Transfer to LGPS?

Searcher2

xylophone wrote: »

And he might wish to double check his transfer value?

I have the "Guaranteed transfer value" in writing from the Deferred Pension Fund on a document headed "Statement of entitlement to guaranteed cash equivalent". This was provided to the Pension Service who have provided me a copy. I have been in touch with the Pension Service (LGPS) to check. They have contacted my old pension service to query the figures but they won't discuss them just saying they have been provided and are correct. They look very high to me given my contributions. I am wondering if I should have titled this thread "can this Guaranteed transfer value be correct"? I know I am inexperienced in this area but it seems very high to me

hyubh

Searcher2 wrote: »

They look very high to me given my contributions.

Your personal contributions do not matter - it's a DB scheme. It was perfectly possible back in the day for (say) banks to have non-contributory final salary schemes, i.e. where the employee rate was zero.

xylophone

it's a DB scheme. It was perfectly possible back in the day for (say) banks to have non-contributory final salary schemes, i.e. where the employee rate was zero.

Perfectly true- I was in one such scheme.

Were the (preliminary) opinion of the DCC officers cited in that post to hold good, then that would be even more reason to transfer. In reality I'd ignore it however given the scheme still awaits the government minister responsible to rule either way - see the LGPC's discussion here:

Unless his own old scheme will index link the pre 88, post88 and excess by RPI (if he feels RPI is a better bet and if RPI applies to his old scheme, as indeed it does to mine) - as I said in my first post, he needs to check the whole situation before taking a decision.

Searcher2

The letter from the Pensions Service has come today. I haven't rung them or the old pension fund yet. The letter is pretty much the same but states that the £29K "is the amount of CARE pension which would be available to you TODAY".

It then gives a transfer calculation which I didn't have before

Value of Transfer Payment

TV Payment : £283K

GMP Adjustment
Total GMP £1132
Less Post 88 GMP £1132 = £0
Plus Post 1988 GMP £1132 * 15% = £169
GMP (£169) * GMP FACTOR 3.39 = £575

Gross Transfer Payment = £283K + £575

Transfer Factor

Accrual Rate TV Factor Conversion

(A) Pension
N/A * 9.98 * 0.8800 = 8.78

(B) Widow's Pension
49/160 * 2.92 * N/A = 0.89

Value of Transfer Payment £283575 / Transfer Factor 9.67 = £29K

Benefits as a Result of the Transfer

Additional Pension : £29K
Additional Widow's Pension : £8,900

So it looks like the LGPS £29K is the value as of today payable at 67 and will presumably go up at CPI whereas my leaving it in my old scheme will result in £10K payable at 62 but going up by RPI.

hyubh

So it looks like the LGPS £29K is the value as of today payable at 67 and will presumably go up at CPI

Yes.

whereas my leaving it in my old scheme will result in £10K payable at 62 but going up by RPI.

You've checked? Increases in the LGPS are nice and simple (generally), in a private sector DB scheme frequently not so.

Searcher2

hyubh wrote: »

Yes.


You've checked? Increases in the LGPS are nice and simple (generally), in a private sector DB scheme frequently not so.

I have been looking through documents I have and found onefrom 2009 that says "How does the new calculation of deferred pension increases work? The total deferred pension will be increased in deferment each year on 1 November by the increase in the RPI, subject to a maximum of 5%"

If that is the case then surely the LGPS is the way to go (having presumably been given too much money by my old pension scheme)?

Searcher2

More info :

The old scheme is contracted-out of the State Second Pension on a salary-related basis.

** Increases to the deferred pension before the benefit is paid

The total GMP is increased by 6.25% for each complete tax year between the date of leaving the fund and the GMP age.

The fund pension (over the GMP) built up before 6 April 1997 and all the fund pension built up after 5 April 1997 is increased by up to 5% for each year between the date of leaving the fund and NRD

** Increases to the Fund pension once it is being paid

GMP built up after 5 April 1988 - increased in line with price inflation or 3% a year whichever is lower (paid from GMP age). The Government will pay any further inflationary increases due from State Pension age.

Fund pension built up before 6 April 1997 - Increase in line with price inflation up to a maximum of 5% a year.

At date of leaving :

GMP built up after 5 April 1988 =£670 a year
Fund pension (over GMP) built up before 6 April 1997 = £4180 a year
Fund pension built up after 5 April 1997 = £1250 a year

Total = about £6,100 a year

hyubh

Searcher2 wrote: »

More info :

For comparison...

The old scheme is contracted-out of the State Second Pension on a salary-related basis.

Same as the LGPS.

** Increases to the deferred pension before the benefit is paid

The total GMP is increased by 6.25% for each complete tax year between the date of leaving the fund and the GMP age.

LGPS revalues by section 148 orders, which have proved to be a lower rate than that in practice.

The fund pension (over the GMP) built up before 6 April 1997 and all the fund pension built up after 5 April 1997 is increased by up to 5% for each year between the date of leaving the fund and NRD

LGPS is uncapped CPI rather than RPI capped at 5% for both the post-97 pension and post-88 excess. (Significance of 1997 is just that GMP accruals stopped then, which would have affected both your old scheme and the LGPS equally.)

** Increases to the Fund pension once it is being paid

GMP built up after 5 April 1988 - increased in line with price inflation or 3% a year whichever is lower (paid from GMP age). The Government will pay any further inflationary increases due from State Pension age.

Same as with the LGPS, at least until the 'flat rate' state pension starts, at which point the LGPS could only get worse from the point of view of your council tax bill.

Fund pension built up before 6 April 1997 - Increase in line with price inflation up to a maximum of 5% a year.

Uncapped CPI in the LGPS as said.

At date of leaving :

GMP built up after 5 April 1988 =£670 a year
Fund pension (over GMP) built up before 6 April 1997 = £4180 a year
Fund pension built up after 5 April 1997 = £1250 a year

Total = about £6,100 a year

I'd say proportionally the GMP isn't very large, so the better GMP revaluation rate in deferment shouldn't be a big factor in your decision.