Pensions confuse me - please help!

miss.average

Hi
this is the situation.
My mum is 64, and works as a school administrator (40 years!!). She has recently been thinking about retiring ( but the thought of spending 24 / 7 with my dad seems a bit daunting). + She's a bit scared of making the wrong decision with regards to her pension. She's asked the school for advice on and off over the past couple of years , but the pension person takes a very long time to get back to mum, and mum doesn't always understand the terminology. So basically she's clueless and has asked me for advice ( arghhhh and I know nothing!!)
This week she has been asked would she be interested in taking voluntary redundancy , would there be any impact on her pension if she takes the redundancy. To me it seems like she was on the verge of leaving and now someone wants to pay her to leave it's a no brainer........... but any help at this stage would be gratefully received.
I have suggested a financial adviser, but she's not that keen and seems to think I can sort this out for her!!
thanks in advance

mania112

If they were still paying into her pension - she'll lose those contributions (obviously).

However, the redundancy pay will likely be more than a few more months of pensions contributions anyway.

If she wanted to leave and now she's being offered £x to do that, sounds like it might be the right thing to do.

If she has a final salary pension 40 years is enough to entitle her to full pension, so that's not a worry (as far as i'm aware). If she is forced to wait until 65 to receive the full pension - I presume the redundancy pay can tide her over until then?

hyubh

miss.average wrote: »

My mum is 64, and works as a school administrator (40 years!!).

A school administrator with an occupational pension would mean being a member of the LGPS, assuming a state school (and indeed, not necessarily a state school - the odd private school participates in the LGPS too). If she's been a member of the pension scheme for most of those 40 years, then it's possible her normal retirement age in the LGPS is less than the regular 65 anyhow - you should dig out her latest 'annual benefit statement' from the scheme administrator, which should say either way. The statement would have been sent out last summer or autumn, possibly via the employer.

She's a bit scared of making the wrong decision with regards to her pension.

*If* she's been paying pension contributions for those 40 years, then she can't really go wrong, assuming it is the LGPS she's a member of. I say 'if', because historically only full- or near-full timers were allowed in the LGPS, so even if that is her scheme, her membership might be a lot less than 40 years if she was or is a part timer.

She's asked the school for advice on and off over the past couple of years

For the facts of the situation it is better to ask the scheme administrator rather than the employer, although they legally won't be able to provide 'advice' in the sense of 'you should do this'.

This week she has been asked would she be interested in taking voluntary redundancy , would there be any impact on her pension if she takes the redundancy.

Assuming it is the LGPS, then at age 64 with historical protections there won't be much at all.

I have suggested a financial adviser, but she's not that keen and seems to think I can sort this out for her!!

Again, if it is the LGPS, then a financial advisor would be a waste of money IMO.

xylophone

She is already drawing her state pension?

Has she been a member of LGPS for forty years?

miss.average

She has been receiving her state pension , she only qualified for full pension some 12 years of her 40 years employment, - her lump sum is around the £45K.
Sorry - my misunderstanding, Mum had asked the scheme administrator not the school, and not really for 'advice' but to explain her options, she was always referred to annual statement - and she felt that was being a hindrance to them.
Looks like the redundancy offer is 'icing on the cake' to me??
thank you all for your help.

woolly_wombat

miss.average wrote: »

she only qualified for full pension some 12 years of her 40 years employment

Presumably because she works term-time, part-time only?

As hyubh has stated, part-timers were excluded from the LGPS in the past.

She won't have to wait for 65 to be paid either:
http://www.lgps.org.uk/lge/core/page.do?pageId=102180

If your employer makes you redundant or retires you in the interests of business efficiency and you are aged 55 or over, your benefits are payable immediately without reduction.

Looks like the redundancy offer is 'icing on the cake' to me??

Looks like it to me too!

xylophone

Do make sure that your mother's tax position is in order after retirement and redundancy.

Bigmoney2

miss.average wrote: »

Hi
this is the situation.
My mum is 64, and works as a school administrator (40 years!!). She has recently been thinking about retiring ( but the thought of spending 24 / 7 with my dad seems a bit daunting). + She's a bit scared of making the wrong decision with regards to her pension. She's asked the school for advice on and off over the past couple of years , but the pension person takes a very long time to get back to mum, and mum doesn't always understand the terminology. So basically she's clueless and has asked me for advice ( arghhhh and I know nothing!!)
This week she has been asked would she be interested in taking voluntary redundancy , would there be any impact on her pension if she takes the redundancy. To me it seems like she was on the verge of leaving and now someone wants to pay her to leave it's a no brainer........... but any help at this stage would be gratefully received.
I have suggested a financial adviser, but she's not that keen and seems to think I can sort this out for her!!
thanks in advance

She could look into doing some voluntary work, or joining a local group such as the U3A's, local walking group, book group, womens institute, there are lots of things to do in retirement.

grey_gym_sock

Bigmoney2 wrote: »

She could look into doing some voluntary work, or joining a local group such as the U3A's, local walking group, book group, womens institute, there are lots of things to do in retirement.

and so could OP's dad (with the possible exception of the womens' institute).

miss.average

thanks for your thoughts. - my mum is a 'young' 64 and already has a very active voluntary life, it's spending the time with my dad is the problem!! lol Unfortunately Dad's not too well - but he too is fairly busy, and has made lots of plans for him and mum ........ that's what I was trying to say!!!! poor old mum

hyubh

miss.average wrote: »

Mum had asked the scheme administrator not the school, and not really for 'advice' but to explain her options, she was always referred to annual statement - and she felt that was being a hindrance to them.

Ultimately, there's not really much to say. The ABS should note her normal retirement age in the LGPS, which is usually 65 nowadays, together with an estimate of her benefits were she to leave now (or more exactly, on the 31 March prior to the ABS being issued), together with an estimate of her projected benefits were she to stay working and in the scheme until her normal retirement age. So long as her hours stayed fairly static over time, the actual benefit calculation isn't too hard either - just keep in mind it is based on the final twelve months' whole time equivalent salary against the 'reckonable' membership (= calendar membership pro-rated for part time working), rather than the final actual salary against the calendar membership.

Given she's over 55, if she gets made redundant short of her normal retirement age, while her final membership will fall a bit short of what she would have achieved were she to stay working, she won't take any further hit for drawing the pension early because the employer will instead (it's in the scheme rules). Conversely, if she stays working and making pension contributions, it wouldn't be a big deal staying on beyond her normal retirement age in the scheme either because there is no maximum accural, or number of years membership that count towards the pension - every extra day will count, if only in a small way!

Looks like the redundancy offer is 'icing on the cake' to me??

I'd say so. The only thing she might ask is whether her employer's discretionary policy for the LGPS will allow her to augment her pension using her redundancy pay, assuming the latter is above the statutory minimum. Not saying she'd necessarily want to do that, but if is possible then it will be an option...