Local Government Pension Scheme - transferring pensions in

w00519773
w00519773 Forumite Posts: 182
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Say I join LGPS with a new employer and I have two pensions elsewhere:

1) A  previous LGPS pension in another area of the UK.
2) A Defined Contribution pension with another employer.

Say I transfer both these pensions into the new LGPS pension.  I assume the following will happen:

1) The previous LGPS pension will transfer as 'Additional Pension contributions'.
2) The Defined Contribution pension will transfer as 'Additional Voluntary Contributions'.

Have I understood this correctly?

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  • Silvertabby
    Silvertabby Forumite Posts: 8,579
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    edited 17 February 2022 at 10:23PM
    w00519773 said:
    Say I join LGPS with a new employer and I have two pensions elsewhere:

    1) A  previous LGPS pension in another area of the UK.
    2) A Defined Contribution pension with another employer.

    Say I transfer both these pensions into the new LGPS pension.  I assume the following will happen:

    1) The previous LGPS pension will transfer as 'Additional Pension contributions'.
    2) The Defined Contribution pension will transfer as 'Additional Voluntary Contributions'.

    Have I understood this correctly?

    Not at all. 
    How big is the gap between your 2 LGPS records?  If more than 5 years, and you go ahead with the transfer, then your old LGPS pension will be converted to CARE benefits on your new record.  You would lose any R85 protections and the final salary link.
    Less than 5 years, however, and the transfer in would keep the final salary link in respect of your pre 2014 benefits and R85 protections in respect of your pre 2008 service.  This means that if your new post is on a higher whole time equivalent salary than your old (with cost of living increases) then all of your pre 2014 service will be re-calculated using your new pensionable pay.  However, if your new salary is lower, then you will be asked if you want to keep your records separate. 
    A DC transfer in would be converted to CARE benefits.  Note that acceptance of a DC transfer in is at your new employer's discretion - some accept DC transfers, some don't on account of the extremely generous transfer in factors.
    APCs and AVCs are both something quite different.  Come back to us for more details if you do decide to re-join the LGPS.
  • VoiceFromTheSidelines
    VoiceFromTheSidelines Forumite Posts: 3
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    I was hoping someone might be able to help me decide on a similar LGPS transfer-in or not scenario. 

    I joined the LGPS scheme Nov/2008 and left it Mar/2016 with pay on leaving being £48k whilst working for a Local Authority. I've been working in the private sector since then but recently joined a new Local Authority in Dec/2022 on a salary of £75k. 

    I've done some reading but still slightly confused and can't determine the difference between the two options (transfer in or not) would mean for me?

    Many thanks
  • hyubh
    hyubh Forumite Posts: 3,425
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    I was hoping someone might be able to help me decide on a similar LGPS transfer-in or not scenario. 

    I joined the LGPS scheme Nov/2008 and left it Mar/2016 with pay on leaving being £48k whilst working for a Local Authority. I've been working in the private sector since then but recently joined a new Local Authority in Dec/2022 on a salary of £75k. 

    I've done some reading but still slightly confused and can't determine the difference between the two options (transfer in or not) would mean for me?

    Many thanks
    That's a five year disqualifying break for like-for-like service and re-established final salary link for pre-April 2014 membership. So, if you transferred, you would exchange the deferred benefit (increasing by CPI) with a CARE pension credit (also increasing by CPI). I'm not up-to-date on the factors used, but I would expect this still to be worthwhile (i.e. the CARE pension credit will be higher than the deferred pension). This is notwithstanding the fact you'd lose the lower NPA for what is currently the 2008-2014 component of your deferred benefit (age 65 vs. SPA).
  • VoiceFromTheSidelines
    VoiceFromTheSidelines Forumite Posts: 3
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    hyubh said:
    I was hoping someone might be able to help me decide on a similar LGPS transfer-in or not scenario. 

    I joined the LGPS scheme Nov/2008 and left it Mar/2016 with pay on leaving being £48k whilst working for a Local Authority. I've been working in the private sector since then but recently joined a new Local Authority in Dec/2022 on a salary of £75k. 

    I've done some reading but still slightly confused and can't determine the difference between the two options (transfer in or not) would mean for me?

    Many thanks
    That's a five year disqualifying break for like-for-like service and re-established final salary link for pre-April 2014 membership. So, if you transferred, you would exchange the deferred benefit (increasing by CPI) with a CARE pension credit (also increasing by CPI). I'm not up-to-date on the factors used, but I would expect this still to be worthwhile (i.e. the CARE pension credit will be higher than the deferred pension). This is notwithstanding the fact you'd lose the lower NPA for what is currently the 2008-2014 component of your deferred benefit (age 65 vs. SPA).
    Thanks for replying @hyubh

    From what you've described am I right to assume it would 'probably be better' if I did go ahead with transferring in?

  • dunstonh
    dunstonh Forumite Posts: 114,312
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    edited 14 August at 9:55AM
    Do you plan to retire earlier than scheme age?  If so, having a separate defined contribution plan available to fund the gap can be beneficial.      So, knowing what would 'probably be better'  will depend on your objectives.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • hyubh
    hyubh Forumite Posts: 3,425
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    hyubh said:
    I was hoping someone might be able to help me decide on a similar LGPS transfer-in or not scenario. 

    I joined the LGPS scheme Nov/2008 and left it Mar/2016 with pay on leaving being £48k whilst working for a Local Authority. I've been working in the private sector since then but recently joined a new Local Authority in Dec/2022 on a salary of £75k. 

    I've done some reading but still slightly confused and can't determine the difference between the two options (transfer in or not) would mean for me?

    Many thanks
    That's a five year disqualifying break for like-for-like service and re-established final salary link for pre-April 2014 membership. So, if you transferred, you would exchange the deferred benefit (increasing by CPI) with a CARE pension credit (also increasing by CPI). I'm not up-to-date on the factors used, but I would expect this still to be worthwhile (i.e. the CARE pension credit will be higher than the deferred pension). This is notwithstanding the fact you'd lose the lower NPA for what is currently the 2008-2014 component of your deferred benefit (age 65 vs. SPA).
    Thanks for replying @hyubh

    From what you've described am I right to assume it would 'probably be better' if I did go ahead with transferring in?
    Probably, but get a quotation from the administrator first, if you haven't already.
  • VoiceFromTheSidelines
    VoiceFromTheSidelines Forumite Posts: 3
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    dunstonh said:
    Do you plan to retire earlier than scheme age?  If so, having a separate defined contribution plan available to fund the gap can be beneficial.      So, knowing what would 'probably be better'  will depend on your objectives.
    Thanks for the reply @dunstoph

    Yes, I would hope to retire earlier than the scheme age although who knows, I'm 42 years old with 3 children 8 and under so some very expensive years lie ahead I suspect. I do have a small BTL property that I had in mind would cover the gap.
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