Transfer from LGPS to CSP Alpha - CARE question

Trevelyan

Short version:

What are people's thoughts on transferring in two years in the LGPS to a job paying 1/3 more which is in the Civil Service Alpha pension scheme?


More comprehensive version:
For years, I was working in a job offering the LGPS, but I was 21 when I started and had no idea what any of it meant. It wasn't until much later that I realised 1) what pensions were about and 2) what an amazing deal it was. Frustratingly, I could have been on a final salary pension scheme, had my employer actually given me information earlier, which would have made all the rest of this much easier..

My next job was also an LGPS job and the pay was a lot better, too. I joined the scheme and was in it for exactly 2 years (to the day) until I left. However, by this point I was now in a CARE scheme.

I started another job a few weeks back and, this time, it's one that is covered by the Civil Service Pension scheme. I've just got the paperwork from the scheme today and after some checking here, I reckon I would opt for staying in the Alpha scheme. I'm 30, so the partnership contributions will only be 8%, and my logic is that I can always opt for the transfer and start over on the partnership scheme if general advice in the future is that [then] is a good time to invest again.

So far so simple. However, I was wondering if transferring my two years pension from LGPS would make sense; or if it would actually be detrimental in any sense, since it would be lowering the average overall? I was earning around 75% of what I'm on now (so a jump of 1/3) - but then if it was the same accumulation of years in both schemes then the net result would be the same?

I'm going to apply to transfer regardless, to see what my two LGPS years would buy me in Alpha, but I wonder if anyone has any other thoughts, cautions or advice on this I might want to consider?

Many thanks!

hyubh

Trevelyan wrote: »

However, I was wondering if transferring my two years pension from LGPS would make sense; or if it would actually be detrimental in any sense, since it would be lowering the average overall? I was earning around 75% of what I'm on now (so a jump of 1/3) - but then if it was the same accumulation of years in both schemes then the net result would be the same?

As the gap is less than five years, any final salary service would transfer over as final salary service, adjusted for different normal pension ages etc. Regardless of the gap, the CARE part would transfer over pretty much like-for like, given the thing that a 'Club' transfer guarantees is keeping the old active member revaluation rate, and Alpha and the LGPS have the same one.

Since the CARE pension in both Alpha and the LGPS is calculated in year-by-year chunks, rather than an average pay figure being calculated at the end and applied to all service retrospectively, different rates of pay in the old and new job will make no difference to the CARE pension already accrued.

(PS - while year-by-year chunks is the normal way a CARE scheme works, it doesn't have to, so you aren't foolish for raising the question - in fact, the old LGPS councillor section was a literal 'career average pay' scheme.)