Should I combine Local Government Pension Scheme pots?

Silvertabby

“ I would take the CPI linked over the possibility of a slightly higher paid job later on every time myself.
Originally posted by barnstar2077

Johnnyboy11 wrote: »

Me too.

Since April 2009 a deferred LGPS pension has increased by 26% whilst public sector pay has increased by only 10%. That's a massive delta, affecting the retirement plans of everyone in the public sector, ouch!

That assumes no promotion/increase in pay grade. Now, where did I put that crystal ball again.....

Happier_Me

I made the decision to not combine 3 years ago and as Silvertabby has said, its very much a crystal ball job. On the service, my situation was straight forward: old job final salary: £49k, new job salary:£44k (the £49k was higher than my salary when I left my old job, that came about through the best of three year calculation - a pleasant surprise when I got my pension statement).

The factors that influenced my decision was:

• The obvious - old pay higher than new pay
• CPI likely to be higher than pay rises
• I have absolutely no desire to take on a higher paid job
• I can actually see myself taking a lower paid job if I get the opportunity in the future and I wouldn't want that to impact my FS pension
• High chance of a restructure that could force a pay cut anyway
• I like the fact I can calculate my LGPS pension with some degree of certainty as my FS element is effectively fixed and not vulnerable to a future pay reduction outside of my control.
• I have 11 years 85 rule protection, so a higher final salary does boost my pension at 60 quite nicely.

The only downside for me is the possible impact on a future ill health retirement (hopefully unlikely).

Johnnyboy11

R85 protection and the earlier retirement age of your deferred pension (Age 65) are very valuable if you ever decide to retire early. If you have the 85 years (membership + deferred membership + age), my understanding of recent change to the LGPS Regs. is that it is now possible to voluntarily retire from age 55 without the need for your employer's consent, albeit the protections won't cover the years between age 55 and 60.


I will meet R85 at age 56 and plan to start a deferred LGPS pension then, with a modest four year (20% ish) actuarial reduction, which is nice

Rich2808

Happier_Me wrote: »

I made the decision to not combine 3 years ago and as Silvertabby has said, its very much a crystal ball job. On the service, my situation was straight forward: old job final salary: £49k, new job salary:£44k (the £49k was higher than my salary when I left my old job, that came about through the best of three year calculation - a pleasant surprise when I got my pension statement).

The factors that influenced my decision was:

• The obvious - old pay higher than new pay
• CPI likely to be higher than pay rises
• I have absolutely no desire to take on a higher paid job
• I can actually see myself taking a lower paid job if I get the opportunity in the future and I wouldn't want that to impact my FS pension
• High chance of a restructure that could force a pay cut anyway
• I like the fact I can calculate my LGPS pension with some degree of certainty as my FS element is effectively fixed and not vulnerable to a future pay reduction outside of my control.
• I have 11 years 85 rule protection, so a higher final salary does boost my pension at 60 quite nicely.

The only downside for me is the possible impact on a future ill health retirement (hopefully unlikely).

Worth bearing in mind that if you do take a pay cut you can also get your final salary calculated on the average of any 3 consecutive years' pay in the last 13 years of employment - if you suffered a pay reduction in your last 10 years of membership. Helpful perhaps if you take a lower paid job in your 50s or 60s.

And of course there are also options for flexible retirement if you combine your benefits e.g. work 3 days a week and claim your pension unreduced (generally on the back of the 85 year rule) for 2 days - thus easing you into full retirement. Although I knew someone who did that and they were so dedicated they worked the equivalent of 5 days a week anyway! Its only an option if your employer allows it though.

Its just a shame we don't all have a crystal ball as has been said - as you cannot predict what will befall you in terms of health, life expectancy, pay, promotion and also the risk of breaching annual and lifetime allowances which is greater if you combine benefits etc etc

hyubh

Rich2808 wrote: »

Worth bearing in mind that if you do take a pay cut you can also get your final salary calculated on the average of any 3 consecutive years' pay in the last 13 years of employment - if you suffered a pay reduction in your last 10 years of membership. Helpful perhaps if you take a lower paid job in your 50s or 60s.

Small caveat - this protection pertains to 'continuous employment' (reg. 10 of the 2008 Benefit Regs). So, working for one council in a senior role then moving to another for a role having less responsibility and correspondingly lower pay wouldn't count. Moving within the same employer is more ambiguous, though should still normally count as 'continuous employment'.

Silvertabby

hyubh wrote: »

Small caveat - this protection pertains to 'continuous employment' (reg. 10 of the 2008 Benefit Regs). So, working for one council in a senior role then moving to another for a role having less responsibility and correspondingly lower pay wouldn't count. Moving within the same employer is more ambiguous, though should still normally count as 'continuous employment'.

hyubh beat me to it. When it comes to the '10 year rule', assume nothing, check everything - especially if the drop in pay is due to your own request to switch to a lower paid post.

dunkle

I hope it’s ok for me to drop in on this thread and ask a similar question

I had 18 years in lgps ending in August of 2018
When I left I was in quite a decent paid job, which was boosted by shift and weekend allowance.

I was made redundant and did not work unti April this year

In April I returned to the same company and rejoined the scheme.
My new job is around 700 pound a month less than old. But with benefit of no shifts, no weekends, no bank holidays, no Xmas and new year working etc. So it’s all ok for me

Now I have the choice what to do regards pension. In an ideal world I would love to stay with my organisation and I would like promotion, but being public sector and having been made redundant previously, I’m realistic to know that may not happen. There could be promotion and there are plenty of other departments but none of that is guaranteed

So, question is, what am I best doing. I assume I’m better off keeping separate but I am a real idiot with things like this

I’m 43, 18 years previous service with this company, prior to that I had a pension with a high street retailer over 8 years which is left separate

Thanks in advance

dunkle

I have made contact with the pension department to ask if they are able to provide a forecast based on both choices. Not sure if this is something they can do

Silvertabby

dunkle wrote: »

I have made contact with the pension department to ask if they are able to provide a forecast based on both choices. Not sure if this is something they can do

Unlikely, I'm afraid, due to the amount of work involved. It would mean running calculations on both of your real records, then manually creating a 'dummy' record showing your combined service. Certainly not a 5 minute job, and not something the LGPS I worked for did under these circumstances.

Have they written to you asking if you want to combine your records or not? If they have, then that letter should give some indication of your relevant salaries. ie, the final salary link comparison is based on your pensionable salary under the old rules, which excluded non-contractual extras. If your old salary was bumped up by extras, then you need your (old rules) pensionble pay, which will be shown on your deferred benefit statement.

It sounds like your new job doesn't have these extras, so it should be a relatively easy comparison.

Then read my comments in post No 4 , most of which also apply to you in view of the short gap between leaving and re-joining.

dunkle

Cheers. I really am at a loss. I think keeping them split would be best / most logical conclusion.

If I knew I’d be here for next 22 years and knew that come that I would be promoted and earn that extra 700 quid a month that I was getting on previous salary things would be different I guess