Compulsory Redundancy and pension question

RED1

I currently work in local government and am being made redundant shortly.

My question is this:

I will receive a redundancy payment of approx 6 months salary. In addition I am able to access my pension accrued with my current employer. (I have other pensions from previous employment I cannot access yet)

However, as I am likely to take up a new job soon (although not so soon as to interfere with the redundancy payment), I don't want to draw down my pension.

My HR people are telling me that when my redundancy starts I automatically become a pensioner in their eyes and the pension payments kick in. If this happens and I take up another post in local government within 6 months, I will have to pay significant tax on the pension lump sum plus the annual pension payments will stop. I'm told I will not be able to reclaim that pension when I eventually retire in say 10 years time.

Can I defer the pension from my current employment and draw it down in 10 years time rather than be forced to take it now, which is what HR are telling me?

Ideally what I want to do is leave my current post and receive the redundancy payment, keep my pension for later when I decide to retire, and start a new local gov't post in which I will pay into another pension fund, or continue paying into my current one if that's possible.
I'm happy for a break in continuity of local government service so I can keep the redundancy payment, but the pension issue is making me uncertain.

thanks

Drp8713

No, if you are over 55 it has to come into payment.

Can you not look for a job outside of LG so there is no abatement? Then you can get your full LG pension and full salary with your new employer?

RED1

Hi - thanks for the quick reply. Am a youngster at only 51 years of age. Does that make a difference? I guess probably not

I was actually surprised I would be able to access pension at 51, but that is indeed the case .......

Yes it would be great if I walked into a non LG job - trouble is I'm about to be offered another council post elsewhere.

xylophone

https://shareweb.kent.gov.uk/Documents/KentPensionFund/Publications%20and%20Factsheets/Redundancy%20and%20the%20LGPS%20factsheet.pdf

Have you been given a fact sheet like this?

Drp8713

If you are under 55 i dont see why your pension would come into payment. Unless you were a TUPE from the LSC or something it should just be deferred

jem16

RED1 wrote: »

Hi - thanks for the quick reply. Am a youngster at only 51 years of age. Does that make a difference? I guess probably not

I was actually surprised I would be able to access pension at 51, but that is indeed the case .......

Where are you based? In Scotland you can indeed access the LGPS on redundancy but I believe in England it is age 55.

Sanchsoot49

I'm think maybe if you work in public sector ie. civil service if you started before a certain date you can take your pension from age 50.

jem16

Sanchsoot49 wrote: »

I'm think maybe if you work in public sector ie. civil service if you started before a certain date you can take your pension from age 50.

I work in the Public Sector and cannot take my pension till age 55. My pension was started in 1977.

Each scheme has different rules.

Andy_L

Was it a redundancy or an early retirement package that is being offered?

RED1

Andy_L wrote: »

Was it a redundancy or an early retirement package that is being offered?

Its a compulsory redundancy package and yes I'm in Scotland where the rule is that I can access the pension at 50 so long as I hit certain criteria, which I do.

hyubh

RED1 wrote: »

However, as I am likely to take up a new job soon (although not so soon as to interfere with the redundancy payment), I don't want to draw down my pension.

Whatever genius in central government wrote the scheme regulations didn't think of that possibility, i.e., where a redundancy causes an early pension becoming due and the recipient does not want to draw it. That said, usually there's little point in not drawing it - so long as there's a bit of a gap, and the new pay is less than the old pay, there shouldn't be any abatement issues and the retiree will be free to accrue a second (smaller) LGPS pension with the new job. That said, the specifics will be down to the policy of the administering authority (they have to have one).

My HR people are telling me that when my redundancy starts I automatically become a pensioner in their eyes

An early pension is due according to the scheme rules, not your HR. Indeed, HR would likely prefer it *not* being due, since the early pension is being paid for by the employer.

If this happens and I take up another post in local government within 6 months, I will have to pay significant tax on the pension lump sum plus the annual pension payments will stop.

Why would you pay tax on the 'tax free' lump sum? And are you really sure about the pension stopping? If you haven't already, I think you need to get in touch with the scheme administrator - if the administering authority is your employer, then Pensions specifically rather than HR.