LGPS 2014 - additional years contract

woolly_wombat

I took out a contract to purchase LGPS additional years prior to 1 April 2008.

I spoke to my Pensions Manager a few months ago and was told that no provision was being made to fund additional years post 1 April 2014 other than by clawback from the lump sum.

Do any LGPS 2014 experts 'in the business' know whether this is still the case?

I am currently thinking of purchasing extra pension via ARCs and am trying to decide how to proceed, given that LGPS is moving from 1/60 final salary to 1/49 career average.

I am wondering whether to cancel the additional years contract from 31 March 2014.

WW

woolly_wombat

Of course it's entirely possible that I have misunderstood, but I'd like to plan ahead.

Thanks in advance...

WW

Pixieboy

Hi WW,
The last I heard all additional contribution contracts, so added years, ARCs, and additional survivor benefits types, (but not AVCs which would carry on) would cease on 31st March 2014 and members would be credited with whatever had been purchased at that time.

In the draft transitional provisions regulations that were consulted on
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/175654/Final_LGFSR__2_.pdf
Draft Regulation 15
this was the case and there would be the option of starting up on a new basis.
It is not yet clear what will be the final outcome as it appears that discussions are still ongoing on a number of areas at a central level.
It will probably be worth knowing what the position will be before making any decision to stop payments...

woolly_wombat

Pixieboy wrote: »

The last I heard all additional contribution contracts, so added years, ARCs, and additional survivor benefits types, (but not AVCs which would carry on) would cease on 31st March 2014 and members would be credited with whatever had been purchased at that time.

In the draft transitional provisions regulations that were consulted on
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/175654/Final_LGFSR__2_.pdf
Draft Regulation 15
this was the case and there would be the option of starting up on a new basis.

Thanks for the link Pixieboy, that's very interesting and much more radical than I was anticipating.

WW

gardenia101

I expect this will affect me to - & I knew nothing about this possible change

I haven't heard anything about it from my local GMB union reps when they did their pensions roadshow last year, & there was no mention of it in the last newsletter from my LGPS pension fund. And I was only patting myself on the back in the summer for sorting out buying some ARCs :rotfl:. Oh well, I suppose an extra 10 months payments in will help buy an extra tin of beans each month.

I'm also not clever enough to understand exactly what "no provision was being made to fund additional years post 1 April 2014 other than by clawback from the lump sum" means so if someone could explain it in simple terms I'd be very grateful.

What I imagine it will mean for me is that I'll no longer be able to afford to pay for as many years additional pension as I do now.

As an aside - my GP was very reluctant to sign the form to enable me to buy ARCs & I had to discuss it with him for over 20 minutes (which is the equivalent of 3 appointments). The form asked if "X was likely to remain in reasonable health until retirement age" which he thought was too vague, & was worried it would come back to haunt him if I were to retire on ill health grounds before I'm 65 (66, 67, 67 - think of a number, double it blah blah). I wonder if the whole process of buying ARCs will be made much more difficult, as well as increasing in expense?

hyubh

gardenia101 wrote: »

I expect this will affect me to - & I knew nothing about this possible change

I haven't heard anything about it from my local GMB union reps when they did their pensions roadshow last year, & there was no mention of it in the last newsletter from my LGPS pension fund.

You are assuming central govenment had these details decided upon long ago. Alas, but you are wrong...

And I was only patting myself on the back in the summer for sorting out buying some ARCs

It may still be the case that existing ARC contracts continue - the final transitional regs aren't out yet, and the government has backtracked on other changes.

I'm also not clever enough to understand exactly what "no provision was being made to fund additional years post 1 April 2014 other than by clawback from the lump sum" means

Historically there was a facility to buy extra years membership. This is different from an ARC, which concerns purchasing an amount of pension that won't vary depending on your final salary. When the option to take out a new added years contract was removed, those who already had one could continue, so the bit you quote is concerning that. Or in short: it's not relevant to you, since you have an ARC not added years contract.

woolly_wombat

gardenia101 wrote: »

I expect this will affect me to - & I knew nothing about this possible change

And I was only patting myself on the back in the summer for sorting out buying some ARCs :rotfl:.

I was warned that there might be a problem with added years but have also purchased ARCs and had no idea that both added years and ARC contracts could be terminated on 31 Mar 2014.

WW

woolly_wombat

gardenia101 wrote: »

What I imagine it will mean for me is that I'll no longer be able to afford to pay for as many years additional pension as I do now.

As an aside - my GP was very reluctant to sign the form to enable me to buy ARCs & I had to discuss it with him for over 20 minutes (which is the equivalent of 3 appointments). The form asked if "X was likely to remain in reasonable health until retirement age" which he thought was too vague, & was worried it would come back to haunt him if I were to retire on ill health grounds before I'm 65 (66, 67, 67 - think of a number, double it blah blah).

Very interesting and highly relevant IMHO.

Also, I am really not at all happy that existing added years and ARC contracts could be terminated on 31 Mar 2014. As far as I am concerned these are legal agreements that I entered into in good faith.

WW

woolly_wombat

hyubh wrote: »

You are assuming central govenment had these details decided upon long ago. Alas, but you are wrong...



It may still be the case that existing ARC contracts continue - the final transitional regs aren't out yet, and the government has backtracked on other changes.



Historically there was a facility to buy extra years membership.

Do any LGPS experts know whether existing additional years and ARC contracts will continue from 1 April 2014, or are they still expected to be cancelled?

I am also concerned that there could be no facility to purchase additional survivor benefits as with current ARCs.

WW

amandajc

I too would be very interested in hearing from anyone who can cast light on this. I recently asked my workplace pension officer about paying into the ARCs system as I am going to reduce my working hours in January and want to protect my pension. He issued me with the relevant forms (which I haven't filled in yet as I'm still debating whether to go for ARCs or AVCs) but nothing was said about what might happen in April. I just presumed that things would continue much the same (although perhaps with a greater cost/reduced benefit attached?).

woolly_wombat

amandajc wrote: »

I too would be very interested in hearing from anyone who can cast light on this. I recently asked my workplace pension officer about paying into the ARCs system as I am going to reduce my working hours in January and want to protect my pension. He issued me with the relevant forms (which I haven't filled in yet as I'm still debating whether to go for ARCs or AVCs) but nothing was said about what might happen in April. I just presumed that things would continue much the same (although perhaps with a greater cost/reduced benefit attached?).

I understand that there are moves afoot to prevent members of the LGPS from taking all of the AVC pot as the 25% tax free lump sum after 31 March 2014.

Would any LGPS experts like to comment?


WW