LGPS Deferred Pension lump sum

Silvertabby

Malchester wrote: »

No never been in fire service, never even been in a fire station!!! I worked for one of the West Yorks local authorities

Then you need to speak to your LGPS tomorrow - because you've certainly been quoted the commutation factor for a 60 year old ex-fireman!

I make the conversion for £18,887.00 lump sum / £6245.00 pension (using 1:12) to be £33,509.64 lump sum / £5026.45 pension.

Malchester

No never been a firefighter. Never even been in a fire station. Worked for one of the Met authorities in West Yorks

kidmugsy

Malchester wrote: »

No never been a firefighter. Never even been in a fire station. Worked for one of the Met authorities in West Yorks

If they pay you too large a lump sum, or too large an annual pension, then when they discover their mistake you will have to pay it back. In your shoes I'd be keen to avoid that hassle.

Malchester

Thanks kid muggy I agree with you. The value of the lump sum is not really in question. It is the remaining annual pension that is my concern and how long before it reaches breakeven

Malchester

Just checked last years statement and the responses on here seem to have been spot on. Last years statement talks about a commutation factor of 1:12. The quote for my pension when paid in June has used 1:18.69. The min and max lump sums hav increased by the correct percentage as has max annual pension. However the min annual pension quote (with max lump sum) is too high as it seems to have increased by much more than the 3% it should have ke WYPF have used the wrong commutation factor. I will be in touch with them tomorrow.

Thanks for all your helpful comments and suggestions

Malchester

Checked with wypf - the commutation factor of 1 to 18.69 is correct it is based on the rules that applied when I was a member from 1983 to 1994

Silvertabby

Malchester wrote: »

Checked with wypf - the commutation factor of 1 to 18.69 is correct it is based on the rules that applied when I was a member from 1983 to 1994

Umm - I really must throw cold water on this, I'm afraid. I'm a retired LGPS administrator and know from experience (including bringing many deferred records from the 1980s/1990s into payment) that the LGPS commutation rate was and is 1:12.

The LGPS I worked for didn't administer any Fire Service pensions, unlike WYPF, so I had a google of the regs. The Fire service commutation rates were on an age related sliding scale (very generous, I have to say!) and the rate of 1:18.69 is straight from the Fire Service chart.

The error on your records could be something as simple as the wrong employer code, which tipped you into Fire pension regulations. When you rang, did you just query the commutation rate?.. or did you also say that you worked for a Local Authority and not the Fire Service?


ADD: Taken from WYPF information leaflet for deferred LGPS members (ie, not Fire Service)

For membership before 1 April 2014

We work out your pension benefits for your membership before April 2014 based on your final pay and the length of your membership when you leave or retire. The pay we use to work out your pension benefits on your membership before April 2014 is your pay when you left the pension scheme, or one of the previous two years if that's higher. And if you were working part-time when you left the scheme, it's the full-time pay you would have got, if you'd worked full time. You will be able to give up some of your pension to get a tax free lump sum when you take your pension. For every £1 of pension you give up, you'll get £12 of tax-free lump sum (HM Revenue and Customs limits apply).

...And this is from the fire service pension scheme data:

Firefighters RDS modified scheme
Commutation

Commutation

If, on retirement, you prefer to have a lump sum as well as a pension you can provide one by commutation. To do this you must give written notice to the fire and rescue authority, no earlier than 4 months before your intended retirement and no later than the day before your pension is due to come into payment. You would state how much of your pension (including any Additional Pension Benefit) should be commuted, i.e. converted into a lump sum. (Note that you may not commute any portion of a higher tier ill-health pension.)
For special firefighter members, the amount of lump sum provided by each £1 of pension commuted is determined by factors provided by the Scheme Actuary, they reflect those that applied to members of the FPS 1992 as at 1 April 2014. (These are greater than apply to standard FPS 2006 members.)
You can commute up to one quarter of your pension provided that the resultant lump sum would not be greater than the maximum permitted by HM Revenue and Customs without incurring a tax charge ("a scheme chargeable payment"). This limit is most likely to be exceeded if the relevant commutation factor is greater than 20. When your pension becomes due, the authority's pensions administrator will be able to tell you how much you can commute, if restricted by the tax limits.
Assume a special firefighter member is entitled to a pension of £8,000 and is aged 57 years and 7 completed months on the day his pension commences; the relevant commutation factor shown below is 19.8. He opts to commute one quarter of his pension for a lump sum. Based on £8,000, this would be £2,000.

Either you worked for the Fire Service in a non-fire fighting role, which sounds unlikely, or your computerised pension records are showing the wrong employer code (those pesky little digits can cause a lot of trouble if input incorrectly!)

Malchester

Hi thanks Silvertabby. Following your comment I have been back in touch with WYPF. They have checked my account three times now (by three different people) and everything is correct. These three checks have confirmed that my commutation rate is 1:18.69 as it is a protected right (along with the right to receive a pension unreduced from the age of 60). Because I left local government in 1994 I have these protections. I also have it in writing that the commutation rate is correct.

I also asked why the annual summaries for each year included a commutation rate of 1:12 - they said that was just a standardised form and applied to the vast majority of members of the scheme. The same info talked about standard retirement age as being state pension age, but mine isn't, it is 60 and when I queried that they said I was one of a very few limited people with these protections

Silvertabby

Malchester wrote: »

Hi thanks Silvertabby. Following your comment I have been back in touch with WYPF. They have checked my account three times now (by three different people) and everything is correct. These three checks have confirmed that my commutation rate is 1:18.69 as it is a protected right (along with the right to receive a pension unreduced from the age of 60). Because I left local government in 1994 I have these protections. I also have it in writing that the commutation rate is correct.

I also asked why the annual summaries for each year included a commutation rate of 1:12 - they said that was just a standardised form and applied to the vast majority of members of the scheme. The same info talked about standard retirement age as being state pension age, but mine isn't, it is 60 and when I queried that they said I was one of a very few limited people with these protections

How very odd. It can only be you actually worked for an arm of the Fire Service, even though you weren't a fire fighter and didn't operate from a fire station, and were granted admission to the fire service pension scheme instead of the LGPS. All I can say is that you keep tight hold of the letter confirming that very tasty commutation rate!

Being able to take your benefits unreduced from 60 is correct - it's called meeting the Rule of 85, which means that as long as your service (including deferred service) plus your age totals 85, then your benefits are payable in full (with certain conditions).

Far from only applying to a very limited number of people, it applies to the vast majority of people with LGPS benefits with similar service to yourself.

Thank's for letting us know the outcome.

Malchester

Thanks Silvertabby.

Never worked for the fire service at all - worked a few years for Gateshead Council and then the rest of the time for Calderdale Council in Halifax - I am as dumbfounded as you about the whole thing but, having had three people at WYPF independently check it all I can only take what they have said as being accurate. It does make a huge difference to how I take the pension. At 1:12 I would have taken the lowest lump sum and maximum pension as it would only take 12 years before I would lose out. At the higher rate it will take almost 19 years (assuming interest on the lump sum and annual increases on the pension are equal) for me to lose out (when I will be 79). And with other pensions, plus the state pension kicking in later it is, to me, a no-brainer to take the largest tfls. All I need now is for them to receive my completed form and find out they were wrong!!!!!!!!