Transfer from LGPS to LGPS?

Unclefoobar

I am currently employed by an organization funded by local council. I am a member of the LGPS and have accrued approximately 18 years worth of contributions. Current salary is £31500.

I will soon change jobs and will be directly employed by another local council, my salary will increase to £44100.

I am not sure whether I should transfer my pension or start afresh with a new LGPS pension with my new employer.

I had always hoped to retire at 60 albeit with a 25% penalty. Present age is 40

With the changes coming next year to the LGPS in 2014, I have read that I will not be able to split the pension with different benefits, i.e. take one part at 60 and the 2014 onwards part taken at 67 if all the pension is in one pot.

Sorry to sound ignorant but any advice appreciated.

mania112

http://www.lgps.org.uk/lge/core/page.do?pageId=102034

this may be useful.

Also you need to check if you're going to exceed the annual allowance.

Due to the odd way pension contributions are calculated in Final Salary pensions, a pay rise can easily breach the allowable pension contributions.

jem16

Unclefoobar wrote: »

I am not sure whether I should transfer my pension or start afresh with a new LGPS pension with my new employer.

If you do transfer it will mean that your 18 years will be calculated on the higher salary as opposed to the lower salary so that's a good reason.

With the changes coming next year to the LGPS in 2014, I have read that I will not be able to split the pension with different benefits, i.e. take one part at 60 and the 2014 onwards part taken at 67 if all the pension is in one pot.

That appears to be correct. If you take it earlier than age 67, then your accrued benefits will not be actuarially reduced (assuming after normal retirement age) and the 2014 onwards part would be.

You would need to sit and work out the figures.

woolly_wombat

Unclefoobar wrote: »

I am currently employed by an organization funded by local council. I am a member of the LGPS and have accrued approximately 18 years worth of contributions. Current salary is £31500.

I will soon change jobs and will be directly employed by another local council, my salary will increase to £44100.

I am not sure whether I should transfer my pension or start afresh with a new LGPS pension with my new employer.

I had always hoped to retire at 60 albeit with a 25% penalty. Present age is 40

With the changes coming next year to the LGPS in 2014, I have read that I will not be able to split the pension with different benefits, i.e. take one part at 60 and the 2014 onwards part taken at 67 if all the pension is in one pot.

Sorry to sound ignorant but any advice appreciated.

An interesting conundrum.

On the face of it you wouldn't want to miss out on the uplift in your pre-move entitlement, but it looks as if you are correct about not being able to split the pot (which would result in different actuarial reductions being applied to pre/post April 2014 portions).

Presumably you will have looked at the worked examples in the following link, where pre-2014 final salary pension has been calculated for theoretical individuals based on average annual future salary increases of 1%, 2.5% and 4%:
http://www.lgps.org.uk/lge/aio/17704584

Some points to bear in mind:

1. If you leave your existing entitlement where it is then it will increase by CPI in deferral.
2. Do you expect your future salary to increase by more or less than CPI in the future?
3. Your pre April 2014 final salary pension will be calculated on your actual final salary, and if those annual increases are less than CPI then transferring your existing lgps might not be so smart after all.
4. On the other hand if you expect to rise through the ranks and attain a much higher salary eventually then you might regret not effecting a transfer!
5. Your SPA is currently projected to be 67, but do you really think this is unlikely to rise again in the future?

You have probably already pondered all of this.

It's not straightforward is it?

WW

Unclefoobar

woolly_wombat wrote: »

An interesting conundrum.

On the face of it you wouldn't want to miss out on the uplift in your pre-move entitlement, but it looks as if you are correct about not being able to split the pot (which would result in different actuarial reductions being applied to pre/post April 2014 portions).

Presumably you will have looked at the worked examples in the following link, where pre-2014 final salary pension has been calculated for theoretical individuals based on average annual future salary increases of 1%, 2.5% and 4%:
http://www.lgps.org.uk/lge/aio/17704584


Some points to bear in mind:

1. If you leave your existing entitlement where it is then it will increase by CPI in deferral.
2. Do you expect your future salary to increase by more or less than CPI in the future?
3. Your pre April 2014 final salary pension will be calculated on your actual final salary, and if those annual increases are less than CPI then transferring your existing lgps might not be so smart after all.
4. On the other hand if you expect to rise through the ranks and attain a much higher salary eventually then you might regret not effecting a transfer!
5. Your SPA is currently projected to be 67, but do you really think this is unlikely to rise again in the future?

You have probably already pondered all of this.

It's not straightforward is it?

WW

Not straightforward at all, I feel like I've got marbles in my head trying to find a similar example to my situation but thank you for the link.


The £44100 is the starting salary rising to around £49500 eventually.

I've got a meeting with my new employers HR next week so they may be able to give me more information specific to my situation.

:beer: