Lgps

BigMank

Hi
My wife worked for a Local Authority for 14 years. She left in 2009, and February 2017 she will be 60 years of age.
Can she take the pension that she has accrued with the Local Authority and invest it elsewhere, or does she have to keep it where it is.
She is in full time employment, but has basically had a 6 year pension gap.
Any help would be much appreciated.
Regards
Keith

Suffolk_lass

The Local Government Pension Scheme is a defined benefit scheme. This will limit your ability to withdraw it and invest elsewhere.

Because she left in 2009 it is possible that she can draw it from age 60 under reserved rights - you (she) would need to check. My understanding is that the 2010 raising of minimum pension age from 50 to 55 (normally ten years before scheme pension age - and unless exceptional circumstances apply, anything before the normal pension age results in reductions in benefit because of the longer term the pension will be drawn for) triggered many public sector pension schemes raising their normal pension age from 60 to state pension age.

DB schemes are not normally portable except within the public sector under club rules. These would not necessarily favour your wife. You will find that the accrued benefit for the 14 years she was in the scheme will have been index linked for each year (although CPI has been relatively low since 2009). The starting point is for her to request an up to date pension statement and clarifying at what age she could begin to draw it without actuarial reduction, to inform your decision-making.

hyubh

BigMank wrote: »

My wife worked for a Local Authority for 14 years. She left in 2009, and February 2017 she will be 60 years of age.
Can she take the pension that she has accrued with the Local Authority and invest it elsewhere

She can transfer out to a money purchase arrangement, yes. However, she will likely require financial advice to do so (unless the LGPS pension is very small). Further, it will unlikely be a good thing to do - LGPS CETVs are currently calculated on a basis that doesn't give rise to the sorts of multiples being found with private sector DB schemes at present. (In fact, it typically understates the value of scheme benefits even on internal LGPS terms, meaning lower transfer values than otherwise.)

Why does she what to 'invest it elsewhere'? It's already a great investment where it is.

Silvertabby

Based on the information you have given your wife can take her LGPS pension benefits at 60, but with a small actuarial reduction for early payment (she's too young for full R85 protections).

She could ask for an estimate now, which should tell her the earliest date she can take her benefits unreduced. She then has the option of taking them at 60 or leaving them until they can be paid in full.

She could also ask for a CETV (cash equivalent transfer value) so she can look at all of her options - but, as hyubh says, the LGPS transfer calculation factors aren't as high as some private schemes.

ADD: Reductions will only apply to post 2008 service, and so will be minimal. Probably not worth deferring beyond age 60.

xylophone

You say that she is "employed elsewhere" - is no pension scheme offered?

If not, one soon will be?

https://forums.moneysavingexpert.com/discussion/5616532

She can check when she will be able to draw an unreduced LGPS pension.

https://www.lgpsmember.org/arl/already-left-when.php


Has she obtained a new state pension statement?

https://www.gov.uk/yourstatepension?utm_source=Mail-Online&utm_medium=Partnership&utm_campaign=GTKY

Nick_C

You would be hard pressed to find a pension as good as LGPS. I would need £800K to buy an annuity that was as good as my pension!

BigMank

She is 60 years of age in Feb 2018, sorry and thanks.

kidmugsy

BigMank wrote: »

She is 60 years of age in Feb 2018, sorry and thanks.

Does she want to retire from her present employment at 60 or would she be happy to work on?

lazyred

Silvertabby wrote: »

Based on the information you have given your wife can take her LGPS pension benefits at 60, but with a small actuarial reduction for early payment (she's too young for full R85 protections).

She could ask for an estimate now, which should tell her the earliest date she can take her benefits unreduced. She then has the option of taking them at 60 or leaving them until they can be paid in full.

She could also ask for a CETV (cash equivalent transfer value) so she can look at all of her options - but, as hyubh says, the LGPS transfer calculation factors aren't as high as some private schemes.

ADD: Reductions will only apply to post 2008 service, and so will be minimal. Probably not worth deferring beyond age 60.

The protection upto 2008 is still depenedent on meeting the Rule of 85 requirements. In 2018 age= 60 and years = 23 (14 years to 2009 plus 9 years defferred), = 83. So it will be 2019 before the R85 protection applies.

PensionTech

DB schemes are not normally portable except within the public sector under club rules

Not so: most DB pensions can be transferred out to other DB or DC schemes, albeit DB to DC transfers usually require advice. Public sector DB to DC transfers are prohibited except in the case of funded schemes like the LGPS, which has as much freedom to transfer out as a private sector DB scheme.

This is not to say it is a good idea to transfer the LGPS out - it almost certainly isn't - but it is certainly possible.