LGPS

ashpan

I had decided to wait until i reached SP age before taking my government pension but am having a re-think as im concerned that, due to the current state of the finances in the Uk, this could impact on the lump sum? Am i being overly cautious or is this a real possibility that it could reduce?

MX5huggy

Someone will probably correct me,  but as far as I know the rules for accrued benefits have never been changed. I they have said you will get x based of y service therefore that is what you will get. 

I would question why you are waiting till SP, the reductions for taking it early do not penalise you just reflect that pension will be in payment longer. If you have low income now maybe you would not pay income tax on your LGPS currently whereas when SP kicks in that will use most of your personal allowance. 

hyubh

ashpan said:

I had decided to wait until i reached SP age before taking my government pension but am having a re-think as im concerned that, due to the current state of the finances in the Uk, this could impact on the lump sum? Am i being overly cautious or is this a real possibility that it could reduce?

Do you mean, you have pre-08 service and therefore a standard lump sum? If so, you'll get that regardless, however if you joined pre-06, it's probably in your interests to draw the pension as soon as you reach the 85 year rule, not wait around until SPA.

If alternatively you mean, you are expecting to take a lump sum through commuting part of your pension, well the commutation rate is already intentionally poor (and always has been). So unless you have something specific you want the lump sum for, it's better to stick to the higher pension.

Lastly, if you mean, will the tax free status be taken away?, well that's a matter for general pensions legislation. Before every Budget there comes to be a thread on this board discussing the possibility, and nothing has happened on it yet. So who knows, but I doubt it will happen any time soon.