Should I transfer my LGPS funds to the NHS scheme.

Nastypastie

Hi, I am age 49 and left my local government job and pension scheme to which I had been contributing to for over 20 Years (final salary scheme) and moved to NHS employment last month for a lower paid job. (but more fulfilment and hopefully less stress!)
My LGPS pot is now sitting, obviously with nothing being added and I have been automatically enrolled for the NHS scheme and am contributing to it now.
I have the option of transferring my LGPS existing funds in to the NHS scheme.
I am in the process of getting a pension transfer value quotation from my LGPS previous employer to find out what my previous pension benefits will be worth in the NHS scheme.
However, I feel very uncertain about this especially with the forthcoming changes from 'final salary' to 'average earnings' in April.
A transfer can take some months, would I risk my previous pension being put in to the new pension at the average earnings rate? Would I be best simply leaving my previous LGPS pot where it is and having two pensions at retirement?
Any advice, thoughts about this would be appreciated.

xylophone

In the circumstances you describe, my inclination would be to leave the pension deferred in LGPS.

http://www.lgps2014.org/content/deferred-benefits

hyubh

However, I feel very uncertain about this especially with the forthcoming changes from 'final salary' to 'average earnings' in April.

That in itself doesn't have much impact - the government has decided that a final salary link for deferred FS pension being transferred between public sector schemes will be maintained so long as the break between jobs was less than five years, which it obviously was in your case. Nevertheless, it's probably still prudent not to hang around too long, given the fine details are still up in the air somewhat.

Any advice, thoughts about this would be appreciated.

The most advantageous situation would be:

1. Pension is transferred under current 'Club' terms. (It will automatically be done under Club terms so long as you do it within a year.) Since your new rate of pay is significantly lower than your old rate of pay, this buys you more service in the NHS scheme than it did in the LGPS.

2. While the NHS scheme (like the LGPS before it) subsequently changes to CARE, existing final salary membership is fully protected.

3. Over time you get a couple of promotions in your new job; as your rate of pay jumps accordingly, the value of your LGPS transfer-in retrospectively jumps up too.

That said - does your deferred LGPS pension benefit from 85 year rule protections, i.e. at what age can you draw it without reductions? If it does then they would be lost if you transferred out, i.e. the NHS service credit would have an NPA of 65.

xylophone

It also occurred to me that should the OP wish, as the LGPS is 'funded", he would have the opportunity to consider transfer out if he wished?

http://www.thisismoney.co.uk/money/pensions/article-2700019/Key-points-Governments-pension-freedom-plans.html

Nastypastie

Thank you for your very helpful reply, but it has raised another question?
Which I can't find the answer to in my literature.
With regards to working out if I am protected under the 85 year rule.

In my case I started paying in to one LGPS in 1994 and in 2004 changed to another LGPS transferring my pension benefits along with me, when I moved to a different county and changed job.

So I first joined the current scheme where my deferred benefits now sit before Oct 2006.

Surely, the 10 years in the first scheme get counted in to the total to enable me to retire before age 65 without reduction of my benefits? Or is it just the years paying in to the LGPS from 2004 to 2014 where my deferred pension sits?

hyubh

In my case I started paying in to one LGPS in 1994 and in 2004 changed to another LGPS transferring my pension benefits along with me, when I moved to a different county and changed job.

If you did indeed transfer then all the service goes against the second membership.

Surely, the 10 years in the first scheme get counted in to the total

If you have enough membership overall, then yes. What do your benefit statements say?

Nastypastie

Thanks again Hyubh, yes I transferred all my benefits across in 2004. I recall that Some of my earlier years had been part time whilst I was studying and child care, so this would have reduced my pensionable membership.

unfortunately, My statements always arrive a year behind, so I don't have 2014's yet. My statements since transferring are confusing, as when I entered the new employment in 2004, it was only once I was in the 'full time post' , I found that it had been made up of two 18.5 hr posts so effectively I had two contracts, so each benefit statement shows ' employments 1 and 2', separately but on the same statement. Eg:

Employment 1
value of benefits as at 31 March 13.
Pensionable membership 11yrs 213days
Pension: 5,272.97 pa
Plus grant £11, 574.44
( includes 7yrs 87 days service transferred in from previous fund)

---

Employment 2
Pensionable membership 4 years 127 days
Pension £2,135.51
Plus
Retirement grant £2,286.85

Then goes on to give a forecast for 2031 depressing

hyubh

Nastypastie wrote: »

unfortunately, My statements always arrive a year behind, so I don't have 2014's yet.

Given you've left, you should also be getting a deferred benefits statement at some point to confirm your benefits as at your date of leaving, rather than 31 March just gone.

My statements since transferring are confusing, as when I entered the new employment in 2004, it was only once I was in the 'full time post' , I found that it had been made up of two 18.5 hr posts so effectively I had two contracts, so each benefit statement shows ' employments 1 and 2', separately but on the same statement.

That would imply you had two separate LGPS memberships. I'd suggest contacting the LGPS administrator tomorrow (either by phone or by email) to ask the following outright:

a) Whether you have two separate memberships

b) Whether one or both benefit from rule of 85 protections, and if so, at what age you can draw your benefits without reduction

c) Whether they have your leaver details yet, given you are thinking about a Club transfer out yet haven't received your deferred benefit statement yet.

That said, if you do have two LGPS pensions, in principle you could transfer one but not the other into the NHS scheme. You might do this if, for example, one benefits from the 85 year rule more than the other, in which case the one that doesn't might as well go against the NHS scheme's current NPA of 65.