Should I transfer old LGPS to new LGPS?

CraggyRockFace

I had a job in a London borough and had an LGPS pension administered by that borough. This was my first ever pension.

I now have a new job in a county outside London, also with a different LGPS pension scheme administered by the county.


I recieved a letter from the county LGPS scheme asking if I wanted to transfer any previous pensions into their LGPS scheme.


Do I want to? I have no idea if its even possible considering they are both the same thing? Are they?


I only work 15h week so these pension are currently very small!


Many thanks for any advice.

hyubh

CraggyRockFace wrote: »

I have no idea if its even possible considering they are both the same thing?

Are they?

Yes they are, but the question is whether you wish to have two small periods of membership in the same scheme or one bigger one. If the earliest period began under the CARE scheme (i.e. you joined on or after 1 April 2014), then there will be no changes in the total pension either way.

If however the earlier period started before April 2014, then you have a bit of final salary service whose value will go up if combined with the second period, were your whole-time equivalent salary in your new job ended higher, after inflation, than the whole-time equivalent salary you finished the old job on. Conversely, the value of any pre-April 2014 membership would fall if your later whole-time equivalent salary proved less.

That said, if the earlier period finished under the CARE scheme, then strictly speaking the default position is to combine with the option of keeping separate - however, when the two periods are with different LGPS funds, clearly it's prudent from an administration point of view to get the decision in first (while it has no consequence to the individual member, a transfer value is still calculated and passed over).

CraggyRockFace

Many thanks for your detailed and comprenhensive reply! I started the first London job in 2015, so I take it from your post that it won't make any difference at all if they are left seperate or combined?

So for the sake of less paperwork and less hassle, I think I'll probably combine them and transfer the old one into the new one...

When you say this:

if the earlier period finished under the CARE scheme, then strictly speaking the default position is to combine with the option of keeping separate - however, when the two periods are with different LGPS funds, clearly it's prudent from an administration point of view to get the decision in first (while it has no consequence to the individual member, a transfer value is still calculated and passed over).

Do you mean than if I make a decision to combine the two pensions, then they are not actually permenantly combined? Or that I can still separate them in the future if I want to?

What would be the point of keeping them separate - if combining them doesn't affect their value?

hyubh

CraggyRockFace wrote: »

Many thanks for your detailed and comprenhensive reply! I started the first London job in 2015, so I take it from your post that it won't make any difference at all if they are left separate or combined?

There are still differences, but only in relation to being in two parts (if kept separate) -

1) You could take the 2015 one early while still in the job for the second.

2) Any employer-led early retirement in your late 50s (e.g. due to redundancy) would only bring the later membership into payment.

3) Any ill health retirement from active would only be in relation to the second period (and ill health terms from deferred, while possible, are not as good).

For only a small period of membership that attracts an identical normal pension age and early retirement factors as the later one, personally I'd combine, though it won't be a big deal either way.

Do you mean than if I make a decision to combine the two pensions, then they are not actually permanently combined? Or that I can still separate them in the future if I want to?

No. Until 2014, the rules were, if you left and rejoined, memberships remained separate unless you elected to combine, within a certain window (the precise details varied, but simplifying slightly, within 12 months of rejoining). When the scheme switched to a CARE basis in 2014, the rules changed to say that, rejoiners have their memberships automatically combined, but with the option to elect for separate benefits within 12 months.

This creates an administrative problem when the 'aggregation' involved is between LGPS funds, and why the new fund would really like an explicit answer from you. If you don't answer however, then according to the rules, they should just go ahead and request a CETV from the old fund once your 12 month window is up.