advice please

molerat

As you have been contracted out then yes it more than likely will be, long term contracting out results in a large reduction - mine is £74. Have you used the on line forecast ? That will give you the COPE estimate which is the amount that has been deducted from your "new" 35 year pension to compare with your "old" 30 year pension to produce your starting amount. You could then consider class 3 contributions to make up to the full amount, the figures work out like taking a 30% annuity, a single payment of £14.10 is worth £4.45 a year for the rest of your life.

jamesd

Yes, it's due to being in a contracted out defined benefit scheme. Your state pension entitlement is reduced by an amount roughly comparable to the amount the scheme is expected to pay to you using the value of the NI rebates it received.

Broadly this makes you and others in a similar position winners because instead of being capped at 35 years you can just carry on working or paying in and end up with both the state pension and the part of the work pension that is also in lieu of part of it.

It doesn't seem particularly sensible in your situation to overpay on the mortgage or pay into the LGPS AVC scheme. A personal pension is available from age 55 and can be drawn as rapidly as desired with no requirement to take it at the same time as the defined benefit pension. 25% tax free lump sum, the remainder taxed as income in the tax years in which you take it. This is likely to be far more efficient for your money than paying off the mortgage regularly, since you can exploit the tax benefits to do it after you reach 55. Contributions are limited to your earned income or to £40,000 a year including the value of employer and employee LGPS contributions, carry forward of unused amounts from the previous three tax years is permitted to go over 40k.

hyubh

mrs_motivated wrote: »

We have closed the existing LPGS scheme to new employees and existing employees not currently admitted prior to auto enrolment,

Hmm, better not let the staff know about your own bumper pension ;-)

primarily due to the ever increasing pension liability sat on our balance sheet, currently over £0.5million with only a relatively few members of staff in the scheme.

Er, right, and yet chucking a further £160K or however much it will be into your own pension (+ ongoing risk of it needing additional funding depending on investment performance) is nothing...

We are in the process of setting up a new scheme which is more affordable for both staff and the company

For staff and the company? Don't kid yourself - a crappy DC pension will never compete with LGPS membership. If 'affordability' were crucial to the individual, they can already opt for the 50/50 section.

Please can you or anyone else confirm that the reason I need another 7 years contributions to receive full state pension (despite having 35 full years contributions) is due to been contracted out?

Yes. For each qualifying year since contracting out ceased, you will be earning more state pension that you would have otherwise had if the new state pension hadn't come in. Oh, and a possibility the government will force the pension fund to grant full increases on your GMP, assuming you were in the LGPS before 1997...

greenglide

Oh, and a possibility the government will force the pension fund to grant full increases on your GMP, assuming you were in the LGPS before 1997...

But only where the SPa date is up to December 2018 when male and female pension ages are equalised.

I cannot see any government extending this wonderful deal to anyone later than that. The whole freebie seems incredibly generous and I am one of the beneficiaries:-)

hyubh

greenglide wrote: »

But only where the SPa date is up to December 2018 when male and female pension ages are equalised.

I cannot see any government extending this wonderful deal to anyone later than that.

I have yet to read or hear anyone who can elaborate on the government's purported justification for the present situation on GMP increases. Admittedly Brexit makes extending it beyond 2018 harder than before, but since no-one publicly suggested 'GMP equalisation' as a reason to pay full increases before it was actually decreed, I have my doubts on whether the situation will have materially changed for those that might have thought that way in two years time.

greenglide

It is all part of fallout from pensions equalisation. See "This will ensure public service pension payments to these individuals continue to be equal between men and women." in https://www.gov.uk/government/news/government-one-step-closer-to-introducing-new-state-pension-this-year

It seems that the government has, at some point, promised that public sector workers who have their their SPa pushed from one side of nSP to the other will not lose the GMP indexation because of it. Of course when the do that for females they have to do it for males as well.

Why the private sector isnt impacted as well I dont know.

hyubh

greenglide wrote: »

It is all part of fallout from pensions equalisation. See "This will ensure public service pension payments to these individuals continue to be equal between men and women." in https://www.gov.uk/government/news/government-one-step-closer-to-introducing-new-state-pension-this-year

Yes, and that explanation came out of the blue and there has been zero elaboration since.

It seems that the government has, at some point, promised that public sector workers who have their their SPa pushed from one side of nSP to the other will not lose the GMP indexation because of it.

All the Treasury statement alludes to is the general principle of how GMP and excess traditionally interacted in a public sector scheme.

Of course when the do that for females they have to do it for males as well.

If full increases on the GMP continued not to be paid, then women who retired before 65 would be systematically disadvantaged due to their lower GMP age (a man retiring at 60 would get full increases anyway because the GMP is not yet in payment). I still don't really 'get' how this can justify paying full increases for anyone (male or female) over 65 however.

Or, put another way, I see the need for a special sort of bridging pension, but not a generalised 'let's forget this was ever GMP in the first place'.

Why the private sector isnt impacted as well I dont know.

Quite, however GMP equalisation is potentially a bigger kettle of fish there.

greenglide

I still don't really 'get' how this can justify paying full increases for anyone (male or female) over 65 however.

It isnt at all obvious what is going on but my interpretation is still that every public sector pensioner with an SPa date between April 2016 and December 2018 will get their GMP inflation proofed "for ever" which, in my case, is a "good idea" as all my GMP (pre and post 88) is in LGPS having transferred a private sector DB pension into the scheme. With hindsight it has proven to be a very good deal!

hyubh

greenglide wrote: »

my interpretation is still that every public sector pensioner with an SPa date between April 2016 and December 2018 will get their GMP inflation proofed "for ever"

Indeed! I'm just saying I can see this generosity getting potentially extended to others, like (for example) the OP...

Teaandscones

hyubh wrote: »

Indeed! I'm just saying I can see this generosity getting potentially extended to others, like (for example) the OP...

I agree. I suspect that the government has had some legal advice regarding sex discrimination relating to GMP indexation which is great news for those public sector pensioners reaching SPA until 2018, but from 2019 that will no longer apply.