McCleod Judgment LGPS

Pipkin1812

As I understand it whether you are better off under the final salary pension before being moved to CARE will only be assessed when you decide to take payment of your pension.  If you have protection under R85 could this also apply to CARE element if indeed you would have been better off staying in the final salary scheme? Also is the retirement age protected at all as this could impact decision on when to take pension. I hope this makes sense and would welcome any clarification on how things work if anyone can help.  Thank you. 

Dazed_and_C0nfused

Whether you are "better off" is going to be a very personal decision.

A smaller pension payable in full at say 60/65 would be better for some whilst a larger pension not payable until 67/68 will be better for others.

The pension age for each scheme is set in the scheme rules, McCloud doesn't alter that.

Silvertabby

R85, which ceased for new entrants from 2006, isn't covered by McCloud.  Sliding protections were set in place for those who joined before October 2006 but, In the case of those yet to reach NRA, these protections will only apply to pre 2008 benefits.

horsewithnoname

As I understand it, MyCsp will be showing the relative amounts on the annual benefit statement, though not until after October 2023, when the relevant legislation has been sorted. 

But it’s not possible to say which is ‘better’ as some might prefer a higher pension and some might prefer extra lump sum. There are a lot of variables and we’re all different. 

Pipkin1812

Thanks for the replies, so pre 2008 has protected retirement age of 60 under R85 but remainder is 65 and 67 for CARE. I have been working part time since CARE was introduced. Not sure if this has any implications?

Silvertabby

Pipkin1812 said:

Thanks for the replies, so pre 2008 has protected retirement age of 60 under R85 but remainder is 65 and 67 for CARE. I have been working part time since CARE was introduced. Not sure if this has any implications?

Yes, as long as you meet R85 when you retire.  That's membership plus age = 85, so you must have at least 25 years qualifying membership if you retire at 60.  

Not on your retirement age(s), but working part time = lower pay = lower CARE pension.  Your pre 2014 benefits still have a final salary link, but your pensionable pay for this purpose is your whole time equivalent salary.  

Pipkin1812

Thanks @Silvertabby. I have been paying into pension since 1983 so should qualify for R85. CARE is 1/49th so not sure whether this will be more than 1/80th of whole time equivalent since 2014 if McCleod applies. 

Dazed_and_C0nfused

Pipkin1812 said:

Thanks @Silvertabby. I have been paying into pension since 1983 so should qualify for R85. CARE is 1/49th so not sure whether this will be more than 1/80th of whole time equivalent since 2014 if McCleod applies. 

No, the new scheme is way more generous is purely cash terms.

Say you earn £15k as your part time salary and the full time equivalent is £30k.

1/80th of £30k = £375.  But you only accrued 0.5 of a year as a part timer so pension would be £187.50.  This would be subject to change based on your final salary when retiring.

1/49th of £15k = £306.12 (which is also inflation proofed each year) 🙂

But there will be other differences to factor in, TFLS may be available with the 1/80th scheme and also be paid earlier without reduction.

Silvertabby

Dazed_and_C0nfused said:

Pipkin1812 said:

Thanks @Silvertabby. I have been paying into pension since 1983 so should qualify for R85. CARE is 1/49th so not sure whether this will be more than 1/80th of whole time equivalent since 2014 if McCleod applies. 

No, the new scheme is way more generous is purely cash terms.

Say you earn £15k as your part time salary and the full time equivalent is £30k.

1/80th of £30k = £375.  But you only accrued 0.5 of a year as a part timer so pension would be £187.50.  This would be subject to change based on your final salary when retiring.

1/49th of £15k = £306.12 (which is also inflation proofed each year) 🙂

But there will be other differences to factor in, TFLS may be available with the 1/80th scheme and also be paid earlier without reduction.

The LGPS switched from 1/80th with an automatic lump sum of 3 X pension to 1/60th (with no automatic lump sum) back in 2008, so the comparison using Dazed's example figures would be £250 per annum versus CARE's £306.12 +.  

Don't know how the McCloud calculations will pan out, but when CARE was introduced in 2014 the LGPS had an underpin protection system in place.

This meant that those within 10 years of NRA (as at 2014)  had 2 calculations at retirement, one under the new old rules/CARE combo, and one under purely the old rules, and then received the higher of the two.

The Union made such a great fuss about how 'they' had managed to get this great concession for older LGPS members, that some younger ones panicked and asked if they should opt out of the LGPS in order to preserve their benefits under the old rules, thus  safeguarding their 'better' benefits (er.... NO!)

Then we had the retirees who made dramas out of telling us that they were entitled to the underpin, and so wanted their pension to be calculated under the old 'better' rules.

Don't know what the stats are now, but as at the time I retired over 99% of underpin retirees were getting higher pensions from the old rules/CARE combo due to the much higher accrual rate.