LGPS deferral

Wentthedaywell?

I am 60 in Oct 17 and intend retiring from local government then with 37 years service. I was thinking about doing another 6 months though, so I leave in spring not autumn.

Now I'm thinking about still leaving in May-ish, but deferring my pension (and AVC) till October 18 and living off savings for 6 months. Can I do this and am I right in thinking I'd save a year of reductions, for going before 66, if I start taking it at 61? Is there anything else to consider?

hyubh

Wentthedaywell? wrote: »

Now I'm thinking about still leaving in May-ish, but deferring my pension (and AVC) till October 18 and living off savings for 6 months. Can I do this and am I right in thinking I'd save a year of reductions, for going before 66, if I start taking it at 61?

Not necessarily because you haven't factored in the 85 year rule - given your age, benefits earned on service up until April 2008 will have full 85 year rule protections, i.e. if you went at 60 (37 + 60 being well over 85), then that part of your pension would not be reduced. Also, a NPA of 66 (presumably your state pension age?) only pertains to your CARE benefits. Admittedly, things are complicated by having to take everything together however.

If I were you I'd contact the administrator to confirm what would and what would not get reduced, and by how much (latter may require requesting a formal estimate, though shouldn't be a big deal).

Wentthedaywell?

Thanks hyubh. Have I understood? There will be a reduction, but because of the protections it will be so small as not to be a major consideration? Even if it's just a couple of hundred a year it might be worth living off savings for a few months. It is possible to do this, isn't it?

I will try asking the pensions people. They are very unapproachable and I don't have a lot of faith in them- I have 5 different pension estimates from them, my annual statements and the on-line calculator. Because of 3 different LG pension schemes, stepped protections and a change of contract, it's very difficult to work out myself. They've previously told me they won't give me another forecast before I'm 59.

hyubh

Wentthedaywell? wrote: »

Thanks hyubh. Have I understood? There will be a reduction, but because of the protections it will be so small as not to be a major consideration?

Possibly, yes - aside from the full protection for pre-2008 service, you're in the age group for tapered protections for post-2008 service.

I will try asking the pensions people. They are very unapproachable and I don't have a lot of faith in them- I have 5 different pension estimates from them, my annual statements and the on-line calculator.

Annual statements will be as at 31 March, so you may not be comparing like for like. Further, if there are tricky details (like there will be in your case), I wouldn't necessarily expect the automated calcs used for annual benefit statements to deal with them all. For the same reason an online calculator should never be considered more definitive than a formal estimate.

Because of 3 different LG pension schemes

What do you mean - you have three periods of unaggregated membership? Or just that you left and rejoined a few times, combining membership at each point?

They've previously told me they won't give me another forecast before I'm 59.

What does your last formal estimate (as distinct from an ABS or online calculator output) actually say then, and when was it produced?

Wentthedaywell?

hyubh wrote: »

What do you mean - you have three periods of unaggregated membership? Or just that you left and rejoined a few times, combining membership at each point?

What does your last formal estimate (as distinct from an ABS or online calculator output) actually say then, and when was it produced?

Sorry, clumsily put; I meant the pre-2008, the pre-2014 and the current, all with different accruals.

I've just had the latest statement, up to March 2015, which was less than the previous estimate for the same period. It also projects a sum if I go at 66 (unreduced) and carry on contributing. This is about £7k more for a further 7.5 years. Neither calculation seems to take into account (I hope) the higher salary which I will elect to be used in the final calculation.

System

Hi

If we rather clumsily break down your 37 years.

2 years post 2014
6 years 2008/14
29 years pre 2008

This is a simple calculation, if you are/were full time.

29/80 + 6/60 +??

So 29/80ths is (100/80)*29 = 36.25%
&& 6/60ths is (100/60)*6 = 10.00%

So you have 46.25 % as a pension plus the 2014 amount. They roughly go @2% per annum. (100/49)*2 = 4.08%

So my Guesstimate is that you are around HALF pay. With the rule of 85 probably applying you may well achieve Half pay in retirement.

So the calculation is straight forward, providing you haven't lost days through strikes etc.

Your record will have 28/364 06/000 for the years and days in each scheme. If you know them them I would be happy to try and give a more accurate % figure. Which in my view is easier to understand and budget for, without posting your salary.

Wentthedaywell?

Thanks John D, that's really useful. I've recalculated using my own figures and I should be around half salary (hopefully at my previous grading). My difficulty is the tapered protections. I think it will work out at about half the full reduction for going before 66, and of course a lot of my service (28/37) will be fully protected.

My main query is: is it worth deferring my pension (and indeed, can I do this?) from approx. April to October 2018 to save one year of the reductions? If it's not a big amount it may not be worth using savings and missing out on 6 months' pension.

System

Hi

Well I am sure you can opt out at any time, although there may be an automatic opt-in on some payrolls.

In effect your 80ths and 60ths are locked and can't be added to in terms of service, but can be increased thru salary / PI as applicable.

If you have the rule of 85, then consider using it on your 60th Birthday for the 80ths and 60ths portion. Draw what you can unreduced, and the 2014 should be taken separately when it is best to do so.

The scheme age is unaltered for the "old" LGPS, and the 2014 is SPA (66/67).

You need a 121 with a member of the LGPS team and thrash out dates etc.

Wentthedaywell?

Thanks JohnD. I hadn't realised I could split the different bits, that's interesting and something else to consider.

Have I understood? I could take the <2008 and the 2008-14 pension, at 60 then just sit on the post-2014 till I'm 66 so don't get any reduction on anything? I thought it was just the <2008 amount that the 85 year rule applied to, so that's not the case?

I doubt I'll be able to get a 1 to 1, they've been really unhelpful in the past, though it might be better now the date in nearer.

daveyjp

Wentthedaywell? wrote: »

I am 60 in Oct 17 and intend retiring from local government then with 37 years service. I was thinking about doing another 6 months though, so I leave in spring not autumn.

Now I'm thinking about still leaving in May-ish, but deferring my pension (and AVC) till October 18 and living off savings for 6 months. Can I do this and am I right in thinking I'd save a year of reductions, for going before 66, if I start taking it at 61? Is there anything else to consider?

Have you considered flexible retirement? Take your pension now, work 3-4 days until retirement. You will receive your pension, a salary and another smaller pension.

A friend in Local Government did this about 5 years ago and has just retired permanently.

MMF007

Sorry to say that you cannot take pension from the 3 incarnations of the scheme at different times. If you choose to start receiving your LG pension it is just that, your pension, albeit that some of the component parts have different accrual rates etc.!

I am not i can post a link so,have quoted the LGPS2014 guidance that explains this:
Paying in before April 2014,

If you are currently a contributing scheme member, your pre-April 2014 pension will still be based on your final year’s pay when you leave and the current Normal Pension Age.

When you choose to take your benefits remember that your pension is paid together, at the same time. You cannot take your pension relating to benefits built up to April 2014 at a different date to your pension built up from April 2014.