LG Pension Scheme

Quiche57

Hi - I'm very confused! I have recently taken voluntary redundancy from a job working for a london borough. I am however now employed elsewhere as I can't afford to stop working yet although I am 59. I have also signed up to my new employers pension scheme. I have received a letter about my LGPS but it's not very clear. It says I can opt to convert part of my pension to gain an increased lump sum at retirement - rate of conversion being 1:12 (I have no idea what this means and therefore if i want to do it ! ) What the letter does not explain is what to do if i do not want any of my pension just yet ? Could my pension not be transferred to my new scheme with my new employer ? Is there any free advice I can get about my particular situation ?

xylophone

You just leave your LGPS pension deferred until you can claim it under the terms of your scheme?

The 12:1 refers to the possibility of commuting some of your pension when you come to draw it in order to increase your lump sum.

12:1 is an ungenerous commutation rate.

Does your authority produce a leaflet like this

http://www.dyfedpensionfund.org.uk/English/members/Documents/Factsheets/Commution%20-%20English.pdf

xylophone

Incidentally, these members

http://forums.moneysavingexpert.com/member.php?u=1922759

http://forums.moneysavingexpert.com/member.php?u=2533069

are very familiar with LGPS - you might try a PM?

Sambella

For every £1 of your pension you give up you get £12. So for £1000 given up you get £12000.

But if your pension was worth say £7000 and you took £2k as a lump sum your yearly pension is then with £5000 a year.

Unless your new employer has a better pension leave it where it is if you don't want to take it now.

The pension advisory service may assist you.

Sambella

BUT if early access to your pension was allowed as part of your voluntary redundancy surely this would have been sorted out before you left?

Teaandscones

If you have taken voluntary redundancy at 59, you should get your pension from the day of leaving without actuarial reduction.

As other posters have suggested,the 12:1 lump sum offer is generally a rubbish deal unless you were in particularly bad health.
The pension is actually worth about double that. (Note there may be some compulsory lump sum if part of your service started before 2006).

xylophone

I seem to remember one or more of the forum LGPS experts discussing taking the pension on redundancy after a certain age without actuarial reduction.

However, it appears that the OP does not wish to draw the pension before NPA?

Or perhaps under the terms of the redundancy it has not been offered?

Presumably a member under NPA can choose to defer?

I have sent a PM to hyubh to ask if he could comment.

hyubh

Lorraine_Steward wrote: »

I have recently taken voluntary redundancy from a job working for a london borough. I am however now employed elsewhere as I can't afford to stop working yet although I am 59.

As Teaandscones says, that would be an automatic early retirement with no actuarial reduction - presumably the letter you mention later is in relation to this? It's unclear which job relates to what.

Note that if the new job comes with LGPS membership too, you should check no 'abatement' will apply for pre-2014 service on the now-taken pension.

I have also signed up to my new employers pension scheme. I have received a letter about my LGPS but it's not very clear. It says I can opt to convert part of my pension to gain an increased lump sum at retirement - rate of conversion being 1:12

Usually expressed the other way round (i.e. 12:1). Unless you really need the cash, or are a high earner with lifetime allowance issues, it's better not to 'commute' and instead keep the higher pension.

Could my pension not be transferred to my new scheme with my new employer ?

No, but if you could, you wouldn't benefit from the unreduced early payment (your ex-employer is very likely having to pay for the privilege).

System

Hi

Redundancy, post 55 years of age, within the LGPS states that your pension comes into payment.

I feel sorry for you being with a London Authority as I believe they are well down the batting order in terms of running costs and member interaction.

All of this would have been sorted out with many authorities prior to your leaving.

Now if you do not co-operate by filling in the forms and sending anything back for a few years then your pension will be delayed in payment. This has the effect of a large sum of arrears being paid when it does start.

I repeat that the scheme regulations say you have to take your pension when made redundant.

The conversion rate is considered a poor option, but nevertheless an option.

This means that if your annual pension is worth £1000 per annum, you can choose to reduce this amount to £900 pounds and have £100 times 12 (£1200) paid as a one off cash lump sum.

Factors to consider

The pension is guaranteed for a minimum payment time of 10 years, so a form asking who to pay any balance to, should you die early.

This almost negates the 12:1 lump sum option, and your pension will increase with inflation, CPI, narrowing the gap.

If you live into your 90's then the difference is markedly noticeable.

With your pension in payment it will have an effect on your earnings, both in terms of PAYE and possibly abatement. Although I think abatement (reducing your income by the amount of your LGPS) will not apply.

If in doubt please ask.

xylophone

Presumably a member under NPA can choose to defer?

Clearly not (from previous above from hyubh and johndough) and I have now found this:-

http://www.berkshirepensions.org.uk/info/11/active_members/15/retirement/9

Can I defer payment of my redundancy pension until a later date?

No, we are obliged to pay your pension to you at the point you are made redundant.

This being the case, I am wondering how all this was not sorted out well before the OP's final day of employment?

woolly_wombat

johndough wrote: »

Hi



I feel sorry for you being with a London Authority as I believe they are well down the batting order in terms of running costs and member interaction.

Myself and one of my offspring have small pensions with a couple of London authorities, now administered by separate pension shared services, and I can confirm that they are both under extreme pressure and the levels of member interaction have been very badly affected.

My daughter has been trying to transfer out to a civil service pension (from two separate LG authorities) for many months and has had any number of excuses for failure to act.

At one point she was told that she was unable to speak to the person dealing with her request because they were deaf but emails were also ignored.

Dreadful.