LGPS retirement help needed please!

MARTYM8`

My_perfect_cousin wrote: »

Not wishing to move away from the key pension queries - but with regards to redundancy / early retirement.

I had thought that redundancy payments were based on years of service rather than pension contributions. I have continuous service (that has been accepted by my new employer) since 01.09.81.

BTW, my pension runs from 01.09.83 as there is no record of pension contributions in my first post. (no luck with the tracing service)

I had therefore thought that, if I am made redundant, the payment would be based on service rather than pension matters.

I expect that any decisions that I make regarding my pension would impact on any voluntary retirement offer however.

I am not aware that either option is in the pipeline in my current post.

Yes - if you keep the pensions separate it could affect an offer of enhanced pension/early retirement if you are made redundant. But it depends what you are offered. Given the cuts still to come you cannot rule out redundancy in the next few years.

The problem is that what might be right depends on what may happen to you in the future - if you expect redundancy it might make sense to merge your pensons but generally given the big reduction in salary it would usually make more sense to keep the two pensions separate given you have lots of 85 year rule protection given your service pre 2008.

hyubh

My_perfect_cousin wrote: »

Additional info - My annual pay rate in my previous post was a fair bit higher than the full time rate for my present part-time post. I am not likely to be seeking a post that would pay at the rate of my previous post.

OK, that makes things clear.

1. It it doesn't matter when I meet the rule of 85 - so long as I meet it before age 60.

Depends what way you're looking at it... when the 85 year rule was abolished there were transitional protections put in place that meant some people still benefited, but only fully with respect to membership up to 31 March 2008. Have you looked at the discussion on the national LGPS site by the LGA?

http://www.lgps2014.org/content/rule-85

2. If I close my 'old' pension I would not be able to voluntarily retire and access my 'old' pension 'until at least age 60'.

Up until April this year, the earliest age at which an LGPS member could draw their pension without their employer's consent was 60. If you keep your deferred membership deferred, then that old rule will still hold for it, and new rule only apply to membership pertaining to your current job. However, the new rule doesn't mean current members are getting something 'for free' - it's just a liberalisation that (arguably!) allows people to be a bit silly and take a large actuarial reduction, whereas before they would have to wait until age 60.

3. If I combine the two pensions I would be able to access my pension benefits voluntarily from age 55 (with actuarial reduction) but all the pension earned before 01.04.14 would be calculated using my final salary in my 'new' post.

If you stayed long enough for it to become irrelevant, yes.

(I will need to ask him about the extent of actuarial reduction - whether it is from age 60, 65 or something else)

Different parts of the pension will potentially be different here.

My thinking is that I would continue in my new part time post after mid autumn 2014 - after potentially leaving the LGPS - it is likely that my new employer would allow this.

In that case you should investigate a 'flexible retirement' - specifically, whether (a) your current employer will allow one and (b) if so, whether they would allow one if you combined your memberships first:

http://www.lgps.org.uk/lge/core/page.do?pageId=102186

Note that the decision to give a flexible retirement or not rests with the employer not the pension administrator (reason being, allowing one may cost the employer a 'strain charge' to the pension fund).

I was a bit phased by the 'at least 60' comment by the pension person - and my fear that the pension rules may change and make access to my pension less favourable in the future.

It's the government that set the rules of the LGPS, not a pension admin assistant on £20K or whatever. If the admin assistant is a prudent person he or she will not try and second guess the government however!

BTW - is it likely to be possible for me to leave the pension scheme in autumn 2014 but continue in my new post? Would I be obliged to open up another new pension?

Occupational pensions aren't compulsory - even if you get auto-enroled into a fresh membership you could opt out. (But why would you...?)

hyubh

My_perfect_cousin wrote: »

I expect that any decisions that I make regarding my pension would impact on any voluntary retirement offer however.

The pension comes in because a voluntary redundancy of someone between 55 and their normal retirement age in the LGPS will involve an automatic early retirement, with the employer paying a 'strain charge' to the pension fund to prevent an actuarial reduction (there will be no choice in the matter). As such, bringing on board 30 years membership could make letting you go for the next few years very expensive. (Same thing applies to the flexible retirement possibility I raised in my previous post.)

System

Hi

I had thought that redundancy payments were based on years of service rather than pension contributions. I have continuous service (that has been accepted by my new employer) since 01.09.81.


Redundancy is from your job. Whether you are in the LGPS or not you can still be made redundant.

Redundany with LGPS membership, over 55, brings your pension into payment automatically.

As far as I am aware you wull have only 1 lgps pension record made up of the previous and current schemes.

My_perfect_cousin

(Up until April this year, the earliest age at which an LGPS member could draw their pension without their employer's consent was 60.)

The pension guy said that I would not be able to access my 'old' pension until 'at least 60'

(If you stayed long enough for it to become irrelevant, yes.)

I will be 55 next summer

(It's the government that set the rules of the LGPS, not a pension admin assistant on £20K or whatever. If the admin assistant is a prudent person he or she will not try and second guess the government however! )

Fair enough - It's very hard to know what to do though. It seems that I either act on the information that I have (and am getting) with the full knowledge of the impact... or wait with the understanding that I may or may not regret not acting now. The key problem is that I only have until mid autumn 2014 to be able to exercise the option of combining the pensions ... or to miss that particular boat.

thanks again folks

hyubh

johndough wrote: »

Redundancy is from your job. Whether you are in the LGPS or not you can still be made redundant.

Redundancy from the job is true, however 'continuous service' may mean continuous local government service (so long as the current employer knows about the previous employment). A concept of 'local authority service' that doesn't distinguish between specific employers can extend beyond pensions into general employment rights.

As far as I am aware you wull have only 1 lgps pension record made up of the previous and current schemes.

Only if he chooses to combine...

hyubh

My_perfect_cousin wrote: »

(Up until April this year, the earliest age at which an LGPS member could draw their pension without their employer's consent was 60.)

The pension guy said that I would not be able to access my 'old' pension until 'at least 60'

Well, yes - that's what I was clarifying. Up until April this year the earliest a member (deferred or active) could draw an LGPS pension without their latest LGPS employer's say-so was 60; this is now 55, however if you kept your deferred pension uncombined and so deferred the old rule would still apply to it. Nonetheless, just because matters have been liberalised for membership coming under 2014 scheme rules doesn't mean it makes sense to make use of them.

(If you stayed long enough for it to become irrelevant, yes.)

I will be 55 next summer

I was merely referring to the standard best-of-last-3 protection becoming irrelevant.

It's very hard to know what to do though. It seems that I either act on the information that I have (and am getting) with the full knowledge of the impact... or wait with the understanding that I may or may not regret not acting now.

The administrator cannot give 'advice'; they can merely report the facts of the sitation. That said, it is highly unlikely for the government (or in a private sector DB scheme, the scheme trustees) to retrospectively change normal pension ages for historic membership. What they can easily do however is change normal pension ages for membership going forward... but in the grand scheme of things any such shenanigans won't affect you much, given your age.

The key problem is that I only have until mid autumn 2014 to be able to exercise the option of combining the pensions ... or to miss that particular boat.

In your position, I would (a) ask the pension team outright for clarification of where you stand with the 85 year rule, citing the LGA guidance (a URL would do) and the notion of 'tapered' protection, and (b) ask your current employer's HR about the possibility of flexibile retirement in x number of years, and whether combining previous membership would affect their decision.

ellie-g

Hi All
Please can you help? I am in the old (1995) NHS pension scheme. I would like to retire in October this year at 58 as I am finding the job increasingly stressful. My early retirement penalty for going at 58 instead of 60 would be a reduction in pension of 10% and for the lump sum 7%.

Is it better to use sell some of my investment trusts to fund the 2 years and wait until 60 before taking the pension OR is is better to take pension and keep a hold of my shares which earn me about 3% per annum in dividends?

By the way if I take my pension at 58 it will be 12K and I will have about 3.5K in divis if I also reinvest my lump sum into the investment trusts. I have paid off the mortage on my tiny house, I am single with no children.
Thanks All

System

MARTYM8` wrote: »

I would personally seek independent advice. I wouldn't always trust the admin staff working for the pension fund - its not in their interest to maximise your pension.


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I was an LGPS officer, I got paid whatever the member chose, and there is a duty of care to see that members get the best, which meant querying employer submissions on pay.

As to ADVICE, you cannot get genuine advice, paid for or otherwise. To give advice you would want to know the DATE of Death and years spent in care to be able to clarify the best option.

I did give a member 2 sets of figures to show what the first 10 years were worth in money terms. He had a terminal illness and wanted to leave the maximum benefit for his family.

So while I didn't give advice, I gave the best information I could to suit the members needs. He was able to make his own decision.

Oh! and quite often we had IFA's ringing in and needing the scheme explaining to them.

woolly_wombat

Nick_C wrote: »

In your position, I would be tempted to keep the two pensions separate. You old pensions will be indexed linked to CPI, and is likely to rise faster than your salary.

I wouldn't combine them. Some people even deliberately opted out of the lgps for just 1 month when the new rules came in this April, and then opted back in to keep separate benefits. See:
https://forums.moneysavingexpert.com/discussion/comment/64671942#Comment_64671942

If you combine then you will be yoked to your new final salary, unless you leave within 3 years in which case you risk remaining jobless due to age discrimination. Keeping your memberships separate is a simpler solution and you will be able to take your first pension separately, without incurring a reduction in your second pension.

WW