Redundancy at 50, local government pension

aliavavodka

I'm being made redundant, and have had a forecast from my pension,
Because I am 50, and my employment ends at Christmas my forecast is

With contributions up to redundancy, payable at 55
Standard annual pension. £2722.68
Standard (tax free) lump sum £4132.20

If I was to contribute till 55, payable at 55
Standard annual pension. £5581.27
Standard (tax free) lump sum £4850.76

As you can see 4 years and 9 months make quite a difference.
Is there any way I can make up the difference?
Unfortunately redundancy has come at a bad time for me, I've recently had surgery and may need more, so the chances of finding employment are slim.
Many thanks Alison

Silvertabby

Um - you do realise that even if you are made redundant you can't access your pension until you are 55?

There is no way you can make up the shortfall, unfortunately. You (and your employer) can only contribute when you are actively employed.

You mention surgery and being unable to work - have you investigated the possibility of ill health retirement instead of redundancy? If approved, that would give you immediate access to your pension.

aliavavodka

Sorry my post was a bit misleading. The projections are both at age 55, the first is with redundancy, the second is if it was paid till 55.
My contributions for the 4 years and 9 months would be under £4000, it just seems I will be losing out quite substantially by being made redundant at this stage.

hyubh

aliavavodka wrote: »

Sorry my post was a bit misleading. The projections are both at age 55, the first is with redundancy, the second is if it was paid till 55.

Seems a slightly odd age to project to, given 55 will be before the normal pension age for any tranche of pension benefits. Are the figures before or after the actuarial reduction?

My contributions for the 4 years and 9 months would be under £4000, it just seems I will be losing out quite substantially by being made redundant at this stage.

The scheme is generous, yes, but it's part of the total remuneration package when an employee of a participating employer. From that perspective 'making up the difference' doesn't quite make sense, unless you're looking to pay the employer contribution as well (likely at least two-and-a-half times your own)...?

Silvertaby's contrary suggestion of pursuing a ill health retirement seems spot on to me - have you looked into this? The fact there are three 'tiers' of ill health retirement in the scheme increases your chances, within reason (https://www.lgpsmember.org/tol/thinking-leaving-illhealth.php).

Silvertabby

hyubh beat me to it.

Your pension isn't just based on your own contributions - it's calculated on your salary/accrual rate, then paid for by your and your employer's contributions. Your employer pays much more that you do - probably 3 times as much.

The figures you have been given do sound like they are before any actuarial reductions. If so, you will need to take this into account if you plan to take your pension at 55.

aliavavodka

The figures you have been given do sound like they are before any actuarial reductions. If so, you will need to take this into account if you plan to take your pension at 55.[/QUOTE]

I have no idea what this means, can you explain?'
Many thanks Alison

GunJack

It means that a % reduction is applied to your pension for every year before the scheme normal retirement age if taken early. Often in the region of 5% per year early, so 5 yrs early could be around 25%

xylophone

I have no idea what this means, can you explain?'

https://www.lgpsmember.org/tol/thinking-leaving-when.php

https://www.lgpsmember.org/tol/thinking-leaving-illhealth.php

xylophone

The figures you have been given do sound like they are before any actuarial reductions.

https://forums.moneysavingexpert.com/discussion/comment/73266938#Comment_73266938

Hi, I've worked for my employer for 29 years.

The pension seems very modest after 29 years of employment?

aliavavodka

I joined the pension scheme 20 years ago, as before that part timers couldn't join.

Silvertabby

The figures you have been given do sound like they are before any actuarial reductions. If so, you will need to take this into account if you plan to take your pension at 55.

I have no idea what this means, can you explain?'
Many thanks Alison

Your LGPS retirement age is the same as your State pension age. (67)

As you have 20 years pensionable service, you may have a bit of Rule of 85 protections - but only in respect of your service up to 2008.

As Gunjack says, your pension would be reduced for every year taken early. This is a bit of a guess, but if you take your pension at 55 then the figure you have quoted would be reduced by at least 43% (possibly more - depends on your R85 protections).

Ill health retirement, however, is a whole new ball game. It's worth asking the question - if the answer is 'no' then you won't be any worse off than you are now.