LGPS retirement help needed please!

My_perfect_cousin

Thanks all.

Regarding the last post. As my thinking is to leave the pension scheme within 2 years, I would benefit from the higher pay in my previous job. If I was to leave the scheme I would not plan to leave my new job.

From the various excellent advice I realise that I don't know enough about the various elements of the pension schemes prior to and after 01.04.14. I will need to find out more.

I think that key to my decision will be two matters. One of which can only be answered be me (maybe, at least) and the other would benefit from views from this (fine) forum.

The first question is whether I am likely to need to draw my pension before 60. (I am thinking that I will be able to access my 'old' pension at that date - actuarily reduced or not). This is one for me!

The second is whether the current rules regarding access to my 'old' pension could change, potentially removing my ability to access it at 60 or changing the benefits available from it???

thanks again to everyone for your time and help - I'm still warmly welcoming any thoughts on the subject please!

Teaandscones

You need to be careful if you do combine as to when you can take your pension without actuarial reduction. At the moment, your service up to 31st march 2008 will satisfy the 85 year rule and thus not be subject to actuarial reduction if you take it at 60 whereas service since then will be. I would check with the LGPS administrators whether that would still be the case if you combine, or whether the years transferred are based on the pension age of 65 without rule of 85 protections?

The main advantage of combining is that you get the pension paid after redundancy aged 55 or older without actuarial reduction. (it makes no difference to redundancy pay). However, if you opt out in 2015, this is probably a very small window.

You are in danger of being too clever by combining and then opting out. I would be inclined to bank the old deferred pension by leaving it separate but continue to contribute with the new pension. The new CARE scheme of 1/49ths is remarkably generous for someone in their mid 50's.

System

Hiya

By September you will have your Annual Benefit Statement.

Your amounts shown will tell me a lot about your circumstances.

Whether your (ex) employer (not the Administering Authority) gave the best of the last 3 years pay when you left. They are obliged to do so.

You may get 2 statements a DB and a Current, most if not all the answers will be there.


w w w warwickshire_ gov uk/pensionguides

the above pension guide covers reductions in pay

MRMX9

johndough wrote: »

Hiya

By September you will have your Annual Benefit Statement.

Your amounts shown will tell me a lot about your circumstances.

Whether your (ex) employer (not the Administering Authority) gave the best of the last 3 years pay when you left. They are obliged to do so.

You may get 2 statements a DB and a Current, most if not all the answers will be there.


w w w warwickshire_ gov uk/pensionguides

the above pension guide covers reductions in pay

A lot of LGPS administrators provide on line records now so you can check your benefits and most recent statement letter at any time. Most pension statements are issued at the end of July – so any statement from your old (and new) employer is probably imminent.

Generally your final salary pension is based on the best pay of last 3 years – but if you took a pay cut (e.g. due to restructuring) in the previous 13 years they can take the best 3 consecutive year average over that entire period. You actually also get the CPI uprating from the final year of that 3 year average until you take the pension – which can be worth quite a lot. Its explained here.

http://www.wiltshirepensionfund.org.uk/reductions-in-pensionable-pay.pdf

So the OP needs to ask if he transfers his previous pension to his new employer will that protection continue in his combined benefits – because if he does it would make sense to transfer his benefits as he would get the benefits of transferring plus keep the benefits of his old job salary - as at 54 he is within 13 years of retiring. It may not if he chose to move roles/take a pay cut voluntarily – but I don’t know the circumstances.

And its only going to get more complicated as they will probably keep changing the scheme every few years to make it cheaper!

This is why he needs independent advice – because even working out your final salary in the LGPS requires complex study and calculations.

My_perfect_cousin

thanks again all

regarding the last very helpful message

Yes - I moved voluntarily. I had not considered that my new employer would continue to recognise my pay in the final year of my previous post for pension purposes beyond the 3 years - I will ask - just in case. (whilst the 2 employers are part of the same pension scheme with my old employer, the two employers are different)

I have now asked for a pension statement relating to my final year in my previous post.

all other comments / advice etc warmly welcomed!:)

MRMX9

My_perfect_cousin wrote: »

thanks again all

regarding the last very helpful message

Yes - I moved voluntarily. I had not considered that my new employer would continue to recognise my pay in the final year of my previous post for pension purposes beyond the 3 years - I will ask - just in case. (whilst the 2 employers are part of the same pension scheme with my old employer, the two employers are different)

I have now asked for a pension statement relating to my final year in my previous post.

all other comments / advice etc warmly welcomed!:)

You might as I suggested want to check if there is an online records system for your new/old LGPS benefits – rather than wait for them to send you details in the post. Given you are in the same fund both records for your new and old job will normally be accessible via one login.

Almost all funds now use the altair self service system – here is a link for example for the Staffordshire fund. You just complete your name, NI number and date of birth and they send you an activation key by email or post. If you do a google search for your fund and online records it should give you the link:

http://www.staffspf.org.uk/Calculator/Self-Service-Calculator.aspx


If nothing else its useful to be able to check your records at anytime because transfers can take months (often a year) to process. You can also do online projections, check death benefits/beneficiaries and generally feel more confident that your pension exists and all is correctly recorded.

Because things from personal experience can go wrong – when I did a transfer my records just disappeared between the two bodies (different fund same pension administrator) and it was only through the axise online system I realised the transfer hadn’t been properly actioned.

Good luck - and welcome to the delights of LGPS rules. Simple they are not!:D

MRMX9

woolly_wombat wrote: »

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


WW

That’s something new I have learned.

I assumed you could only leave LGPS benefits deferred if you changed jobs/employer – I didn’t realise you could opt out for a month, leave benefits deferred and then rejoin within the same job leaving the old/new benefits separate. I assumed they would discourage that now – given that CPI upratings on deferred benefits are much more generous than 1% pay rises on your current final salary. Clearly you risk losing ill health/early retirement benefits – but that’s always a risk with deferred LGPS pensions.

Now we are moving to career averages with a CPI uplift (we hope!) this becomes less of an issue for younger people – but for those with lots of service (particularly pre 2008) that could potentially increase your pension substantially. Cos CPI vs 1% over 10 years could potentially increase your pension by 15-20%.

hyubh

Almost all funds now use the altair self service system

Ha, that's what one particular supplier would like! In reality said supplier has managed to lose a number of contracts recently, though some form of online self-service is usually a feature of newer systems yes.

kidmugsy

ellie-g wrote: »

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?

I'll assume that you have also got a suitable emergency cash fund of, say, 3-6 months outgoings. (If not you might like to establish one by selling some ITs and putting the proceeds into interest-bearing current accounts).

If you choose not to draw the pension early then the avoidance of the actuarial reduction pays the equivalent of a virtually risk-free 3.7% p.a. on the lump sum and gives you the equivalent of an index-linked annuity paying an initial 5.4% p.a. The first is good value, the second very good value. On the other hand you (probably) won't be using your personal allowance against income tax in 2015-16. That's a short-term effect I'd ignore.

If you do decide to go this route (which looks attractive to me), consider selling enough of the ITs to fund that next two years of living: staying in shares is too risky when you know that the money needs to be available short-term.

One question: when is your State Retirement Pension due to start?


Afterthought: if you do decide to go this route, and it looks as if you won't be a tax-payer in 15-16, consider making a personal pension contribution this year - (14-15) to the maximum allowed for you, probably - and then the permitted £2880 net in 15-16. Then use the new pension laws to withdraw the lot in 15-16. That way you should gain very nicely on the investment.

Both the NHS pension decision and the Personal Pension decision (if made) are effectively rewarding you for having the foresight to accumulate your IT investments.

ellie-g

Just like to say a big thank you to Kidmugsy for taking the time to give such a thoughtful reply. I also think the advice about making a personal pension contribution is a great idea and I will definitely do this.
Kind Regards, Ellie x