Lgps active member with deferred pension age 56 made redundant pension offerred reduc

macca789456

Hi just wondered if this looks right. I have just been made redundant after 10 years part time with the council. My last 5 years they put me on a contract so i joined the pension scheme.Ihave a deferred pension with lgps of 10 years service from 1976 to 1986 I chose not to combine both pensions as my deferred one allows me to retire at 60 and has better pension to lump sum conversion rates 18 to 1 as 12 to 1 I was told by pensions that if i combined them as i was being made redundant i would keep my deferred pension rights.After serving my 10 weeks redundancy notice i have today recieved a letter telling me that my total payments are a lot less combined than my last deferred pension statement figures. There are no calculations given only end figure ammounts. When i phoned up for an explanation i was told it was because i had combined them and chosen to keep the 18 to 1 conversion. The figures for deferred pension 29/04/2014 are annual pension 2086 lump sum 6259 and now the best figure offerred is standard pension 1645 lump sum 4488 and that includes my small 5 year pension.They now are also saying that my maximum lump sum allowed is only 5517 if i choose to convert some of my pension.(52 pounds max allowed). This makes me much worse off and getting made redundant. Any help much appreciated. Also they tell me that i do not qualify for rule of 85 protection as i left in 1986 and rule of 85 only came in in 1998.

quotememiserable

Well, first, I think the reason you don't qualify for rule of 85 isn't to do with dates, its because your age plus you pension years comes to 66. It has to come to 85 for that rule to come into effect.
I aslo think the illustrations would have been based on you taking them at normal retirement age, so the benefits now are being reduced because your taking them early, so they have to pay you for longer. Armed with this you might like to ask them again.

macca789456

Hi thanks for the reply deferred pension years count towards rule of 85. redundancy after age 55 says pension can be taken without reductions.

Drp8713

As you left before 1/4/98 you wouldnt have had 85 year rule (age plus service) protections as such, your benefits would have just been payable in full when you reached the date where you were a. At least 60 and b. Had at least 25 years service and/or notional service.

The £17.76 or £17.92 conversion rate (male/female married and 60) is better than the 12 to 1 but your maximum would have not been the now standard 25% but based on your service, I think it used to be called the IR maximum but it is a bit before my time im afraid. But likely less than the maximum now.

im not sure why they are giving you the old conversion rates if you have now combined, as all of your benefits will now fall under the later regulations

if you are over 55 and made redundant the employer will pay the costs so it will not be that.

Is your current full time equivalent salary lower than your salary when you left the first job plus inflation? If so that is likely why the benefits are less. Might still be a good deal as you are getting them 4 years early and that would usually cost you 20% of the pension

hyubh

I was told by pensions that if i combined them as i was being made redundant i would keep my deferred pension rights.

That makes no sense whatsoever to me. Otherwise, what Drp8713 said...

macca789456

Hi thanks very much for your reply i understand what you say about the 17.92 conversion rate. As the pensions could now be combined nothing signed as yet, it looks to me as if they are choosing the best option for them on pension and the best option on lump sum, if they use the new 2014 regs i would not have a lump sum conversion choice available i dont think.It would be a lot easier if they explained things better. My final salary for 1986 was 7459 and my part time salary at full pay would be 13955.Do you think i would be offerred to convert pension into lump sum under the new scheme if i decied to go that way. Many thanks again

macca789456

Hi hyubh i asked if i could join my two lgps pensions one deferred and one active when i was made redundant I was told if agreed i would get to keep my deferred pension payable as it was seperate to my active one without reductions as i was aged 56 so i applied and they have said yes Now i have being given final figures with no explanation as to how they have arrived at them and they are no where near my final statement for april 2014 bearing in mind they said no reductions because of redundancy many thanks but still very confsued

Drp8713

macca789456 wrote: »

Hi hyubh i asked if i could join my two lgps pensions one deferred and one active when i was made redundant I was told if agreed i would get to keep my deferred pension payable as it was seperate to my active one without reductions as i was aged 56 so i applied and they have said yes Now i have being given final figures with no explanation as to how they have arrived at them and they are no where near my final statement for april 2014 bearing in mind they said no reductions because of redundancy many thanks but still very confsued

From this it looks like that you have not combined, they have just agreed to let you have the deferred one payable on compassionate grounds with reductions. That would make sense as to why you were beng offered the old conversion rates and why the pension was around 20% less.

They would have to be silly to let you combine now anyway given that they would then have to pay the extra costs.

macca789456

Hi drp8713 thanks for your reply.I have just spoken to pensions department and they have e mailed me this.
Good morning.

As we have discussed over the phone, when a member has a deferred benefit the value is increased each year to keep it in line with inflation. If a deferred period of service is then joined to a later period of service, the value of the deferred benefit is not retained. Instead the earlier period of service is added to the 2nd period of service and the benefits are calculated when the second period of service finishes using the final pensionable pay in the second employment.

In relation to your wife's service to 06/04/1986 her deferred benefits were calculated as follows:
Pension 8 years 263 days x 1/80 x £7354.91 = £801.74 at date of leaving
x 2.6024 (Pensions Increase) = £2086.45 at April 2014
Lump Sum 8 years 263 days x 3/80 x £7354.91 = £2405.21 at date of leaving
x 2.6024 (Pensions Increase) = £6259.32 at April 2014

When this service is joined to the second period of employment the benefits attributable to that service are calculated at the new date of leaving (10/07/2014) using the final pay at that date (£13725.00).

Pension 8 years 263 days x 1/80 x £13725.00 = £1496.12 at date of leaving
Lump Sum 8 years 263 days x 3/80 x £13725.00 = £4488.35 at date of leaving
No Pensions Increase would be applied until the April following the date of leaving.

I trust that this has clarified the matter for you.


i do not think this seems right as they have not included or mentioned my other later period of service with the lgps 01/10/2009 till 10/07/2014 and also i asked them to explain why i can only convert 52 pounds of pension into lump sum. They have said that i can have them combined and that i am leaving on redundancy but nothing has been put in writing saying it is a redundancy quote.I was told i would keep my preserved rights but this does not seem to be case. Any help on this matter would be much appreciated

mgdavid

I'm even more confused now - is Macca male or female? Is it his pension or his wife's, as stated in the latest post?

hyubh

i do not think this seems right as they have not included or mentioned my other later period of service

Read it again - the second period is mentioned in the final sentence of the first paragraph ('...the 2nd period of service'). However, the numbers in the second paragraph just relate what becomes of the now not-deferred membership in order to provide you/your wife with a direct comparison.

i asked them to explain why i can only convert 52 pounds of pension into lump sum.

Combining will still mean the pre-2008 membership produces benefits under the pre-2008 scheme terms, i.e. 1/80 pension + 3/80 standard lump sum. To increase the lump sum in that situation, you could do so using the current commutation rate (12/1) up to a statutory (i.e., non-LGPS specific) maximum.

They have said that i can have them combined and that i am leaving on redundancy

The response you have quoted does not say you/your wife can combine memberships - rather, it states the facts of the matter were you able to. Given the second membership began over 12 months ago, whether you/your wife can or cannot will be down to the latest employer. (And if you/your wife is employed by the fund's administering authority, and pensions admin has been kept in-house, then it will be HR rather than Pensions who decide.)

I was told i would keep my preserved rights but this does not seem to be case.

Um, the response says directly that were the memberships combined, that would not be the case: 'If a deferred period of service is then joined to a later period of service, the value of the deferred benefit is not retained.' 'Preserved rights' is just a synonym (not very common in the LGPS world) for 'deferred rights' or 'deferred benefits'.