IS THIS POSSIBLE - LGPS PAY IN LIEU AND REDUNDANCY OPTIONS / TAX EFFICIENCY

Stonesmike

Silvertabby said:

Stonesmike said:

Waited 4 months for my lgp to come through, fortunately I had savings to rely on.

Was that during Covid and/or with AVCs?

It was during covid, no AVCs.

Not sure if it was the extra pension years I brought, that pro longed it, my colleague put there forms through after me and was paid 2 months before me.

billywhizz1966

Thanks Stonesmike. As Silvertabby advised I assume it was all backdated so you didn't lose out ?
We also have savings and I am still working but as today is my 55th birthday the best present I have is that there is nothing to now stop me going at anytime and drawing on the reserves saved over the last 37 years ! I am planning on hanging on until September but can see me tempted to go sooner as we re-evaluate the financial position 

Stonesmike

billywhizz1966 said:

Thanks Stonesmike. As Silvertabby advised I assume it was all backdated so you didn't lose out ?
We also have savings and I am still working but as today is my 55th birthday the best present I have is that there is nothing to now stop me going at anytime and drawing on the reserves saved over the last 37 years ! I am planning on hanging on until September but can see me tempted to go sooner as we re-evaluate the financial position 

Hi, it was all back dated, but was put on emergency tax code. Saying that in 2 days time I will receive a tax rebate, which was a bit more than I thought it would be. Reckon it will be April, when it corrects itself. I did phone the tax office and apart from a long wait, they was very helpful.
Happy Birthday and hope you have a lovely day.

Stonesmike

Just remembered I received interest on the lump sum, nice surprise.

jamjar92

Stonesmike said:

Just remembered I received interest on the lump sum, nice surprise.

Out of curiously what interest rate is used, probably better than the headline rates we have now of 0.1%

Silvertabby

jamjar92 said:

Stonesmike said:

Just remembered I received interest on the lump sum, nice surprise.

Out of curiously what interest rate is used, probably better than the headline rates we have now of 0.1%

1% above BOE base rate.

Note that interest (even on top of the tax free lump sum) is taxable.

PensionQ

Hi Everyone
Can anyone help me please?  I am with a Local Government Pension Scheme and have 2 pensions.  1 is a deferred pension and the 2nd is my current pension.  I have also requested VR so am leaving my employment at the end of March 2021 and hope two take my 2 pensions then.  I have been asked by my Pension funder whether I want to combine my deferred pension with my current one.  My deferred pension final pay was £28,000 and the final pay on my current pension is £25,000.  I am 58.
Thank you.

Silvertabby

PensionQ said:

Hi Everyone
Can anyone help me please?  I am with a Local Government Pension Scheme and have 2 pensions.  1 is a deferred pension and the 2nd is my current pension.  I have also requested VR so am leaving my employment at the end of March 2021 and hope two take my 2 pensions then.  I have been asked by my Pension funder whether I want to combine my deferred pension with my current one.  My deferred pension final pay was £28,000 and the final pay on my current pension is £25,000.  I am 58.
Thank you.

When you say VR, do you mean voluntary retirement or voluntary redundancy?  And exactly  when did you leave your first job, and when did you start your current post?

PensionQ

Hi Silvertabby, I have applied for voluntary redundancy.  I started my first job in 1987 left my first job in 2013 and started the current post in 2013 and am leaving this March 2021.  All jobs have been with the same employer.  Just different roles.
Thanks

Silvertabby

PensionQ said:

Hi Silvertabby, I have applied for voluntary redundancy.  I started my first job in 1987 left my first job in 2013 and started the current post in 2013 and am leaving this March 2021.  All jobs have been with the same employer.  Just different roles.
Thanks

That explains why your LGPS has asked you if you want to combine your records or not, as if kept separate only your current post benefits can be paid in accordance with redundancy rules. ie, without any reduction for early payment.

Not a straight forward question or answer.

Briefly, your pensionable pay of £28K in 2013 has risen in accordance with cost of living increases, and is now the equivalent of at least £31,200. Even without the increases, your old post pensionable pay has always been considerably more than your current £25K, which is why your records weren't combined when you changed jobs in 2013.

Now that the possibility of redundancy has been dropped into the mix, and assuming that you want to take ALL of your benefits from March, your options are:

Not combined.

Only your current post benefits will be paid without any reductions for early payment. Final salary element will be based on your current salary of £25K.   If you opt to take your earlier post benefits as well, then they would be classed as normal retirement, not redundancy, and so would be reduced for early payment.  They would, however, be calculated on the equivalent of at least £31,200 pensionable pay and not your current £25K.

Combined.

All of your benefits will be paid under redundancy rules, ie no reductions for early payment.  On the downside, ALL of your final salary benefits will be calculated using your final pensionable pay of £25K and you would lose the benefit of the higher salary.

So, the question is..... would the benefit of having NO reductions for early payment be enough to offset the loss of the higher pensionable pay?

The way I used to do these was to create a dummy record on the 'test' database showing the combined service, then run calculations for both scenarios for comparison.  Will your LGPS do that for you?  They may have to do that in order to calculate both sets of employer strain costs (as they will be different as well) so it's worth asking.