Local Government Pension

kates1981

Can someone explain the LGPS to me and how it differs from my current private sector pension with Standard life. My current private sector pension is a generous 10% employer contribution amd o choose to contribute 15%. I’m looking to change jobs to working in a school setting. The LGPS is really confusing but it looks like I would be missing out on what is a great benefit with my current employer. Trying to say up the pros and cons before I consider this new role. 

Dazed_and_C0nfused

Really??

Your DC pension is dependent on your investment choices and therefore likely to be subject to the ups and downs of the stock market.

LGPS is a promise to pay x/year for as long as you live.  And that's before you take into account spouse pension, death benefits etc.

Have you actually read details of the LGPS?

JoeCrystal

Confused? Read this website: https://www.lgpsmember.org/ 

xylophone

LGPS is a Defined Benefit pension scheme.

https://www.unison.org.uk/get-help/knowledge/pensions/local-government-pension-scheme/#heading-4

What are the benefits of the LGPS?

The scheme is administered locally through 101 regional pension funds (89 in England & Wales), and offers:

• a pension based on your pay and how long you’ve been in the scheme, not the state of the financial markets when you retire;
• the option to exchange part of your pension for tax free cash on retirement;
• immediate life cover and a pension for your husband, wife, partner and/or children when you die;
• an option means you can retire from 55 and receive benefits immediately, although if you voluntarily retire early, your pension is likely to be significantly reduced for being paid early;
• an option to flexibly retire from 55 with employer’s consent, and you can negotiate with your employer to continue working on reduced hours and draw part or all your pension;
  immediate payment of pension benefits, without reduction, if you are made redundant or retired for business efficiency purposes after 55;
• access to a pension, which could be enhanced, from any age if the medical evidence shows you should be retired on the grounds of permanent ill health;
  the ability to boost your pension by paying more contributions, for which you receive tax relief;
• employers’ contributions averaging between 14% and 18% on top of the contributions you pay towards the cost of your pension

The friend of a neighbour was married to an environmental officer employed by the local council.
She had recently given birth to their second child.  Her husband was on duty one night when he was killed in a freak motor accident.

Mercifully, as he was a member of LGPS, her grief was not exacerbated by wondering where the next penny would come from.........

Silvertabby

xylophone said:

LGPS is a Defined Benefit pension scheme.

https://www.unison.org.uk/get-help/knowledge/pensions/local-government-pension-scheme/#heading-4

What are the benefits of the LGPS?

The scheme is administered locally through 101 regional pension funds (89 in England & Wales), and offers:

• a pension based on your pay and how long you’ve been in the scheme, not the state of the financial markets when you retire;
• the option to exchange part of your pension for tax free cash on retirement;
• immediate life cover and a pension for your husband, wife, partner and/or children when you die;
• an option means you can retire from 55 and receive benefits immediately, although if you voluntarily retire early, your pension is likely to be significantly reduced for being paid early;
• an option to flexibly retire from 55 with employer’s consent, and you can negotiate with your employer to continue working on reduced hours and draw part or all your pension;
  immediate payment of pension benefits, without reduction, if you are made redundant or retired for business efficiency purposes after 55;
• access to a pension, which could be enhanced, from any age if the medical evidence shows you should be retired on the grounds of permanent ill health;
  the ability to boost your pension by paying more contributions, for which you receive tax relief;
• employers’ contributions averaging between 14% and 18% on top of the contributions you pay towards the cost of your pension

The friend of a neighbour was married to an environmental offer employed by the local council.
She had recently given birth to their second child.  Her husband was on duty one night when he was killed in a freak motor accident.

Mercifully, as he was a member of LGPS, her grief was not exacerbated by wondering where the next penny would come from.........

Tax free lump sum of 3 x annual salary.

Spouses pension based on assumed service to NRA (State pension age) payable for life.

Children's pensions to age 18/or 23 if in full time education.

Can any private pension scheme match that ? 

I've mentioned before on these boards about a very sad case from my early days as a LGPS pensions administrator.

Chap joined the LGPS, at a time when it was possible to opt out and take a refund if you had less than 2 years membership.  He did that, because he wanted the money to pay for his wedding.  I believe his intention was to re-join the pension scheme at some point - but he never did.....

At least 2 children later, he too was killed in a traffic accident.  His boss had visited the widow before she could be intercepted, and told her that she would get the benefits described above.

She didn't get a penny.

Bobziz

So in summary, pensions don't come any better than the LGPS pension, and it blows your current scheme out of the water.

OldBeanz

kates1981 said:

Can someone explain the LGPS to me and how it differs from my current private sector pension with Standard life. My current private sector pension is a generous 10% employer contribution amd o choose to contribute 15%. I’m looking to change jobs to working in a school setting. The LGPS is really confusing but it looks like I would be missing out on what is a great benefit with my current employer. Trying to say up the pros and cons before I consider this new role. 

You will be going into a great scheme.
Once suitably installed you should enquire about transferring your existing pension to the LGPS. It may well be beneficial to transfer some or all of it. Experts on here will soon give you an opinion (as you can see). You should also be aware of the benefits of the AVC scheme which will allow you to massively increase your tax free cash on drawing your benefits.
Good luck with the new job as the Pension is one of the main benefits over your present scheme.

ashpan

Is the LGPS pension affected by being long term sick in the final year of working as salary drops to 50% after 6 months? 

Silvertabby

ashpan said:

Is the LGPS pension affected by being long term sick in the final year of working as salary drops to 50% after 6 months? 

Yes and No.....

Example:

A member's pensionable pay is reduced due to half pay for the period 1st July to 31st December due to sickness absence. The employer calculates the assumed pensionable pay by calculating the average of the three complete months' pensionable pay received before the pay period in which the pay is reduced.

• April pensionable pay = £1,200
• May pensionable pay = £1,200
• June pensionable pay = £1,300

(In this case the member's pay increased from 1st June to £1,300 per month (£15,600 per year) due to an annual pay award.)

Therefore, £1,200 + £1,200 + £1,300 = £3,700 divided by 3 = £1233.33 per month. The employer would inform the member's pension fund that the assumed pensionable pay for the period 1st July to 31st December is £1233.33 x 6 (months)= £7399.98.

The member pays their basic pension contributions on the reduced pay they actually receive.

Reg_Smeeton

Your local Trade Union educational unit might be running a short distance learning course re: public sector pensions, how they work etc. Maybe worth enquiring (free if you’re a union member). Here’s one running soon near me: http://www.traffordmet.unison.org.uk/2020/07/30/local-government-pension-course/