LGPS - Impact of Extra Year

Ms_Chocaholic

Hi

A long story which I will try and keep brief.  I currently work PT but have been doing lots of additional hours, these hours will not count towards my pension however, I have been given the opportunity for these hours to instead make my PT role up to FT for the last year - how will this affect my final pension, if at all as it will be a full extra year instead of half.  Thanks.  I'm trying to compare this to another offer I have received and trying to work out which would be best.

Thanks

daveyjp

LGPS is now career average so you will earn 1/49th of your annual full time pensionable pay as pension.

MX5huggy

How long have you been in LGPS? How many years in final salary how many in average salary. Have they not been taking pension payments for the additional hours worked? Mine definitely have but I’m on FT contract seconded to a different job on the same grade but working 60 hours per week while the pandemic rages.

jamjar92

The extra hours should make a difference to your CARE element of your pension as this is based on earning, more will be added at the end of year and CPI added in future years.

If you are working part-time when you leave the LGPS, or worked part-time at some point during your last year of membership, your final pay is the whole-time pay that you would have received, if you had worked whole-time.

What the difference between the FT equivalent of the PT role and your new FT role, is it the same post to working FT rather than PT.

hyubh

Ms_Chocaholic said:

I currently work PT but have been doing lots of additional hours, these hours will not count towards my pension

Non-contractual overtime is pensionable under the CARE scheme, it only wasn't under the final salary scheme. So in other words, as others have said, those additional hours did actually count towards your pension - if you didn't have pension contributions deducted, you will need to get that sorted.

I have been given the opportunity for these hours to instead make my PT role up to FT for the last year - how will this affect my final pension, if at all

When did you join? If before April 2012, and you haven't had a gap of more than 5 years at some point since, then you will fall under the 'McCloud' remedy, so that membership between April 2014 and March 2022 will be on either the old final salary or newer CARE basis, whatever comes out better. In that scenario converting non-contractual overtime into contractual hours will at least bring the period more into play for final salary being potentially better. (Although, the CARE scheme's much higher accrual rate will not still make final salary terms obviously better, even taking account of the higher normal pension age.) 

If however you joined only after March 2012, then we are only looking at the CARE scheme, in which care it won't make a difference.

OldBeanz

You may want to consider paying as much taxable income into an AVC which you should be able to take with your pension tax free.

Ms_Chocaholic

I'll explain it to give it some context.

So I have been employed since December 1991 continuously so part of my pension will be final salary.  I have been doing lots of extra hours (over 1,000) due to Covid which have come under a Covid Relief post, however I have been given the option of my PT "normal" post being increased to FT (I work 18.5 hours per week) for the 2020/21 financial year - unsure what will happen going forward as I don't expect it to go on much longer but this won't be a permanent change to FT as I don't want that once the Covid work reduces.

I have been given the option of:

1. The additional hours remaining under the Covid Relief post which means I will accrue holiday entitlement for each hour I've worked (currently stands at about 145 hours) and be paid for those (about £2k before tax) ..... against 2 below.

2. Make these hours under my "normal" role up to 37 hours but I understand the additional hours will not be calculated in my pension (there's a lot of hours).

It's really all confusing to me and I don't know what to do best.

Let me know if you need clarification on anything else, happy to answer all questions, thanks.

Ms_Chocaholic

Oh and yes pension deductions have been taken on the Covid hours I've worked.

Ms_Chocaholic

Not all my years since 1991 have been FT so that's why I asked if I used this year as FT rather than PT, would that additional year help me out.

jamjar92

Whatever you done since 2014 will not change the years of membership to the FS part of the scheme. It will use the FT equivalent salary of your current post to work out the pension, regardless if your last year is PT or FT.  The salary used is the last before retirement or the year you leave the LGPS scheme, and become a deferred member.

You will find the number of years you have on the pension statement

The CARE element (post 2014) is 1/49th of pay for that year, so earn more, more is added to the pension.

When are you retiring? If its soon, the Mcloud case maybe of interest.

See https://forums.moneysavingexpert.com/discussion/6251824/finding-advice-on-the-mccloud-judgement/p1

hyubh

Ms_Chocaholic said:

So I have been employed since December 1991 continuously so part of my pension will be final salary.  I have been doing lots of extra hours (over 1,000) due to Covid which have come under a Covid Relief post, however I have been given the option of my PT "normal" post being increased to FT (I work 18.5 hours per week) for the 2020/21 financial year - unsure what will happen going forward as I don't expect it to go on much longer but this won't be a permanent change to FT as I don't want that once the Covid work reduces.

I have been given the option of:

1. The additional hours remaining under the Covid Relief post which means I will accrue holiday entitlement for each hour I've worked (currently stands at about 145 hours) and be paid for those (about £2k before tax) ..... against 2 below.

Has the Covid Relief post gone through to the pensions team as a distinct employment? So you have your 'main' post (date joined scheme December 1991) + a second, concurrent one (date joined scheme March 2020 or whenever exactly)? As I type this we haven't got past scheme year end, so you won't have two annual benefit statements, but have you had a pensions starter letter or somesuch for the Covid post...?

2. Make these hours under my "normal" role up to 37 hours but I understand the additional hours will not be calculated in my pension (there's a lot of hours).

As said, non-contractual overtime is pensionable under CARE - so for your CARE benefits, 50 hours will be counted as much as 37.

Is your Covid Relief rate of pay different to the rate of pay in your main post...?