Combining LGPS and AVCs

Aylesbury_Duck

Hi.  I contribute to the LGPS in the Kent.  If I move to a new employer based in Surrey that also offers the LGPS, do the schemes automatically get combined, or does my Kent scheme freeze and a new account begin in Surrey?

Also, I make LGPS-linked AVCs via Prudential.  Prudential offer the scheme in Surrey as well.  Can that be continued with the Surrey scheme or again, is a new pot started?

saucer

Quick answer is that your employer may change but your LGPS membership just continues, both in the scheme and the Pru AVC.

Everything you need to know is here https://lgpsmember.org/

AlanP_2

saucer said:

Quick answer is that your employer may change but your LGPS membership just continues, both in the scheme and the Pru AVC.

Everything you need to know is here https://lgpsmember.org/

Are you sure? My undesstanding was that you had to OPT IN for the old (Kent) pension accrued to be transferred across to the nexe scheme (Surrey) unless it has changed in the last couple of years.

I'm basing my understanding on 2 people I kmow who came to our area from out of County with good promotions and never got around to completing the transfer / opt-in forms. Cost one of them >8k pa final salary pension, so an expensive mistake.

Aylesbury_Duck

AlanP_2 said:

saucer said:

Quick answer is that your employer may change but your LGPS membership just continues, both in the scheme and the Pru AVC.

Everything you need to know is here https://lgpsmember.org/

Are you sure? My undesstanding was that you had to OPT IN for the old (Kent) pension accrued to be transferred across to the nexe scheme (Surrey) unless it has changed in the last couple of years.

I'm basing my understanding on 2 people I kmow who came to our area from out of County with good promotions and never got around to completing the transfer / opt-in forms. Cost one of them >8k pa final salary pension, so an expensive mistake.

I thought opt-in was now default?  If I make the move there's no way I'd choose to opt out.  I've got a small element of final salary LGPS pension (c.£2k p.a.) and a growing CARE pension of c.£3k p.a.  From reading the link saucer kindly sent, it seems my final salary element will just stay there and my CARE element will continue to grow.  Similarly, I have over £25k in AVCs which I'm monitoring to keep around the 25% of total pot value.

Silvertabby

Surrey will ask you if you want to combine your LGPS records or leave them separate.  You will only be asked once, and you can't change your mind even if things change in the future.

Combine or not combine?  That is the question.  The answer is that, without a crystal ball, it's well nigh impossible for anyone to say which option would be the best for you. 

You will have to open a new in-house AVC account via your new employer, otherwise they won't take your AVC contributions from your new salary.

Transfers don't happen automatically.

Silvertabby

Aylesbury_Duck said:

AlanP_2 said:

saucer said:

Quick answer is that your employer may change but your LGPS membership just continues, both in the scheme and the Pru AVC.

Everything you need to know is here https://lgpsmember.org/

Are you sure? My undesstanding was that you had to OPT IN for the old (Kent) pension accrued to be transferred across to the nexe scheme (Surrey) unless it has changed in the last couple of years.

I'm basing my understanding on 2 people I kmow who came to our area from out of County with good promotions and never got around to completing the transfer / opt-in forms. Cost one of them >8k pa final salary pension, so an expensive mistake.

I thought opt-in was now default?  If I make the move there's no way I'd choose to opt out.  I've got a small element of final salary LGPS pension (c.£2k p.a.) and a growing CARE pension of c.£3k p.a.  From reading the link saucer kindly sent, it seems my final salary element will just stay there and my CARE element will continue to grow.  Similarly, I have over £25k in AVCs which I'm monitoring to keep around the 25% of total pot value.

I think that Alan meant that you would have to opt to transfer your benefits to your new LGPS, not that you would have to opt in to the actual new scheme.  That is indeed the default. 

If you do opt to leave your benefits with Surrey, then all of them - final salary and CARE - up to your date of leaving will be deferred, and you will start a completely new membership with Kent. 

How much service do you have with Surrey, what is your leaving (whole time equivalent) final salary pensionable pay, and what will be your new (wte) final salary with Kent?

Aylesbury_Duck

Silvertabby said:

Surrey will ask you if you want to combine your LGPS records or leave them separate.  You will only be asked once, and you can't change your mind even if things change in the future.

Combine or not combine?  That is the question.  The answer is that, without a crystal ball, it's well nigh impossible for anyone to say which option would be the best for you. 

You will have to open a new in-house AVC account via your new employer, otherwise they won't take your AVC contributions from your new salary.

Nothing happens automatically.

Thank you.  Is one advantage of not combining, the potential to commence the two LGPS pensions separately, or do they both have to be taken at the same time?  e.g. take one early at say, 60 (with the appropriate reduction) and take the other in full at 67.

Yes, I realised I'd need to arrange for new AVCs to be deducted but can they be combined, or will they be left separate as well?  I guess a consideration here (if there's an option) is what I do with the LGPS pots, so as to keep at or below the 25% point where I could access the whole AVC pot tax free.  I suppose if I keep both LGPS separate, it makes sense to do the same with the AVCs.

Silvertabby

Aylesbury_Duck said:

Silvertabby said:

Surrey will ask you if you want to combine your LGPS records or leave them separate.  You will only be asked once, and you can't change your mind even if things change in the future.

Combine or not combine?  That is the question.  The answer is that, without a crystal ball, it's well nigh impossible for anyone to say which option would be the best for you. 

You will have to open a new in-house AVC account via your new employer, otherwise they won't take your AVC contributions from your new salary.

Nothing happens automatically.

Thank you.  Is one advantage of not combining, the potential to commence the two LGPS pensions separately, or do they both have to be taken at the same time?  e.g. take one early at say, 60 (with the appropriate reduction) and take the other in full at 67.

Yes, I realised I'd need to arrange for new AVCs to be deducted but can they be combined, or will they be left separate as well?  I guess a consideration here (if there's an option) is what I do with the LGPS pots, so as to keep at or below the 25% point where I could access the whole AVC pot tax free.  I suppose if I keep both LGPS separate, it makes sense to do the same with the AVCs.

If left separate, then you can access the deferred one from 55 plus (I'm guessing that you joined after 2006 and so don't have any R85 protections?) whilst continuing to pay into the new one.

I you do that, then you'll need to specify to the Pru that you want to keep your AVC funds separate - if they combine, then your total AVCs when taken with just the Kent pension may indeed exceed the 25% limit.  I would strongly advise that you keep a sharp eye on the values of your AVC pots, just in case the combined value is used in the calculation of your first pension payment. 

The biggest disadvantage of not combining would be if you were to be made redundant by Kent.  Unless the regs change in the meantime, that would you give you immediate unreduced benefits as long as you are 55 or over at the time.  This wouldn't be extended to your deferred pension, which would remain subject to the normal early retirement reductions.  See what I mean about the crystal ball?

Aylesbury_Duck

Silvertabby said:

Aylesbury_Duck said:

AlanP_2 said:

saucer said:

Quick answer is that your employer may change but your LGPS membership just continues, both in the scheme and the Pru AVC.

Everything you need to know is here https://lgpsmember.org/

Are you sure? My undesstanding was that you had to OPT IN for the old (Kent) pension accrued to be transferred across to the nexe scheme (Surrey) unless it has changed in the last couple of years.

I'm basing my understanding on 2 people I kmow who came to our area from out of County with good promotions and never got around to completing the transfer / opt-in forms. Cost one of them >8k pa final salary pension, so an expensive mistake.

I thought opt-in was now default?  If I make the move there's no way I'd choose to opt out.  I've got a small element of final salary LGPS pension (c.£2k p.a.) and a growing CARE pension of c.£3k p.a.  From reading the link saucer kindly sent, it seems my final salary element will just stay there and my CARE element will continue to grow.  Similarly, I have over £25k in AVCs which I'm monitoring to keep around the 25% of total pot value.

I think that Alan meant that you would have to opt to transfer your benefits to your new LGPS, not that you would have to opt in to the actual new scheme.  That is indeed the default. 

If you do opt to leave your benefits with Surrey, then all of them - final salary and CARE - up to your date of leaving will be deferred, and you will start a completely new membership with Kent. 

How much service do you have with Surrey, what is your leaving (whole time equivalent) final salary pensionable pay, and what will be your new (wte) final salary with Kent?

It's the other way around, I'm currently with Kent.  LGPS membership since January 2008.

I had 6 years under the final salary scheme to 2014, which accrued £2200 of value.  I have £3200 built up in CARE.  I have c.29k in the Prudential AVC account.

Current salary is £31,700.  New salary would be £31,300. 

Aylesbury_Duck

Silvertabby said:

Aylesbury_Duck said:

Silvertabby said:

Surrey will ask you if you want to combine your LGPS records or leave them separate.  You will only be asked once, and you can't change your mind even if things change in the future.

Combine or not combine?  That is the question.  The answer is that, without a crystal ball, it's well nigh impossible for anyone to say which option would be the best for you. 

You will have to open a new in-house AVC account via your new employer, otherwise they won't take your AVC contributions from your new salary.

Nothing happens automatically.

Thank you.  Is one advantage of not combining, the potential to commence the two LGPS pensions separately, or do they both have to be taken at the same time?  e.g. take one early at say, 60 (with the appropriate reduction) and take the other in full at 67.

Yes, I realised I'd need to arrange for new AVCs to be deducted but can they be combined, or will they be left separate as well?  I guess a consideration here (if there's an option) is what I do with the LGPS pots, so as to keep at or below the 25% point where I could access the whole AVC pot tax free.  I suppose if I keep both LGPS separate, it makes sense to do the same with the AVCs.

If left separate, then you can access the deferred one from 55 plus (I'm guessing that you joined after 2006 and so don't have any R85 protections?) whilst continuing to pay into the new one.

I you do that, then you'll need to specify to the Pru that you want to keep your AVC funds separate - if they combine, then your total AVCs when taken with just the Kent pension may indeed exceed the 25% limit.  I would strongly advise that you keep a sharp eye on the values of your AVC pots, just in case the combined value is used in the calculation of your first pension payment. 

The biggest disadvantage of not combining would be if you were to be made redundant by Kent.  Unless the regs change in the meantime, that would you give you immediate unreduced benefits as long as you are 55 or over at the time.  This wouldn't be extended to your deferred pension, which would remain subject to the normal early retirement reductions.  See what I mean about the crystal ball?

That's really helpful, thank you.  On balance, given that my husband and I have made made private pension provision as well, it seems sensible to combine, thereby getting the potential redundancy benefit should that situation arise and avoiding the risk of any confusion over the split AVC pot.  If we elect to retire early, we have around £250k of private pension to bridge the gap before our LGPSs and AVCs kick in, so don't foresee the need to take one and defer one.

Silvertabby

Aylesbury_Duck said:

Silvertabby said:

Aylesbury_Duck said:

AlanP_2 said:

saucer said:

Quick answer is that your employer may change but your LGPS membership just continues, both in the scheme and the Pru AVC.

Everything you need to know is here https://lgpsmember.org/

Are you sure? My undesstanding was that you had to OPT IN for the old (Kent) pension accrued to be transferred across to the nexe scheme (Surrey) unless it has changed in the last couple of years.

I'm basing my understanding on 2 people I kmow who came to our area from out of County with good promotions and never got around to completing the transfer / opt-in forms. Cost one of them >8k pa final salary pension, so an expensive mistake.

I thought opt-in was now default?  If I make the move there's no way I'd choose to opt out.  I've got a small element of final salary LGPS pension (c.£2k p.a.) and a growing CARE pension of c.£3k p.a.  From reading the link saucer kindly sent, it seems my final salary element will just stay there and my CARE element will continue to grow.  Similarly, I have over £25k in AVCs which I'm monitoring to keep around the 25% of total pot value.

I think that Alan meant that you would have to opt to transfer your benefits to your new LGPS, not that you would have to opt in to the actual new scheme.  That is indeed the default. 

If you do opt to leave your benefits with Surrey, then all of them - final salary and CARE - up to your date of leaving will be deferred, and you will start a completely new membership with Kent. 

How much service do you have with Surrey, what is your leaving (whole time equivalent) final salary pensionable pay, and what will be your new (wte) final salary with Kent?

It's the other way around, I'm currently with Kent.  LGPS membership since January 2008.

I had 6 years under the final salary scheme to 2014, which accrued £2200 of value.  I have £3200 built up in CARE.  I have c.29k in the Prudential AVC account.

Current salary is £31,700.  New salary would be £31,300. 

Very little difference in salary.  If left deferred, then your old record would increase each year in line with CPI inflation.  Your new pension will increase in line with any increases in pay, plus CPI revaluation.  If you are currently at the bottom of your pay scale and/or expect a promotion or 2 then combining would make sense, as your old final salary record would benefit by the higher pensionable pay.