LGPS - what option should I take - advice please

hyubh

Nick_C wrote: »

Normal retirement/pension age for LGPS used to be 60.

Wrong.

I joined LGPS in 1980 and my retirement age was 60.

Nope, assuming you weren't amongst a limited number of special cases (in modern terms, for people who had protected NPAs because they had transferred from another scheme with a lower NPA than the LGPS/LGSS). As you mention 1980, see section E2 of the Local Government Superannuation Regulations (1974), which you can find on p.48 of this PDF (warning - it's large):

http://www.legislation.gov.uk/uksi/1974/520/pdfs/uksi_19740520_en.pdf

You could work for 40 years and retire on half pay plus a lump sum of 3 times salary.

That's not quite the same thing. Before the 85 year rule there was the 25 year rule: once an active member reached 60, if their combined reckonable and qualifying service was 25 years or more, they were entitled to draw their benefits if they left employment. For many existing members this was essentially indistinguishable from the 85 year rule when the latter came in (60+25=85).

I have friends who were made redundant at 50 and got a pension with no deductions.

Same today, in essence, only with a minimum age of 55 (due to covering pensions legislation) and the cost being explicitly borne by the employer in the form of a capital charge, rather than getting 'lost' in overall fund liabilities.

In those days, councils were giving added years to people they were making redundant.

'Compensatory Added Years' - got replaced (in effect) by employers being able to purchase a fixed amount of additional pension (also, CAY pension was [and still is!] recharged on an ongoing basis rather than paid for up front).

I also think the 85 year rule may have been used for councils' discretionary schemes.

You seem to be wanting to link every single thing specific to the LGPS back to the 85 year rule ;-)

Nick_C

jem16 wrote: »

Isn't that just describing the Rule of 85 - ie 60 plus 25 years membership equals 85?

No, although there was obviously a similar ethos behind it.

One rule determined pensionable age. A different rule determined whether or not actuarial deductions should be made for people retiring before normal pensionable age.

Before 1998, if you joined LGPS and you were under 35, your pensionable age was 60, because you could potentially get 25 years service in by age 60.

However, you didn't have to do those 25 years to qualify for a pension at 60. Your pensionable age was simply based on your age on joining. You could (for example) do 10 years and move to the private sector, leaving a preserved benefit payable at the age of 60 based on 10 years service/contributions.

The 85 year rule didn't determine whether or not you could retire. It determined whether any or not any actuarial deductions would be made if you retired before normal pensionable age. So in my case, my pensionable age was 60 (and that was confirmed to me when I joined the scheme aged 23 and in subsequent annual statements). When I was made redundant at age 55, I became entitled to receive my pension because I was 55 and because of the redundancy. The 85 rule then came into play to see whether or not any actuarial deductions should apply. Because my age was 55 and I had over 30 years service, I satisfied the rule of 85 and no deductions were made in respect of pension accrued prior to 1998. If I had not satisfied the 85 year rule, I would still have got a pension but a much smaller amount.

So my pensionable age was always 60. When LGPS pensionable age changed to normal SRP age, people in my age group got transitional protection.

My younger former colleagues are going to have to work to 68, and I appreciate how lucky I have been!

hyubh

Nick_C wrote: »

However, you didn't have to do those 25 years to qualify for a pension at 60. Your pensionable age was simply based on your age on joining.

Presumably you're talking about notional service for 85 year rule purposes...? (Which wasn't the same thing as qualifying service for 25 year rule purposes... or indeed qualifying service for 85 year rule purposes, which changed over time.)

So in my case, my pensionable age was 60 (and that was confirmed to me when I joined the scheme aged 23 and in subsequent annual statements).

How did 1990s provisions apply in 1980? Or indeed, what were all these annual statements you received? Perhaps you did get them throughout this time, but issuing annual statements only became a statutory requirement from 2004.

When I was made redundant at age 55, I became entitled to receive my pension because I was 55 and because of the redundancy. The 85 rule then came into play to see whether or not any actuarial deductions should apply.

If you were entitled to receive an early pension due to redundancy, then the question of an actuarial reduction didn't come into it. When was this?

System

Hi

Well the scheme age was 65 for retirement.

When I joined and transferred in my private sector pots the calculations took account of my joining date and I did not qualify for the 'Rule of 85'.

This meant that the service purchased was greater than if I had, (There are factors that affect the calc).

Now while working there I ran an extract report to see who would be affected by the change from 50 to 55 for redundancy, and 1 or 2 senior people left just prior to the date change, they were typically early 50's.

When I left, post 55 years of age, but under 60 and with no rule of 85 protection the employer took up the strain, there was an actuarial reduction of 28% ish. I got the benefit, had I had rule of 85 protection the strain would probably be around 3% ish for the employer to make up.

For redundancy the rule of 85 affects the amount the employer has to cover, against that amount already factored in, and means an employee might be too pricey to release into the wild.

saver861

Nick_C wrote: »

The 85 rule then came into play to see whether or not any actuarial deductions should apply. Because my age was 55 and I had over 30 years service, I satisfied the rule of 85 and no deductions were made in respect of pension accrued prior to 1998. If I had not satisfied the 85 year rule, I would still have got a pension but a much smaller amount.

My understanding is that if you are made redundant at age 55 or over in LGPS then your whole accrued pension is paid without any reductions. So the 85 rule does not come into it. I took voluntary redundancy at 56 from LGPS and they paid all accrued pension though I joined in 1993 and did not meet the 85 rule.

You would have got the same amount either way as the employer picks up the pension strain so the 85 rule does not impact on what you would have received in the case of redundancy.

Brogden

Nick_C wrote: »

The problem with applying for less stressful jobs is (i) people will think you are overqualified (ii) you will be interviewed by people half your age with half your experience. They will feel threatened by you. They will worry about their own ability to manage you.

/QUOTE]

There is quite a lot of conversation on here about LGPS matters. Being in the private sector, I have little knowledge of these.

However, I am now redundant and for the last few months have been looking for work as I go through my long notice period. I just wanted to say that Nick's message here is truer than true and I take my hat off to him .

Around two months ago, I contacted the various recruitment agencies with whom I was dealing and stopped the process. I couldn't go through any more 'trying to fit' and 'trying to say the right thing' to a much younger and much more naive interviewer. I am going to be self employed and try to be myself.......cross your fingers for me!

At least I can clear the last of me debts shortly with my pay off!

greenglide

I worked in Local Government (as a short term move after redundancy in private sector) in 1990 and left in 1996 (a long "short term stop-gap") and deferred my LGPS pension.

When I reached 60, in 2011 I reached my scheme pension age due to a rule which could have been "rule of 85" and I have been receiving the pension ever since as there was no option to defer it which would have been my preferred action if available.

hyubh

greenglide wrote: »

there was no option to defer it which would have been my preferred action if available.

Given you wouldn't have received an actuarial increase until over 65, why defer...?

saver861

hyubh wrote: »

Given you wouldn't have received an actuarial increase until over 65, why defer...?

Well that's why the option was not available. It would make no sense to defer.

Nick_C

greenglide wrote: »

I worked in Local Government (as a short term move after redundancy in private sector) in 1990 and left in 1996 (a long "short term stop-gap") and deferred my LGPS pension.

When I reached 60, in 2011 I reached my scheme pension age due to a rule which could have been "rule of 85" and I have been receiving the pension ever since as there was no option to defer it which would have been my preferred action if available.

Thanks for confirming my assertion that many LGPS members had a pensionable age of 60!