University pension schemes

debtfreeforlife

Hi all,

Firstly apologies if this is a stupid question, but I don't have a particularly good understanding of pension schemes. I'm currently working in the civil service and have an alpha pension scheme, but I've previously worked in universities and had a Local Government Pension Scheme.

I'm currently applying for jobs back in the university sector, but my real hesitation is around pensions as I've heard that's one of the biggest threats facing the sustinability of the university sector at the moment. For context, I'm 31, currently on 35k p/a, and am quite ambitious so will hopefully move up the rankings over the years! I've just applied for a job at a university which offers three different pension schemes: Teachers Pension Scheme (TPS), Local Government Pension Scheme (LGPS) and Universities Superannuation Scheme (USS). The USS is only open to current applicants and even if it wasn't, I know that that's the worst pension scheme to be in at the moment so wouldn't consider it. I suspect that my particular role would fall under the LGPS, since it's similar to my previous role at another university.

My question is this - does anyone know how secure the LGPS is, and whether it's likely to face the same kinds of proposed changes that I know the USS currently is? I'm currently trying to weigh up long term cost benefits of staying in the civil service (maximum 1% pay increase per year, but starting at higher rates than an equivalent grade in the university setting and with a decent pension scheme) vs university (salary starts lower but increases more each year, pension scheme not as good). Obviously there are benefits and drawbacks to each which aren't financial, but I'm hoping I can at least get a good grasp on the pension implications!

Thanks in advance for anyone who can help

ETA: Feel like I should add for clarity, I appreciate that as I'm 31 it would be astonishing if any pension scheme I was in wasn't reviewed before my retirement date, but it would still be helpful if anyone has a current readout on the state of the LGPS vs civil service alpha scheme

JoeCrystal

Oh very secure. The LGPS is one of the largest defined benefit (DB) schemes in the world and is the largest DB scheme in England and Wales, with over 13,000 employers, 5.3m members and assets of £217bn. and ultimately backed by the council tax revenues. I am somewhat bemused by the concept of USS as the worst pension scheme to be in. I assume you are talking relatively as it is still one of the better if not, one of the best pension schemes in the country.

Viking_mfw

I'm in USS and while it isn't as good as when I first joined it's still astoundingly good.

Southend1

If UUK have their way, USS will be 100% D.C. soon. If I were in your position and had the choice I would take TPS or LGPS. I’ve been in HE nearly 10 years now but will probably look for a career change if the proposed changes come in - I stand to lose around a third of my pension, according to UUK’s estimates - of course it could turn out to be a lot more than that but I wouldn’t know for sure until it’s too late to do anything about it.

debtfreeforlife

Thanks all, that's really helpful! Re. the USS, I know it's a relatively good one, I just meant that its conditions for new members are a bit less secure than the other two schemes because it's currently under review. It's not an option for me anyway as the university that I'd be most likely to work at (if I went back into the university sector) only makes it available for existing members. I suspected that the LGPS scheme was pretty secure, but just wanted to check. Pensions make me nervous but I know it's much less painful if I plan for retirement now rather than in ten or twenty years time.

So sorry about the implications for you Southend1 - a lot of my twitter followers have been worrying about the changes on twitter today (and of course I've seen the industrial action announcement) which is what made me worry. Everything I've seen so far though says that the unions will be pushing back against the proposed changes as hard as they possibly can.

hyubh

debtfreeforlife wrote: »

I've just applied for a job at a university which offers three different pension schemes: Teachers Pension Scheme (TPS), Local Government Pension Scheme (LGPS) and Universities Superannuation Scheme (USS). The USS is only open to current applicants and even if it wasn't, I know that that's the worst pension scheme to be in at the moment so wouldn't consider it. I suspect that my particular role would fall under the LGPS, since it's similar to my previous role at another university.

If the employer were to offer a choice between the LGPS and the TPS, that would be against the rules of the former - if you're eligible for the TPS, then you aren't eligible for the LGPS in that employment (http://lgpsregs.org/schemeregs/lgpsregs2013/timeline.php#r4). Of course, only some employees are going to be eligible for the TPS though.

My question is this - does anyone know how secure the LGPS is, and whether it's likely to face the same kinds of proposed changes that I know the USS currently is?

'Secure' in the sense pensions earned will actually be paid? Very much so, if ultimately more for de facto than de jure reasons (unlike the USS, each LGPS fund is not formally a 'last man standing' arrangement, and the central government guarantee is at best ambiguous, especially for admission bodies like universities; however, the biggest employers remain statutory organisations with tax-raising powers and therefore excellent covenants, and have little desire to bankrupt small employers). However, it's very, very unlikely USS benefits won't be paid out in full either.

'Secure' in the sense there aren't the pressures to close DB accrual that the USS has? Yes to that too. Whether this will remain the same in 20 years time... well as you say yourself, who knows, but at that point, you may be in the private sector or back in a now high-level civil service position anyhow.

it would still be helpful if anyone has a current readout on the state of the LGPS vs civil service alpha scheme

One minor reason not to worry is that the government, after acknowledging the LGPS should be treated as quasi-private sector for 'Freedom and Choice' purposes, subsequently doubled down in the opposite direction on other matters (Public Sector Transfer Club membership post-CARE reforms, GMP increases). Good for LGPS members, not so good for council-taxpayers at large and admission bodies

Yourestillalive

Hi, this is an interesting post for me as I work for a university and am currently trying to understand the pensions situation as intended strike action has been announced at my place of work. I have read the basic information provided by UUK and some academic blog posts. My predicament is similar, I am 33 and have just been transferred from SAUL (Superannuation University of London) into USS after a promotion. I have a LGPS pension from a previous employer and didn’t transfer that into SAUL. However, I now have the opportunity to request my SAUL pension (approx 4 years accrual) is transferred to USS. Not sure what to do really, I’m leaning to transferring it before the changes are likely implemented in 2019. Anyway, sorry to jump on this thread with my own issue but I do understand the pensions ambiguity for people at this stage in our careers (I am also quite ambitious)!

hyubh

debtfreeforlife wrote: »

Everything I've seen so far though says that the unions will be pushing back against the proposed changes as hard as they possibly can.

At best they might achieve the current hybrid structure, with a lowered point at which DB accrual switches to DC. It isn't obvious to me that the UCU membership wouldn't ultimately vote for a generous pure DC option however.

One thing to keep in mind - the future can be hard to predict. Ask the same question 10 years ago, and what would we find?

• The USS recording a funding surplus
• The USS having a benefit structure identical to the classic 'public sector' model and no expectation of change - 1/80 pension+3/18 lump sum, revaluation for early leavers and increases in payment as uncapped RPI, public sector-style treatment of GMP, NPA potentially of 60...
• The LGPS and TPS, in contrast, being reformed to abolish a standard lump sum in favour of a better pension but member-hostile commutation rate to get a lump sum, new added years contracts withdrawn, NPA for new joiners raised to 65 without exceptions...

Southend1

Yourestillalive wrote: »

Hi, this is an interesting post for me as I work for a university and am currently trying to understand the pensions situation as intended strike action has been announced at my place of work. I have read the basic information provided by UUK and some academic blog posts. My predicament is similar, I am 33 and have just been transferred from SAUL (Superannuation University of London) into USS after a promotion. I have a LGPS pension from a previous employer and didn’t transfer that into SAUL. However, I now have the opportunity to request my SAUL pension (approx 4 years accrual) is transferred to USS. Not sure what to do really, I’m leaning to transferring it before the changes are likely implemented in 2019. Anyway, sorry to jump on this thread with my own issue but I do understand the pensions ambiguity for people at this stage in our careers (I am also quite ambitious)!

I wonder if you would be better transferring to uSS based on the inflation capping for Saul, which I think is more severe than USS? I’m sure one of the experts will be along soon to comment

hyubh

Yourestillalive wrote: »

I have a LGPS pension from a previous employer and didn’t transfer that into SAUL.

Was that wise? Insofar as the transfer would have been done on Club terms, it would nearly always be beneficial, so long as the new rate of pay was higher than the old one (accounting for inflation).

However, I now have the opportunity to request my SAUL pension (approx 4 years accrual) is transferred to USS.

Standard or non-standard terms? I don't know about SAUL, but when the USS pulled out of the Club last year, it stopped transfers into a DB section generally (unless the member had special rights to complete a Club transfer). So, would this potential SAUL transfer be into a DB or DC section? If the former, have you got a quotation of what USS service or pension you would purchase on completing the transfer...?

Yourestillalive

Dear Hyubh, On first point, possibly not wise then! I struggled with the decision and eventually went with the rather ignorant “don’t put all eggs in one basket” approach. Alas, I should have used this forum back then (first time user tonight).


On second point, I have only had info from SAUL about leaving, which just contains a line in about transferring to USS - presumably standard terms then. Have yet to receive any info from USS about joining but will have to look through the information online to answer your questions and explore further. Thank you for providing a good starting point, much appreciated!