Transfer NHS Pension into LGPS - Or Not?

gardenia101

I'm wondering if I should transfer my NHS pension into my current LGPS, or if I should keep it with the NHS & would appreciate some comments &/or advice as I know nothing about pensions.

My NHS pension transfer info gives a transfer value of £20,725 calculated on a CLUB basis (whatever CLUB is). This would give at age 60 a pension of £1,364 (assume annual but this isn't stated anywhere) & a lump sum of £4,093 with a survivors pension of £672 (no partner but do have 2 kids).

I started paying into an LGPS in June 2012 on starting a new job, but only contribute £55 pcm as I'm employed for 30 hours term time only. I know my employer contributes. but I cannot find a figure for how much this is (LGPS website says Your employer pays the balance of the cost of providing your benefits in the LG).

I am also disabled & aware that I was very lucky to get the job in the first place, & if I were to leave (not through choice but possible further worsening of my disability) I would be very unlikely to find another job. My intention is to stay with my current employer until I retire & I'm 44 now.

Should I transfer or keep the 2 pensions separate?

Regarding my state pension - I have 27 NI qualifying years. If there is a state pension by the time I hit 66/67 & were not all lined up & shot by then.

Only other info that may be relevant - if my health does nosedive I may move abroad to live with family in Cape Verde. Could this affect my eligibilty to claim any of my pensions?

I haven't paid much into any pension as for the 10+ years I was self employed I couldn't decide which scheme was worth paying into, so I just maxed out my cash ISA allowance each year.

jem16

gardenia101 wrote: »

My NHS pension transfer info gives a transfer value of £20,725 calculated on a CLUB basis (whatever CLUB is). This would give at age 60 a pension of £1,364 (assume annual but this isn't stated anywhere) & a lump sum of £4,093 with a survivors pension of £672 (no partner but do have 2 kids).

The Club is the transfer of benefits between public sector schemes. It's supposed to ensure that what you get when you transfer is equal to what you get if you didn't.

The pension quoted is annual.

I started paying into an LGPS in June 2012 on starting a new job, but only contribute £55 pcm as I'm employed for 30 hours term time only. I know my employer contributes. but I cannot find a figure for how much this is (LGPS website says Your employer pays the balance of the cost of providing your benefits in the LG).

Contribution level doesn't matter in a final salary pension. What does matter is the length of service and final salary. That's how the benefit is calculated.

Should I transfer or keep the 2 pensions separate?

Assuming the transfer is cost neutral, what you really need to look at is how you think your salary will rise in future years. Will it be ahead of what you would get if you leave your pension with the NHS which will grow each year in line with CPI.

You also need to compare the retirement age of both schemes and any other possible benefits that may differ slightly.

Only other info that may be relevant - if my health does nosedive I may move abroad to live with family in Cape Verde. Could this affect my eligibilty to claim any of my pensions?

It won't have any effect on claiming them. It may or may not have an effect on state pension increases.

hyubh

gardenia101 wrote: »

My NHS pension transfer info gives a transfer value of £20,725 calculated on a CLUB basis (whatever CLUB is). This would give at age 60 a pension of £1,364 (assume annual but this isn't stated anywhere) & a lump sum of £4,093 with a survivors pension of £672 (no partner but do have 2 kids).

A 'Club' transfer is one between (typically) public sector schemes done on terms that are usually preferential to the member: in simple terms, the same factors (i.e., fractions) and pay figure used to determine the transfer value from the old scheme are then used to calculate the service credit in the new one. In contrast, a transfer done on non-Club terms will use the pay from the new job + factors that take into account the fact you may become a long term member with many years of pay increases.

As such, the transfer value in a Club transfer isn't very important from the member's pioint of view - rather, the important thing is that the service credit calculation for the new scheme will end up similar to the service credit in the old scheme. Depending how long you've been in the NHS scheme, it might in practice even mean (say) giving up 18 years in the NHS scheme for buying 20 years in the LGPS, due to the fact your normal retirement age in the LGPS would be later than in the NHS scheme under that scenario.

The other thing to emphasise is that you wouldn't be buying extra pension in the LGPS as such, but (as I've mentioned) extra service credits - extra years membership in other words. Because of that, if you do transfer then see your rate of pay double within a few years, the amount of pension bought with the transfer will have increased accordingly. The figures you've been given, in contrast, are estimates based on your current rate of pay. Of course, that's a bit academic if you don't expect pay rises though...

I started paying into an LGPS in June 2012 on starting a new job, but only contribute £55 pcm as I'm employed for 30 hours term time only. I know my employer contributes. but I cannot find a figure for how much this is

Neither determine your pension benefits in the LGPS (or NHS scheme for that matter) - Google defined benefit vs defined contribution pension scheme.

Should I transfer or keep the 2 pensions separate?

If you expect the *rate* of pay in your current job to keep up with (or preferably beat) inflation, then consider transfering. If you don't, keep the NHS deferred benefit. The other main thing to consider is whether the normal retirement age (i.e., the point at which you can draw your pension without reduction) was lower in the NHS - check your latest annual benefit statement from the NHS scheme, as I would expect it to be on there (at least, I would expect it to be shown on an annual benefit statement from an LGPS fund).

gardenia101

Thanks for your replies - certainly given me a lot to think about & answered many questions.

I think I'm going to stick with my NHS pension for now - the main reason being that I can take it at 60 wheras my LGPS is looking as though it will be the same as my State Pension Age which is almost 67 (although I think this hasn't been officially agreed yet I'm sure it wont be below 65).

The other possible reason to stick is that my salary when I was working in the NHS was (mostly) rather more than I'm earning now (using full time equivalents). I'm now on almost £4K less than I was in 1998 :eek: as a result of health forcing me to give up a very well paid career. Am I wrong in taking this difference in salaries into consideration?

I'm not expecting my current salary to increase very much during my career - there are only 4 salary scales to go up & then that is it. I'm in a support role, so no room for career progression.

But I do still have a job I enjoy a lot, & can pay into a decent pension so I'm a lot luckier than some.

jem16

gardenia101 wrote: »

Am I wrong in taking this difference in salaries into consideration?

No that's the very thing you should be taking into consideration, especially if you don't expect your current salary to increase that much with promotion. With the lack of pay rises recently in the public sector your NHS pension will have got better as it will have increased.

The other major reason is the fact that you can access the NHS pension at age 60.

hyubh

gardenia101 wrote: »

I think I'm going to stick with my NHS pension for now - the main reason being that I can take it at 60 wheras my LGPS is looking as though it will be the same as my State Pension Age which is almost 67

More exactly, an LGPS member can at present draw their pension at 60 too, but will suffer reductions. Once the career average scheme comes in, 65 will remain the normal retirement age for the final salary pension built up to that date. However, since you won't be able to draw the final salary element without drawing the career average element at the same time, drawing at 65 would cause a reduction in the latter.

The other possible reason to stick is that my salary when I was working in the NHS was (mostly) rather more than I'm earning now (using full time equivalents).

'Mostly'? I don't know how the 'final salary' in the NHS scheme of the 90's was/is calculated, but in the LGPS, if someone's rate of pay fell without them actually leaving their job, there are protections available for the pension, but usually have to be explicitly asked for. That said, if 'final salary' for pension purposes meant 'best 3 of the last 10 years' or the like (in the LGPS it is 'average of the last 12 months'), that wouldn't be necessary.

I'm now on almost £4K less than I was in 1998 :eek: as a result of health forcing me to give up a very well paid career. Am I wrong in taking this difference in salaries into consideration?

In a final salary scheme (where 'final salary' means whole-time equivalent), certainly not. The difference will be even more pronounced given the value of your deferred NHS benefits will have increased with inflation (initially RPI, and more recently CPI).

gardenia101

hyubh wrote: »

More exactly, an LGPS member can at present draw their pension at 60 too, but will suffer reductions. Once the career average scheme comes in, 65 will remain the normal retirement age for the final salary pension built up to that date. However, since you won't be able to draw the final salary element without drawing the career average element at the same time, drawing at 65 would cause a reduction in the latter.

'Mostly'? I don't know how the 'final salary' in the NHS scheme of the 90's was/is calculated, but in the LGPS, if someone's rate of pay fell without them actually leaving their job, there are protections available for the pension, but usually have to be explicitly asked for. That said, if 'final salary' for pension purposes meant 'best 3 of the last 10 years' or the like (in the LGPS it is 'average of the last 12 months'), that wouldn't be necessary.

In a final salary scheme (where 'final salary' means whole-time equivalent), certainly not. The difference will be even more pronounced given the value of your deferred NHS benefits will have increased with inflation (initially RPI, and more recently CPI).

Sorry, I've not explained it all very well....

When I left the NHS in 98 I was on £4K more than I am now, but I wasn't forced to leave then because of my ill health. I left to become self employed in the same profession & did this for many years (saving in a cash ISA while dithering about which pension provider to go with).

My health problems forced me to give up that career, & I didn't work (in the employed sense) for almost 2 years following medical treatment, rehabillitation etc.

The "mostly" part is because I re-joined the NHS scheme briefly for just under 1 year in 2008, on a much lower salary than my previous periods of NHS employment, but still on a few K more than I earn now.

If my heath worsens then I'm not sure what I will do job wise, but I really don't want to think about that just now. I doubt very much I'll be retired on ill health grounds as I'll be able to do a different job for my employer (with an adapted PC) just not my lab-based job.

jem16 wrote: »

No that's the very thing you should be taking into consideration, especially if you don't expect your current salary to increase that much with promotion. With the lack of pay rises recently in the public sector your NHS pension will have got better as it will have increased.

The other major reason is the fact that you can access the NHS pension at age 60.

Why do I feel it shouldn't be this simple? Shouldn't I have hours more hand wringing over this?

Does that change your responses to my choice of sticking with the NHS pension?

Thanks for the info & advice - I seem to be the only one of my female friends who is worried about a pension. They all think their husbands will keep them :rotfl: - as one who doesn't have a husband I don't have this luxery. Not that I'd expect to be kept - every woman should make sure she can survive financially on her own if she needs to IMHO. Seems I'm in a minority though & they think I'm bonkers...

jem16

gardenia101 wrote: »

The "mostly" part is because I re-joined the NHS scheme briefly for just under 1 year in 2008, on a much lower salary than my previous periods of NHS employment, but still on a few K more than I earn now.

Did you transfer your 1995 section into the 2008 section when you rejoined or were the 2 kept separate?

Why do I feel it shouldn't be this simple? Shouldn't I have hours more hand wringing over this?

It should be relatively simple as it's just a matter of comparing the 2 benefits.

Does that change your responses to my choice of sticking with the NHS pension?

No I think the ability to take the NHS pension at age 60 is one of the main choices.

Thanks for the info & advice - I seem to be the only one of my female friends who is worried about a pension. They all think their husbands will keep them :rotfl: - as one who doesn't have a husband I don't have this luxery. Not that I'd expect to be kept - every woman should make sure she can survive financially on her own if she needs to IMHO. Seems I'm in a minority though & they think I'm bonkers...

I agree - anything can happen.

gardenia101

jem16 wrote: »

Did you transfer your 1995 section into the 2008 section when you rejoined or were the 2 kept separate?

I don't know TBH - I assume I would have needed to complete some paperwork to do this, & I can't find any copies (& all those years of self employment have trained me well). Would I need to check directly with NHS pensions?

Although my previous NHS employment was directly with various NHS trusts & my brief 2008 employment was based in a GP practice - looking at the NHS pensions website it appears that there types of employment are treated differently. Afraid I got bogged down in the details...


No I think the ability to take the NHS pension at age 60 is one of the main choices.

Yes, I kept coming back to this. Suddenly 60 doesn't seem so far away!

jem16

gardenia101 wrote: »

Yes, I kept coming back to this. Suddenly 60 doesn't seem so far away!

No it's much better than age 65 or even the ever increasing state pension age that public sector pensions will soon change to.

As to your entitlement to the NHS pensions that you have I would contact the NHS scheme to clarify.

http://www.nhsbsa.nhs.uk/Pensions/2735.aspx