Transfer query from LGPS to Civil Service Nuvous

draker

Hello,

I am contemplating transferring my deferred LGPS pension into the Civil Service Nuvos scheme. I have received the following valuation which suggests I would be better off transfering my pension, but should I be aware of any pitfalls?

The transfer value amount is £60,478.22 which equates to a yearly pension in Nuvos of £7,033.38 compared to £5,503.21 in LGPS plus an automatic lump sum of £8,836.94. I gather with the Nuvos scheme there is no automatic lump sum. The value of the benefits by transferring into Nuvos will buy me 13 years and 187 days service instead of 12 years 207 days service.

I joined the LGPS in August 2000 so I think both schemes have the retirement date set as 65. Is this correct?

My starting salary in the new job is also slightly higher than my old LGPS job. I understand that the final salary element will be frozen in Nuvos and my pension built up in the new job will be paid on a career average basis.

Overall based on the figures quoted am I better off transfering or would it be better to defer my benefits built up in the LGPS scheme?

On paper it looks better to transfer, but it's the lump sum in the LGPS that is confusing me.

Any advice would be gratefully received.

Thanks

hyubh

draker wrote: »

On paper it looks better to transfer, but it's the lump sum in the LGPS that is confusing me.

A Club transfer from a final salary scheme (which is what this is) will maintain a final salary link, notwithstanding the fact Nuvos itself is career average. Further, the intention of a Club transfer is that the service credit in the new scheme will be equivalent to the membership given up in the old one were you to have started in the new job on the same rate of pay you left the old job on - so in your case that means a slightly higher service credit in Nuvos given the lack of an automatic lump sum.

As such, the main thing to consider is less what the transfer gets you now, than what will happen in the future: specifically, left deferred, your LGPS pension's value will increase by CPI every year. Transferred however, it will produce a pension based on the (whole time equivalent) salary in your current job. So... has your rate of pay gone up, stayed the same, or gone down? And what is likely to happen to it in the future...?

draker

hyubh wrote: »

A Club transfer from a final salary scheme (which is what this is) will maintain a final salary link, notwithstanding the fact Nuvos itself is career average. Further, the intention of a Club transfer is that the service credit in the new scheme will be equivalent to the membership given up in the old one were you to have started in the new job on the same rate of pay you left the old job on - so in your case that means a slightly higher service credit in Nuvos given the lack of an automatic lump sum.

As such, the main thing to consider is less what the transfer gets you now, than what will happen in the future: specifically, left deferred, your LGPS pension's value will increase by CPI every year. Transferred however, it will produce a pension based on the (whole time equivalent) salary in your current job. So... has your rate of pay gone up, stayed the same, or gone down? And what is likely to happen to it in the future...?

Thank you for your reply.

My salary has increased marginally in the new job by approximately +£500. The opportunities for promotion will be limited though. Are you saying that any transfer in pension will be paid at my final salary on leaving the Civil Service or based on the final LGPS salary when paid in now?

Also, as I was a paid up member of the LGPS from August 2000, will the contributions paid up until 2008 allow me to claim this pension when I am 60? This might be an important consideration.

Thanks

draker

draker wrote: »

Thank you for your reply.

My salary has increased marginally in the new job by approximately +£500. The opportunities for promotion will be limited though. Are you saying that any transfer in pension will be paid at my final salary on leaving the Civil Service or based on the final LGPS salary when paid in now?

Also, as I was a paid up member of the LGPS from August 2000, will the contributions paid up until 2008 allow me to claim this pension when I am 60? This might be an important consideration.

Thanks

Sorry, I forgot to say that I am now 38. Not sure if this affects whether you are eligible to drawn down any pre 2008 service credit in LGPS at 60.

Thanks.

draker

draker wrote: »

Thank you for your reply.

My salary has increased marginally in the new job by approximately +£500. The opportunities for promotion will be limited though. Are you saying that any transfer in pension will be paid at my final salary on leaving the Civil Service or based on the final LGPS salary when paid in now?

Also, as I was a paid up member of the LGPS from August 2000, will the contributions paid up until 2008 allow me to claim this pension when I am 60? This might be an important consideration.

Thanks

Sorry, I forgot to say that I am now 38. Not sure if this affects whether you are eligible to drawn down any pre 2008 service credit in LGPS at 60

Thanks

hyubh

draker wrote: »

Are you saying that any transfer in pension will be paid at my final salary on leaving the Civil Service

Yes.

Also, as I was a paid up member of the LGPS from August 2000, will the contributions paid up until 2008 allow me to claim this pension when I am 60?

If you left your LGPS pension where it is, 60 would be the earliest you could draw it with a reduction - your normal pension age in the LGPS will be 65 (http://www.lgps.org.uk/lge/core/page.do?pageId=100791).

This might be an important consideration.

True enough - transferring in will transfer in to the Nuvos normal pension age. That said, as Nuvos is the same as the LGPS here (assuming you transfer in before 2015), that factor doesn't actually affect things in your particular case.

draker wrote: »

Sorry, I forgot to say that I am now 38. Not sure if this affects whether you are eligible to drawn down any pre 2008 service credit in LGPS at 60

It doesn't, and 2008 doesn't come into it either (LGPS normal retirement ages were last fiddled with in 2006, though not in a relevant way for yourself).

Drp8713

hyubh wrote: »

It doesn't, and 2008 doesn't come into it either (LGPS normal retirement ages were last fiddled with in 2006, though not in a relevant way for yourself).

I think what he means is without reductions, he joined in 2000, so as that is before 1/10/2006 he will have 85 year rule protections.


He's 38 now so will be 60 in 2036 ish, so although hes a group 3 member, his pre 2008 service will be based on his CRA.


He will be 60 with more than 25 years of service and notional service so he will be able to have his pre 2008 service unreduced from 60 would he not?

cattermole

This is one of the flowcharts for 85 year rule

http://www.wmpfonline.com/NR/rdonlyres/1A3D83AA-1AE9-4A4B-BD8E-80881D3795B1/0/85yearruleflowchart.pdf

hyubh

Drp8713 wrote: »

He will be 60 with more than 25 years of service and notional service so he will be able to have his pre 2008 service unreduced from 60 would he not?

Ah yes, I see what you mean.

draker

Thanks for the replies.

I have had a look through a pension statement dated 31 March 2012. The statement states that in the 80th scheme my pension is calculated as £2936.12 Can I assume that this can be taken without reduction if I retire before 65, but any pension built up in the 60th scheme, currently £2056.74, would be reduced if I decided to retire before 65?

Based on these calculations am I correct in thinking that if I was to leave my pension in the LGPS scheme, I would have the option of retiring at 60 and that my pension would be paid at £2936.12 + £1542.55 (£2056.74 less 25%) making the total pension £4478.67?

I'm minded to leave the pension within the LGPS as this will give me an option to retire early, where as transfering the pension into Nuvos doesn't.

Are there any other benefits I haven't taken into consideration? For example, is the accrual rate better in Nuvos compared to the LGPS.

Sorry for all the questions and thanks in advance for your responses.

Thanks

draker

Any further input on this most welcome.

I'm wondering whether to keep my LGPS where it is as this gives me an option to retire at 60 with only a proportion of the pension reduced
before retiring at 65.

Or am I likely to get a better longer term accrual rate by moving the value into Nuvos?

Thank you in advance for your feedback.