LGPS - Impact of Extra Year

Ms_Chocaholic

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...?

It has yes but it can be changed (started Covid job - April 2020).  I raised an issue through the Union as I wasn't being paid any holiday entitlement so we are still in negotiations stage so things can be changed as the issue re the "normal" post has been an offer thru the union.

Ms_Chocaholic

My Covid job hourly rate and my normal job are the same hourly rate.

Ms_Chocaholic

Oh and no I've not had a pensions starter letter for the Covid post, I was just getting paid additional hours until Feb when I raised the issue of no holiday pay for the additional hours, at which point they created this Covid post so they could calculate the annual leave due.  HR have since offered (thru the Union) to change my PT role for 2020/21 to FT and I said I would get back to them.

I'm hoping to get advice on which option to choose and how this might affect my pension as the union say they can't offer pension advice and I need to know what is the better option for me, thanks.

MX5huggy

My understanding is it does not matter, as said your Final salary element is calculated by how much service you have in the FS element (you can’t add to this) multiplied by the full time salary of the job you finish in and you say both jobs are the same rate. Then for the CARE pension it’s just for every £49 you earn they add £1 to your pension. £20k will get you £408 added to the annual pension £40k will get you £816, it doesn’t matter if you earn this by low pay for lots of hours or high pay for less hours. 

Have you looked at options to boost your pension? AVC’s? 

Retireinten

This is a bit of a confusing one, isn't it?  I would say that the FS element of your pension will be based on your current full time equivalent salary, additional hours will have no impact on this so a decision either way shouldn't affect your FS pension entitlement. 

I think this is down to whether you have worked more than full time hours (37 hours) a week in this covid role and if some of that overtime has been paid above flat rate. If you have effectively earned more than your full time equivalent pay in the past year then I'd say its best to have this paid and accrued into your pension as additional pay and not opt for the FT option.  But maybe I'm missing other benefits here of the FT option!? 

Also, an interesting point about the McCloud judgement - I've seen this stated for teachers pensions, but not sure if this was definitely going to be applied to the LGPS and other public sector pensions. 

Ms_Chocaholic

I've worked something like 1,400 hours over 10/11 months - so is it best that there isn't a separate pension pot for these additional hours and preferable for them all to be lumped together in the one pot (or does it not make a difference).

Ms_Chocaholic

Also if anyone can explain AVCs please and how I would benefit as I know nothing at all about these, thanks.

jamjar92

Ms_Chocaholic said:

I've worked something like 1,400 hours over 10/11 months - so is it best that there isn't a separate pension pot for these additional hours and preferable for them all to be lumped together in the one pot (or does it not make a difference).

The CARE element (post 2014) is 1/49th of pay for that year, so earn more, more is added to the pension. Number of hours does not make any difference. Amkority of your pay is pensionable under CARE.

This is the pay on which you normally pay pension contributions. Typically pensionable pay includes:

• your normal salary or wages
• bonuses
• overtime (both contractual and non-contractual)
• maternity, paternity, adoption and shared parental pay
• shift allowance
• additional hours payments if you work part-time
• any other taxable benefit specified in your contract as being pensionable

You do not pay contributions on:

• any travelling or subsistence allowances
• pay in lieu of notice
• pay in lieu of loss of holidays
• payment as an inducement not to leave before the payment is made
• any award of compensation (other than payment representing arrears of pay) made for the purpose of achieving equal pay
• pay relating to loss of future pensionable payments or benefits
• pay paid by your employer if you go on reserve forces service leave
• the monetary value of a car or pay received in lieu of a car
• any sum which has not had tax liability determined on it

jamjar92

Ms_Chocaholic said:

Also if anyone can explain AVCs please and how I would benefit as I know nothing at all about these, thanks.

LGPS AVC for every £1 you save, it will cost you 80p from your net pay.

If your employers does salary sacrifice, every £1 you save costs 68p from your net pay.

This assumes you are basic rate taxpayer.

You can take this has a TFLS, when taken with the main scheme, subject to HMRC tax limits or used to purchase addition pension at retirement.

Ms_Chocaholic

jamjar92 said:

Ms_Chocaholic said:

Also if anyone can explain AVCs please and how I would benefit as I know nothing at all about these, thanks.

LGPS AVC for every £1 you save, it will cost you 80p from your net pay.

If your employers does salary sacrifice, every £1 you save costs 68p from your net pay.

This assumes you are basic rate taxpayer.

You can take this has a TFLS, when taken with the main scheme, subject to HMRC tax limits or used to purchase addition pension at retirement.

Hi, yes I am a basic rate taxpayer (even with the extra hours).

What is a TFLS?

So say I put £5k into my pension via AVCs, how would I get this back? As a lump sum when I take my pension (plan on retiring early - 59/60 and deferring for a few years) or would this increase my monthly pension? What if I was to die before I drew my pension or a couple of years after I started claiming it - would I lose this £5k?