Local Government Pension Scheme

SallyH57

I have been contributing to the LGPS for 20 years, working full time.and have now reached 61. My family do not seem to live into their 80's and 90's and I have fairly serious back issues which will limit my mobility as I get older. I decided that I would like to access some of my pension benefits sooner rather than later and made enquiries. If I die whilst in service, my daughter would receive a death grant but, because I am divorced and live alone, the survivor pension goes back into the Pension Scheme. I cannot elect for this benefit to be passed to my daughter or grand-daughter. Has anyone else come across this please? Also I cannot draw down any of my pension without taking all of it out of the LGPS and putting somewhere else. I can take early retirement but I don't want to do this or I can take flexible retirement whereby I can access some of the benefits and carry on contributing. This looks like the best option but I would have to either reduce my hours or pay grade. I am exploring this option at the moment but not sure that a reduction of a couple of hours a week - ie an FTE of 0.99 or thereabouts would be acceptable.
I would be very interested if anyone has been in this position.

Thanks

Silvertabby

SallyH57 wrote: »

I have been contributing to the LGPS for 20 years, working full time.and have now reached 61. My family do not seem to live into their 80's and 90's and I have fairly serious back issues which will limit my mobility as I get older. I decided that I would like to access some of my pension benefits sooner rather than later and made enquiries. If I die whilst in service, my daughter would receive a death grant but, because I am divorced and live alone, the survivor pension goes back into the Pension Scheme. I cannot elect for this benefit to be passed to my daughter or grand-daughter. Has anyone else come across this please? Also I cannot draw down any of my pension without taking all of it out of the LGPS and putting somewhere else. I can take early retirement but I don't want to do this or I can take flexible retirement whereby I can access some of the benefits and carry on contributing. This looks like the best option but I would have to either reduce my hours or pay grade. I am exploring this option at the moment but not sure that a reduction of a couple of hours a week - ie an FTE of 0.99 or thereabouts would be acceptable.
I would be very interested if anyone has been in this position.

Thanks

No, there is no way you could leave actual pension benefits to your daughter, assuming that she is over 18 (or 23 if still in full time education) and isn't disabled. (Or your grand-daughter, unless you have adopted her). In the absence of qualifying children, a survivor's pension for life is only payable to a spouse or to a co-habiting partner. There is no way round this within the LGPS.

You are right about the death in service grant, but are you also aware of the post retirement death grant? This is a tax free sum of money of 10 times your own pension minus pension already paid - and you can nominate your daughter to receive this. Note that this only applies if you were to die within 10 years of starting to draw your pension - and if you died at 9 years 11 months the death grant would only be the equivalent of 1 month's pension.


You can't draw down your LGPS pension - it's all or nothing. Flexible retirement is an option, but I suspect that your wish to reduce your hours to 0.99 will be a non-starter, as the flexi retirement rules specify that 'there must be a substantial reduction in hours/pay grade'. Please don't think that you can drop your hours and then return to full time once your flexi pension is in payment - that's another big no-no. Also, are you aware that even if you took your pension on flexi terms it would still be subject to a permanent reduction for early payment?

Just a thought, but are your health issues serious enough to warrant retirement on ill health grounds?

Kynthia

This is very common and generally the case in defined benefit (final salary) pension schemes. The advantage is these are designed to provide an employee and their spouse an income for life with no risk to them. There's no need to worry about inflation rates, what the stock market is doing or have any concerns about running out of money if you live longer than most. It also protects your loved ones should you die young as it will still pay your partner for life and pay money to your children until they are legally not of dependant age (terms can differ for each schene), and if youre still employed it will pay whoever you nominate a death in service grant. It also protects you by offering an ill heath pension should you be too ill to continue working. So as you can see it's a good pension with many advantages.

Once your children are grown, if you don't have a partner, are nearing retirement age, and don't expect to live longer than average then its advantages may not mean you'll get the most out of it. However you still had that cover your whole working life should anything have happened and it's a good thing you didn't need it, like insurance. So it's now up to you whether to transfer out, something most schemes dont offer but the lgps does, consider flexible retirement/part time working, retire early on a reduced pension or accept that you got a pension that looks after you and not your adult children.

SallyH57

Thank you for this. At the moment no but I will need major back surgery in the next year or so and sitting as a desk for hours won't be ideal but ill health retirement is a bit of a stretch as I could probably find some work.

SallyH57

Fascinating to get such useful, honest and practical advice - thank you.

I've requested a pension estimate - once that arrives I will have a better idea.

OldBeanz

You should also be able to do something about sitting at a desk all day. There will be a process for evaluating your requirements if you drive a computer and many employers will adapt your environment etc to help.

Rich2808

Silvertabby wrote: »

No, there is no way you could leave actual pension benefits to your daughter, assuming that she is over 18 (or 23 if still in full time education) and isn't disabled. (Or your grand-daughter, unless you have adopted her). In the absence of qualifying children, a survivor's pension for life is only payable to a spouse or to a co-habiting partner. There is no way round this within the LGPS.

You are right about the death in service grant, but are you also aware of the post retirement death grant? This is a tax free sum of money of 10 times your own pension minus pension already paid - and you can nominate your daughter to receive this. Note that this only applies if you were to die within 10 years of starting to draw your pension - and if you died at 9 years 11 months the death grant would only be the equivalent of 1 month's pension.


You can't draw down your LGPS pension - it's all or nothing. Flexible retirement is an option, but I suspect that your wish to reduce your hours to 0.99 will be a non-starter, as the flexi retirement rules specify that 'there must be a substantial reduction in hours/pay grade'. Please don't think that you can drop your hours and then return to full time once your flexi pension is in payment - that's another big no-no. Also, are you aware that even if you took your pension on flexi terms it would still be subject to a permanent reduction for early payment?

Just a thought, but are your health issues serious enough to warrant retirement on ill health grounds?

I think its a terrible shame that there is no way long term survivor pensions (bar the death in service lump sum and short term pension) can be passed onto friends or close relatives - such as siblings - in the same way those for civil partners and married couples can. Its not as if you can opt out and pay a lower contribution if you are single.

Given civil partnerships will soon be legal for heterosexual couples that might of course be an answer - as pension benefits for partners can then be applied.

Silvertabby

Rich2808 wrote: »

I think its a terrible shame that there is no way long term survivor pensions (bar the death in service lump sum and short term pension) can be passed onto friends or close relatives - such as siblings - in the same way those for civil partners and married couples can. Its not as if you can opt out and pay a lower contribution if you are single.

Given civil partnerships will soon be legal for heterosexual couples that might of course be an answer - as pension benefits for partners can then be applied.

The LGPS (and most other pension schemes) already pay survivor's pension benefits to co-habiting partners so, if civil ceremonies are introduced for heterosexual couples, it won't make any difference.


As for being able to leave pensions for life to siblings, best mates, etc, it will never happen as the cost would be exorbitant. DB pensions such as the LGPS pay pensions based on an accrual rate, rather than on pension contributions - but the contributions (employer as well as employee) are set at a rate which makes the scheme affordable. Would you really be happy to pay 30% of your salary into the scheme just so you can leave a pension to your best mate?

Barny1979

Flexible retirement has to be a reduction of at least 40%, therefore down to 3 days a week.

Kynthia

Rich2808 wrote: »

I think its a terrible shame that there is no way long term survivor pensions (bar the death in service lump sum and short term pension) can be passed onto friends or close relatives - such as siblings - in the same way those for civil partners and married couples can. Its not as if you can opt out and pay a lower contribution if you are single.

Given civil partnerships will soon be legal for heterosexual couples that might of course be an answer - as pension benefits for partners can then be applied.

One thing to note with paying a co-habiting partner is that you both must be free to marry, or enter into a civil partnership. If you aren't free to marry each other for any reason then the partner doesn't qualify. There are also other conditions so people should check.

Silvertabby

!!!8220; I think its a terrible shame that there is no way long term survivor pensions (bar the death in service lump sum and short term pension) can be passed onto friends or close relatives - such as siblings - in the same way those for civil partners and married couples can. Its not as if you can opt out and pay a lower contribution if you are single.

Given civil partnerships will soon be legal for heterosexual couples that might of course be an answer - as pension benefits for partners can then be applied.
Originally posted by Rich2808

Kynthia wrote: »

One thing to note with paying a co-habiting partner is that you both must be free to marry, or enter into a civil partnership. If you aren't free to marry each other for any reason then the partner doesn't qualify. There are also other conditions so people should check.

I assume that the same criteria will also apply to civil partnerships - ie, neither party is already married or in a civil partnership with another person?

I did have some interesting conversations with LGPS members when the co-habiting partner's pensions came into being. One chap insisted that he could nominate his live-in girlfriend to receive his pension because it wasn't his fault that his '***** of a wife' wouldn't agree to a divorce.