Advice for LGPS

Missymoo2

We are trying to get some advice regarding my partners pension scheme and the best options

He is aged 56, almost 57 and has 2 pension schemes with Local government as he had a break in between so one is deferred.
He started in 1984 until 2005 and then his second one started in 2008 until present day. He was never given the option to join the pensions together but they say they will have sent a letter which he hasn’t received. Anyway we know they will stay split but the helpline say that might be a benefit.

He has spoken to the advice line and they just say he needs to get advice himself. Pensionwise will not help with LGPS.

We can get on the calculators which give options for lump sum amount and pension amount.

He doesn't want to retire completely yet but we are debating whether he is to reduce hours or at least pay a lump sum from the mortgage but don’t want to make the wrong decision financially.
His currently salary is £47k.

I do not work, I have extremely poor health, had transplant and have lots of other issues, recently had diagnosis of a brain tumour too, hence why we are discussing these options now. He has also slowed down a great deal as his kidney function is compromised as he donated his kidney to me.

Just trying to get an idea of options, a few years back I would have looked at things in detail but do not have capability currently.

Thanks in advance

Nebulous2

Sorry to hear about your poor health. 

You haven't given enough information about how  much you need to live on, what your outstanding mortgage is and what it costs, and what his pension offer is for us to give informed suggestions. 

Generally a pension is intended to see you through your retirement, rather than to meet immediate needs. There will be an automatic lump sum attached to some of his pension, but taking more will reduce the pension available.  Taking an LGPS pension early will reduce the sum available, but it might be worth it if you get enough to live on, to reduce the pressure on your partner and to spend more time together.  

I retired with an LGPS pension last year at 59. I took a considerably reduced pension over working to 67, but knew it was enough for us to live on, and that it meant an extra 8 years of free time, rather than working full time. I almost immediately realised I wasn't ready to stop completely and took a part-time job with the NHS on a lower salary. 

So your first steps would be to work out:- 

What do you need to take in to maintain your life style? 

What do you have from other sources, such as disability benefits? 

What  is he being offered in pension? 

Is he able to get reduced hours and reduced responsibility, or will they try to make him carry the full responsibility he has now in part-time hours?  

Silvertabby

If your partner's current LGPS has told him that combining his pension isn't an option, then that does simplify your decisions.

Looking at the deferred record first:  He can take payment of this now, and carry on working/paying into the LGPS in his current record.  He has R85 protections, so if he can defer payment until age 60 then these benefits will not be subject to any reductions for early payment.  Or he can take them from, say,  age 57 at which point his pension would be permanently reduced by 14.3% and his automatic lump sum by 6.9%.

He can then reduce his hours, if his employer permits, and carry on paying into the LGPS and accruing pension (at a lesser rate) until he retires fully.  As this record started after 2006 he has nil R85 protections, so taking these benefits before SPA will incur maximum early payment reductions. 

Hope this helps.

Missymoo2

Many thanks, the percentage of deductions for taking the deferred pension earlier has made it clearer, this is what we was struggling to understand.

We have around £95,000 left on the mortgage as this was planned as a stop gap home as we had paid the mortgage on our previous house off. We were going to relocate but have become attached to this house doing many major improvements to lower outgoings for the future. Also moving to a different area with recent diagnosis etc does not seem prudent. We have family local and neighbours are really good. This is a big house though.

The maximum lump sum is around £40k on the deferred pension and £6,300 pa according to the calculator. We have played around to see other options but unsure whether it is best to take a bigger pension and less lump sum. 

As mentioned he would probably just reduce hours in his role as they are understanding with our issues, he would continue with his current pension. 

Can he take the deferred pension and carry on as he is working full time and paying into  his current pension until he reduces hours?

We don’t have debts, just normal living costs which are compared regularly. 

Thanks again, I am waiting for neurosurgeon to discuss treatment options so probably best to wait until then but want to get things clearer so we are prepared.