS offers a commutation rate of 12:1. If they apply that to Lump Sums forgone, you could expect an extra £2083 p.a. i.e £173 per month. That will be inflation-linked, I assume.

xylophone

http://www.lgps.org.uk/lge/core/page.do?pageId=101785


"Any lump sum automatically paid on retirement as explained in Calculate your deferred benefits roughly equates to 15% of the capital value. Any amount you take as a lump sum above the automatic lump sum would be achieved by exchanging part of your annual pension for a one-off tax-free cash payment – for each £1 annual pension given up you will receive £12 lump sum. You may not reduce your pension to below your Guaranteed Minimum Pension.

This seems to be the relevant part of the link.
There appears to be an automatic lump sum of 15% of the capital value which means presumably that 85% is normally taken as pension.

The option appears to be to take a further 10% of the 85% as a lump sum on a !2:1 commutation basis.

The site does not appear to offer the option of taking the automatic lump sum as pension ( a "reverse commutation") if you will.

Unlike this in the USS http://www.uss.co.uk/schemerules/Schemerules120/Pages/19Conversionoflumpsumtopensionandpensiontolumpsum.aspx

See also this https://www.norfolkpensionfund.org/pensionsweb%20documents/form%20r41.pdf

hyubh

pieropan wrote: »

Just a quick query-I reach 60 in 4 years and can draw my LGPS deferred benefits which will be an annual pension circa £1k pcm and a lump sum of £25k. I read on a previous post that I might be able to convert the lump sum into extra LGPS pension as it is income I am interested in.

The division between lump sum and pension is fixed for membership up until April 2008. For membership after that there is no automatic lump sum - instead, you choose how much lump sum you want to buy using the 12:1 ratio someone's mentioned, capping the total lump sum amount to 25% of the fund value. E.g., if you were a contributing member of the LGPS between 2000 and 2010, then you would have to take a lump sum payment calculated using the membership between 2000 and 2008, but you would not have to add to it (reducing your pension income) using the membership between 2008 to 2010.

Have written to my local administrator but it will take months to get an answer

Why do you say that? If you want something quick you should give them a call, or at least an email.

Zero_Sum

pieropan wrote: »

Just a quick query-I reach 60 in 4 years and can draw my LGPS deferred benefits which will be an annual pension circa £1k pcm and a lump sum of £25k. I read on a previous post that I might be able to convert the lump sum into extra LGPS pension as it is income I am interested in.Not sure if I read that correctly ?
Have written to my local administrator but it will take months to get an answer-any advice would be appreciated.
many thanks
Pieropan

you can convert lump sum to extra pension, but as far as I'm aware it doesn't work the other way round

mania112

Zero_Sum wrote: »

you can convert lump sum to extra pension, but as far as I'm aware it doesn't work the other way round

So long as the lump sum doesn't breach 150% of Final Salary you can use the commutation factor in either direction.

bilbo51

mania112 wrote: »

So long as the lump sum doesn't breach 150% of Final Salary you can use the commutation factor in either direction.

Have you got a scheme reference for that please?