LGPS question about transfers

WashingTime

Hi

LGPS member here, shortly to change jobs which means I have the option of transferring my accrued entitlements to my new employers' scheme.

As this change will result in a drop in salary of about 20%, my hunch is to not transfer in but instead start a new pension afresh.

I think this will 'lock-in' my current pension entitlement for my service thus far at my current, higher pay-rate. (could someone confirm?)

Any other points, suggestions or thoughts most welcome.

Thanks

JoeCrystal

What is your new employer's scheme? LG again?

Cheers,
Joe

woolly_wombat

WashingTime wrote: »

As this change will result in a drop in salary of about 20%, my hunch is to not transfer in but instead start a new pension afresh.

I think this will 'lock-in' my current pension entitlement for my service thus far at my current, higher pay-rate. (could someone confirm?)

Yes, the lgps is a final salary pension scheme (until 1 April 2014), so there doesn't seem to be any advantage in effecting a transfer.

Also, it will increase by CPI in deferral.

WW

Andy_L

What will the new employer offer in their pension for the transfer?

GhIFA

Who/what is your new employer? What type of pension do they have?

hyubh

WashingTime wrote: »

As this change will result in a drop in salary of about 20%

Is this a drop in your take home pay due to a reduction in hours, or a reduction in your rate of pay? I ask because pension benefits in the LGPS are determined with reference to the whole-time equivalent salary against calendar service, pro-rated for part time working. As such, someone working full time on £20K moving to a part time job on £30K WTE would be sensible to combine their memberships, even if their actual pay was now (say) £15K.

my hunch is to not transfer in but instead start a new pension afresh.

I think this will 'lock-in' my current pension entitlement for my service thus far at my current, higher pay-rate. (could someone confirm?)

Correct. When you come to retire, you will then have two (small) LGPS pensions.

Any other points, suggestions or thoughts most welcome.

Worth keeping in mind that if you did combine, the final salary for the combined pre-April 2014 membership would be your actual leaving WTE salary, not your WTE salary as at 31 March 2014. However, as woolly_wombat rightly says, benefits kept separate will rise in value with CPI.

Other than that, how much membership do you have in the old job? If it's enough to fall under the 85 year rule protections, then combining will probably lose that.

woolly_wombat

hyubh wrote: »

Worth keeping in mind that if you did combine, the final salary for the combined pre-April 2014 membership would be your actual leaving WTE salary, not your WTE salary as at 31 March 2014.

An important point, and one which I suspect many have missed.

The question is, do you expect wages to exceed or lag CPI between now and retirement?

WW

WashingTime

Thanks all, really helpful.

To confirm, new job is also within local govt with opportunity to be an LGPS member (which I shall take).

Both posts are full-time so the WTE doesn't really matter - though thanks for raising it.

Given that I have a good few decades to go until retirement, the rule of 85 doesn't have much relevance either. I have 8 years accrued so far.

hyubh

WashingTime wrote: »

the rule of 85 doesn't have much relevance either. I have 8 years accrued so far.

Indeed it won't in that case. I'd probably leave the DB where it is given what you say, unless you expect signficant pay rises in the future.