LGPS CETV and Rule of 85

lutzi1

I know there are some great LGPS experts on here, so would be grateful if someone could help me.

I have a deferred LGPS pension of just over £5k pa payable from age 60 and have just applied for a CETV quote. I would also get a lump sum of 3x the annual pension on retirement. (All pre 2008 service). The quote has come back at just over £115k. I am female.

I have two questions please.

1) Does that look about right?

2) It doesn't look to me as if I'm getting any recompense for the fact my pension is payable from age 60, which you would think would have some value. Am I right in thinking this, and have they calculated correctly, please?

Thanks.

Silvertabby

Hi -your CRA (in your case, meeting R85 at age 60) is part of the calculation, but doesn't make as much of a difference as you'd think.

I'm retired and so don't have access to all the latest information - but I've had a look at the GAD factors on line and, based on the information you've given, the CETV given does look reasonable.

You've probably read on these boards that final salary pensions are worth cashing in due to government gilts (outside my ken, but I'm sure someone else will explain!) giving exceptionally high transfer values. However, that doesn't apply to the LGPS, which uses other factors in the calculation of transfer values.

lutzi1

No I realise the LGPS doesn't have particularly sparkling transfer values compared to other schemes thanks (more's the pity!), but I thought I'd read the government actuaries had recently issued some updated factors that should have improved it a bit, and as I say being lucky enough to qualify at 60 should have some value attached one would think.

Thanks for your response.

hyubh

lutzi1 wrote: »

No I realise the LGPS doesn't have particularly sparkling transfer values compared to other schemes thanks (more's the pity!), but I thought I'd read the government actuaries had recently issued some updated factors that should have improved it a bit

It's based on the discount rate used to value liabilities in the unfunded public sector schemes, itself based on a CPI projection. This was altered recently to increase employer rates in the unfunded schemes slightly (since the actuarial value of a given pension benefit in the TPS etc. had increased), and correspondingly, increase LGPS CETVs a bit and decease slightly the amount of CARE pension bought from a non-Club transfer-in. However, this involved nothing like the volatility experienced by private sector DB CETVs over the past few years.

lutzi1

hyubh wrote: »

It's based on the discount rate used to value liabilities in the unfunded public sector schemes, itself based on a CPI projection. This was altered recently to increase employer rates in the unfunded schemes slightly (since the actuarial value of a given pension benefit in the TPS etc. had increased), and correspondingly, increase LGPS CETVs a bit and decease slightly the amount of CARE pension bought from a non-Club transfer-in. However, this involved nothing like the volatility experienced by private sector DB CETVs over the past few years.

Thanks for shedding light in that, I've found it very difficult to find out exactly what's been going on. An excellent explanation, thanks.