LGPS - to combine or keep separate

Pebster

I have been given the option to combine, or keep separate, my previous and current local government pension pots. My previous pension from pre 1 April 2014 service, dates from 2003-2011. In 2015, I briefly worked for the NHS, and more recently I've returned to working in local government. I have been informed by my local county council pension service that as there's been less than a five year gap between my public sector pensionable employments, l can choose whether to keep my previous local government service separate (pre 1 April 2014), or combine it with my current local government pension.

I comprehend the final salary will be fixed for my pre 1 April 2014 service if l keep the pots separate, and so forth. However, there is one significant and very important aspect that l’m struggling to comprehend.

This relates to the age at which l would receive my my previous pension (pre 1 April 2014) if l elect to combine it with my current local government pension. The letter l have received from the local pension service states that l would receive the old pension without reduction at age 65, and the new pension at state pension age. The letter goes on to state that transferring the old pension over may well bring the payment date into line with that of the new pension.

I’m 41 years old and therefore, under current arrangements, my state pension age will be 68 or thereabouts; albeit this could shift upwards if the government wishes to increase state pension age again in future.

I’ve looked on the LGPS website and have read through a lengthy document entitled ‘Re-joining the LGPS’. Within this document, in section D2, which covers rejoiners without a break of more than 5 years, it is stated on page 52-53 that for those wishing to combine pre 1 April 2014 pension with a new active pension account, the benefits will be payable from 65 for the pre 1 April 2014 element.

At first sight, this guidance from LGPS seems relatively clear. However, in the glossary of this same document it is stated: ‘please note that you cannot take your benefits built up in the final salary scheme separately from the benefits you build up in the career average scheme if they have been combined.’

In essence, what l’m trying to establish is whether my pre 1 April 2014 pension would become payable at 65, or alternatively, whether all of my local government pension would become payable at the same time at state pension age (currently forecast to be 68) if l combine both my previous and current local government pension pots.

Thank you for reading. Any responses would be much appreciated.

Silvertabby

Normal retirement dates aren't really the biggest issue here. If you did combine, then your pre 2014 service would still be payable in full from age 65 even though you may not be able to draw it separately. However, if you retired at 65 the early retirement reductions would only apply to your post 2014 service.

What you need to do first is compare your old and new salaries. Your old record was preserved using your pensionable pay as at your date of leaving in 2011, but it hasn't stagnated - it's increased in value each year in line with CPI inflation. It's worth noting that CPI over this period has been more than the average 1% LGPS salary increases, which is one of the ticks in the boxes for leaving it separate.. unless..

If you do combine, then your pre 2014 service will be based on your pensionable pay as at the day you eventually leave. So, you need to uprate your old salary using the multiplication factor from the chart below and compare that with your new pensionable pay (old time pensionable pay is different from CARE pensionable pay so make sure you ask your employer for the correct rate)

27-Dec-10 to 26-Jan-11 1.1996
27-Jan-11 to 26-Feb-11 1.1965
27-Feb-11 to 26-Mar-11 1.1934
27-Mar-11 to 24-Apr-11 1.1904
25-Apr-11 to 24-May-11 1.1855
25-May-11 to 24-Jun-11 1.1805
25-Jun-11 to 24-Jul-11 1.1756
25-Jul-11 to 24-Aug-11 1.1708
25-Aug-11 to 24-Sep-11 1.1658
25-Sep-11 to 24-Oct-11 1.1609
25-Oct-11 to 24-Nov-11 1.1561
25-Nov-11 to 24-Dec-11 1.1511
25-Dec-11 to 24-Jan-12 1.1462


If your new salary is higher than your old uprated salary - or you expect a couple of promotions before you leave - then that's another tick for combining. If your new salary is much lower, however, then that's cause for considering leaving it deferred.


Unfortunately, without a crystal ball, there's no way of knowing what is the right answer when it comes to combining or not.