LGPS Deferred Pension

Cherry_Burton

Hello,

I left local government in 2010 with 20.75 years service. At 65 years old my deferred pension would be £22,915 and the lump sum £58,317 using 31sr March 2019 figures. I am 57 and don't want to work until 65 so I would like to calculate how much I would receive if I took the money at other ages, for instance, 59 and 60 years. I think I saw an example of this calculation on the forum months ago but I can't find it now.

I would be very grateful if someone could show me how to do the sums.

Thank you

CB

billywhizz88

Hi ya

I have been doing similar calls although my service and age come to over 85 years

Whilst I don't have the actual calculation to hand some of it will be based on the 2008 scheme and the rest under CARE average. I think you would see an a urial reduction on your pension if you took your pension at 60 of circa 20 per cent and 59 around 24 per cent. The lump sum would also be reduced by not as much. If you ring your provider they will do the sum for you

Hope I have that right but sure others will put you right if I am wrong

AlanP_2

Try googling lgps and the County / authority that you were a member of. Many of them have websites with calculators.

Cherry_Burton

Hi

Thank you, I have contacted the pension scheme but they have not been very helpful. There isn't a calculator on the website and they only provide information to people within 6 months of retirement. I don't want to retire yet only get the figures to help with planning.

CB

Silvertabby

Cherry_Burton wrote: »

Hello,

I left local government in 2010 with 20.75 years service. At 65 years old my deferred pension would be £22,915 and the lump sum £58,317 using 31sr March 2019 figures. I am 57 and don't want to work until 65 so I would like to calculate how much I would receive if I took the money at other ages, for instance, 59 and 60 years. I think I saw an example of this calculation on the forum months ago but I can't find it now.

I would be very grateful if someone could show me how to do the sums.

Thank you

CB

Based on your age, amount of service and date of leaving you will have full Rule of 85 protections in respect of your pre 2008 service.

That means if you take your benefits from age 60 then your lump sum will be £58,317 (plus cost of living increases from now until age 60) and your pension will only be reduced in respect of your service from April 2008 to your date of leaving. Your benefit statement should show the breakdown between your pre 2008 and 2008 to 2010 service (different accrual rates) so a quick back of the fag packet calc would be to just look at the pension for 2008 to 2010 and reduce it by 25%.

Although it is now possible to access deferred LGPS benefits from age 55, Rule of 85 protections are still linked to a minimum retirement age of 60. Taking them before 60 would mean that your pre 2008 benefits (including your lump sum) would also be reduced.

If you do take your benefits from your 59th birthday, then the reductions would be:

Lump sum - 2.3%
Pre 2008 pension - 5.1%
Post 2008 pension - (back of the fag packet again) 30%

ADD:

Now with a calculator to hand, and using your 2019 ABS figures of £58,317 lump sum and £22,915 pension, I make that:

Pre 2008
£58,317 lump sum
£19,439 pension
Post 2008
£3,476 pension
Total pension = £22,915


Benefits from 60:
£58,317 lump sum
£19,439 pre 2008 pension plus £2,607 post 2008 pension (£3,476 minus 25%)
Total pension = £22,046

Plus cost of living increases from April 2020 to age 60

Benefits from 59:
£56,975.71 lump sum ((£58,317 minus 2.3%)
£18,447.61 pre 2008 pension (£19,439 minus 5.1%)
£2,433.20 post 2008 pension (£3,476 minus 30%)
Total pension = £20,880.81

So you can see the benefit of hanging on until 60, if you can. No point in deferring your pension beyond 60 as the bulk of it would only increase by CPI, which you'd get anyway (late payment increases would only kick in from 65).

How much lump sum would you like to take?

Use this to play around with how much you could get if you commute some of your annual pension for a higher tax free lump sum. But bear in mind that the LGPS commutation rate of 1:12 - ie give up £1 of annual pension for life for a one-off tax free payment of £12 - isn't particularly generous.

Cherry_Burton

Hi,

Thank you. Silvertabby, you are obviously the expert in all things LGPS. The statement does not show the breakdown between the per 2008 and 2008- 2010 service. It only gives single figures for pension and lump sum (plus for Death Grant ).

I rejoined LG in 2013 and am now building up CARE benefits with another scheme. They are much more helpful and it is fairly easy to estimate those benefits. So it is frustrating that I can't get an estimate of the deferred pension. It would be easier to get blood from a stone than any information from them. They will only communicate in writing to your home address and not by email (even cherry.burton@anycouncil.gov.uk) and they won't discuss details on the phone.

Can I assume the 2008-2010 sum is £22915/20.75*2 or is this too simplistic? My plan is to take the benefits from 60 so it is useful to know the lump sum will not be reduced even if the pension is.

CB

Silvertabby

Cherry_Burton wrote: »

Hi,

Thank you. Silvertabby, you are obviously the expert in all things LGPS. The statement does not show the breakdown between the per 2008 and 2008- 2010 service. It only gives single figures for pension and lump sum (plus for Death Grant ).

I rejoined LG in 2013 and am now building up CARE benefits with another scheme. They are much more helpful and it is fairly easy to estimate those benefits. So it is frustrating that I can't get an estimate of the deferred pension. It would be easier to get blood from a stone than any information from them. They will only communicate in writing to your home address and not by email (even [EMAIL="cherry.burton@anycouncil.gov.uk"]cherry.burton@anycouncil.gov.uk[/EMAIL]) and they won't discuss details on the phone.

Can I assume the 2008-2010 sum is £22915/20.75*2 or is this too simplistic? My plan is to take the benefits from 60 so it is useful to know the lump sum will not be reduced even if the pension is.

CB

Hi - this crossed with my 'ADD' so hope my figures are helpful. They are based on your lump sum being 3 x times your pre 2008 pension, with the remainder being your post 2008 benefits (may look high in relation to your pre 2008 pension because the accrual rate was 1/60th with no automatic lump sum, whereas the pre 2008 accrual rate was the lower 1/80th but plus auto lump sum)

The 25/30% reductions in respect of your post 2008 benefits are a worst case guess - the actual rate is calculated on a daily basis, but using these will give you a good idea.