LGPS for newbies

michaels

My DW has done a couple of days invigilating exams at a local school.  This seems to have resulted in her being signed up for an LGPS pension.

What can we do to leverage this?  Can she transfer pension in from her DC pot?  Does this offer value?

Any other advantage? 

Normally I put 2880/3600 into a sipp for her each year - presumably any contributions made to the LGPS need to be deducted from this to keep within AA - is this 16 times benefits for the LGPS contributions?

Thanks

fuzzything

Their membership will end as soon as their employer records them as leaving. If this is within 2 years of starting and they have not transferred in any benefits they will only be entitled to a refund of the contributions they paid. Payroll departments can quite inconsistent with whether they leave an employment contract open or not, so unless she is regularly working it could be ended at any time.

Whilst their membership is Active- 

- You could ask for a transfer quote from the new pension scheme, to find out what annual pension a transfer would purchase, and
- You could look into making Additional Pension Contributions - which would buy more pension

For more take a look at the LGPS members site 
https://www.lgpsmember.org/

https://www.lgpsmember.org/your-pension/the-essentials/tax/

MX5huggy

Yes she can do a transfer in, some LGPS don’t allow it but most do, big advantage is it doing that stops the requirement to be a member for 2 years to be vested (ie they won’t force you to leave LGPS because you’ve worked less than 2 years). It is good value normally I did it with a small pot. 

Is she going to earn less than £3600 gross in the year? AA used up by DB schemes is complicated, it’s pension input amount which you don’t find out until you get your annual statement after the tax year has closed in which you are making additional contributions. You have to estimate it. 

In the first year this is easy it’s just the amount of pension gained which is 1/49th of pensionable pay, subsequent years it’s this plus increase in value of previous years contributions (and any transfers in) (ie CPI because it goes up by CPI each year).

25 times the annual pension when you take the pension is used to see how much Life Time Allowance is used up by DB pensions. But I don’t suppose LTA £1m plus is a consideration.

Silvertabby

It depends on her contract and her employer's decision re allowing transfers in.

If her contract was only for the couple of days mentioned, then her only option will be a refund of her own contributions, less tax.

If her contract is ongoing, then it's worth asking if her employer will accept a transfer in from a a DC scheme.  Some won't accept DC transfers in full stop, because the LGPS purchase factors are so generous, or it may not be possible due to the terms of her contract.

michaels

Thanks All

OldBeanz

I invigilated for 15 years. It was only when we were not paid in line with furlough guidelines i.e. the only people in the public sector that weren't, I also discovered I could have been in the LGPS as well. Needless to say I have not returned.

Liquorice_Twirls

You can only be enrolled in the LGPS if you have a contract for 3 months or more and as everyone says you need to be paying in to the Scheme for 2 years before you can actually have benefits in the Scheme. Otherwise you will get a refund on leaving. 

I would have expected your employer would refund these contributions when you come off their payroll as the work would have been for a short period. Otherwise the Pension Fund should write to you offering to pay a refund now, pay one within the next 5 years or pay a transfer to another scheme now. 

Silvertabby

Liquorice_Twirls said:

You can only be enrolled in the LGPS if you have a contract for 3 months or more and as everyone says you need to be paying in to the Scheme for 2 years before you can actually have benefits in the Scheme. Otherwise you will get a refund on leaving. 

I would have expected your employer would refund these contributions when you come off their payroll as the work would have been for a short period. Otherwise the Pension Fund should write to you offering to pay a refund now, pay one within the next 5 years or pay a transfer to another scheme now. 

The transfer to another scheme option is subject to a minimum of 3 months service.  Less than that, and it's refund only.

Lemon_dr1zzle

Liquorice_Twirls said:

You can only be enrolled in the LGPS if you have a contract for 3 months or more and as everyone says you need to be paying in to the Scheme for 2 years before you can actually have benefits in the Scheme. Otherwise you will get a refund on leaving. 

I would have expected your employer would refund these contributions when you come off their payroll as the work would have been for a short period. Otherwise the Pension Fund should write to you offering to pay a refund now, pay one within the next 5 years or pay a transfer to another scheme now. 

Would just like to add that death in service applies from day 1.