Local Government Pension Scheme

albepi

My wife is 57 and has a deferred LG pension. We need to raise some finance to pay off our mortgage. I need some free advice on what the options are both now and in April 2015. ie if she can take a lump sum.

Any advice would be appreciated.

xylophone

http://www.lgps.org.uk/lge/core/page.do?pageId=101769

albepi

Thanks Xylophone, but been there and that doesn't help.

Your_Hero

albepi wrote: »

Thanks Xylophone, but been there and that doesn't help.

From age 60 and above, depending on when she joined the scheme, she can take 3x the pension as a lump sum or she may have to commute it at 12:1. Any earlier and she will face actuarial reductions.

"For any membership you have built up to 31 March 2008, your deferred benefits will be a pension of 1/80th of your final pay plus an automatic tax-free lump sum of 3 times your pension.

For membership from April 2008 your deferred pension will be at the increased rate of 1/60th of your final pay. There will be no automatic lump sum for membership built up after March 2008, but remember you do have the option when you draw your benefits to exchange some of your pension for tax-free lump sum."

http://www.lgps.org.uk/lge/core/page.do?pageId=101781

xylophone

She will need the consent of the former employer if she wishes to draw benefits before scheme pension age - and the benefits could be actuarially reduced to take account of early payment.

http://www.lgps.org.uk/lge/core/page.do?pageId=100791

jem16

albepi wrote: »

My wife is 57 and has a deferred LG pension. We need to raise some finance to pay off our mortgage. I need some free advice on what the options are both now and in April 2015. ie if she can take a lump sum.

Any advice would be appreciated.

The new pension regulations coming in from April 2015 only affect Defined Contributions schemes. Your wife is a deferred member of a Defined Benefit scheme which is not affected by the changes.

Your wife's options are as Your Hero pointed out.

hugheskevi

The pension can also be transferred to a Defined Contribution arrangement to take advantage of the Budget changes.

Probably a very bad choice, but it is an option.

xylophone

Thanks Xylophone, but been there and that doesn't help.

You need to click on "deferred benefits" on the menu on the left which takes you through to the information on how they are calculated etc.

xylophone

The new pension regulations coming in from April 2015 only affect Defined Contributions schemes. Your wife is a deferred member of a Defined Benefit scheme which is not affected by the changes.

Not so if the scheme is "funded" which is apparently the case with the LGPS. https://forums.moneysavingexpert.com/discussion/comment/66372180#Comment_66372180 see post 27.

http://www.thisismoney.co.uk/money/experts/article-2705868/I-want-transfer-deferred-defined-benefit-pension-defined-contribution-scheme-Why-a.html

"The Government has announced that private sector workers, or those in a funded public sector scheme, will be able to transfer from a DB scheme to a DC one if they want to, meaning they can benefit from the upcoming changes.
Previously it stated the changes would apply just to those with DC pensions. It may well be worth seeking some professional independent financial advice to get more perspective on what you should do with your scheme."

taktikback

hugheskevi wrote: »

The pension can also be transferred to a Defined Contribution arrangement to take advantage of the Budget changes.

Probably a very bad choice, but it is an option.

From what I have read, most providers have already shut that door, in anticipation of the pension reforms, and those that haven't wouldn't touch it anyway because it would be a mis-sell

jamesd

Why do you need to pay of your mortgage? Interest only coming to the end of the term?

There are some options if so. One is approaching the lender to ask for an extension until your household income improves with all pensions in payment. Another is approaching another lender, some may offer mortgages until age 85. Yet another is to consider an equity release mortgage.