LGPS transferring AVCs from Clerical Medical to PRU

pandora205

Hi MSErs,

There is a possibility that I will apply for promotion working for another Local Authority. On checking their pension arrangements it appears that they use the PRU for AVCs (for those making additional contributions in addition to LGPS). I've been paying into a scheme run via my employer with Clerical Medical and have a considerable sum there so far.

What would happen to this if I changed jobs? Can I transfer the lump or would I leave it and start afresh with the PRU? Would there be any implications (ie financial disadvantage)?

I'd really appreciate it if any of you pension experts could give any information please. I haven't made enquiries with the LA concerned as I'm still mulling over the job, sosts of moving house etc. at the mo.

Thanks

Pandora

jamesd

I suggest that you use the edit option, then the advanced button to change the title of this post to include "LGPS, transferring AVCs from Clerical Medical to PRU". That should help people who know about the LGPS to notice it.

hyubh

pandora205 wrote: »

What would happen to this if I changed jobs? Can I transfer the lump or would I leave it and start afresh with the PRU?

Assuming you're going to be electing to combine the previous LGPS membership with the new (an 'interfund' transfer), usually an election to transfer the AVC is done at the same time. Even if the new fund used the same AVC provider as the old, you'd still need to transfer the pot in some sense given it is currently linked to your existing LGPS membership that would no longer exist where it be combined with another in a different fund.

As an aside, and you've probably already figured this out, but if the potential change of jobs will be a 'promotion' as you say and it happens before April 2014 (when the scheme changes to career average), it would usually be a no-brainer to get the interfund done. While you wouldn't be accruing much more service for the final salary part of the pension, the pre-2014 membership you have built up would then all go against what becomes your final salary in the new, higher paid job, rather than just the last part of it.

pandora205

Thanks hyubh
That's a very good point getting promotion sooner rather than later, although I am informed by our pensions department that the career average will only run from April 2014 onwards when the new scheme kicks in (not retrospectively).

hyubh

pandora205 wrote: »

Thanks hyubh
That's a very good point getting promotion sooner rather than later, although I am informed by our pensions department that the career average will only run from April 2014 onwards when the new scheme kicks in (not retrospectively).

Yes. I meant: if you are starting a new higher paid job before April 2014, you are more than likely to want to cancel the deferred benefit for the old job and join its service to the new so that it all goes against the final salary of the new job. (While service post-April 2014 will not be put against the final salary pension, the pay will.)

pandora205

Yes I would do this (if I applied and accepted the post, got an increase in salary, etc...) I'd amalgamate my LGPS (which I think I probably have to do anyway) and the new salary would be one of the reasons for applying. (Sorry if this is confusing - there is an overlap in pay scales so they could technically offer the job on the same, or even less, salary).

hyubh

pandora205 wrote: »

I'd amalgamate my LGPS (which I think I probably have to do anyway)

No, the default situation will be for the old membership to stay separate from the new. If you started a new job with another LGPS employer before April 2014 and didn't do anything, you'd therefore end up with two (small) final salary LGPS pensions rather than one (big) one, with the 'final salary' for the first being the salary you left the old job on.

Sorry if this is confusing - there is an overlap in pay scales so they could technically offer the job on the same, or even less, salary

If the rate of pay were less, deciding whether to join the memberships would be tricky - the deferred pension for the old job will be indexed to CPI, so future pay rises in the new job would have to beat inflation + whatever was the initial difference with the old job.