LGPS, ill health retirement and pension transfer

ANewBeginning

I am 60. About 8 years ago I was diagnosed with a chronic and very painful condition. No cure, just management. I’ve struggled on in a senior management role in a local authority until about 4 months ago when I could take no more and went off sick.

I am going through the process of being medically retired. My request. Not enforced. It’s a long drawn out process but hopefully moving forward, I love my job but just can’t carry on. 

I have always planned on transferring out my pension when I retire, and have taken advice to this end.

My question is If I am awarded ill health retirement, with an uplift to my pension benefits to reflect my illness causing me to leave work before my normal retirement age, will I still be able to transfer my pension out, as long as I don’t commence drawing any benefit from it when I leave? Also will my cash transfer value reflect any ill health retirement uplift? 

I don’t seem to be able to get a definitive answer as my pension provider takes weeks to respond to any questions or emails!!

Thank you 

Silvertabby

No.  If you want to transfer your benefits out of the LGPS you will first have to opt out, thus waiving any ill health enhancements.

You say that you have already taken financial advice re a transfer out, but I suspect that once your IFA realises what you would be giving up, in addition to the poor transfer factors used, a positive recommendation to transfer won't be on the cards.

Joyousrox

the general rule on pension transfers, is that if you are giving up any benefits that you won't get from your receiving scheme, it's probably not a good idea. compare your pension amount quoted by your current provider with what your potential new provider is offering. All companies should offer quotes to give you an idea of what you might expect from them. 

ANewBeginning

Thank you for the responses. Just to clarify, if I defer taking my pension plus any uplift, will that make a difference. Not being greedy, I just want to make sure I’m not losing out, I intended paying off what’s left on our mortgage, clearing my credit card and doing some home improvements with the 25% tax free lump sum when I transferred out. 

Silvertabby

Your pension can't be deferred once you have been granted ill health retirement.

How far into the process are you?  Do you have any idea of what you would be giving up if you were to be approved for Tier 1 - or even Tier 2 - and then say "thanks, but no thanks"?

You would still be able to take 25%  (notional value) of your enhanced pension as a tax free lump sum.  

Lemon_dr1zzle

You won’t be able to get any uplift if you opt out. Opting out mean you are no longer an active member and therefore not eligible to take ill health from active retirement. 

You have two options:
1. Opt out, be entitled to a deferred pension and transfer out 
2. Retire from active with an ill health pension with one of the uplifts 

Kim1965

Does the condition greatly reduce life expectancy?
I think cetv s have gone down dramatically of late, also think cetv from lgps were poor in general.
Have you other substantial provisions?? 

Silvertabby

LGPS factors are set by GAD, and have always been low.  A figure of just 20 times the pension given up wouldn't raise my eyebrows. 

ANewBeginning

Silvertabby said:

Your pension can't be deferred once you have been granted ill health retirement.

How far into the process are you?  Do you have any idea of what you would be giving up if you were to be approved for Tier 1 - or even Tier 2 - and then say "thanks, but no thanks"?

You would still be able to take 25%  (notional value) of your enhanced pension as a tax free lump sum.  

My case is just being assessed by independent medical practitioner. It’s been a long drawn out process as local government processes often are. I am now on half pay as it’s taking so long! My condition comes under DDA protection. But my employer has counted any disability related sick leave using generic sickness policy so I have reached half pay  I have had my estimates for my pension on all 3 tiers. So I know what the difference between them is.

My condition is not expected to reduce life expectancy. Just impact on my mobility etc. 

I never saw my long and pretty successful career ending like this! 

It just seems really unfair that I can’t transfer out my pot, just because I have to give up my job because I’m ill. 

xylophone

I never saw my long and pretty successful career ending like this! 

A long and successful career which had enabled you to accrue a generous DB pension with all its associated benefits.

It just seems really unfair that I can’t transfer out my pot, just because I have to give up my job because I’m ill. 

LGPS is one of the few Public Service schemes where a transfer out to a scheme offering flexible benefits is possible.

In effect what you are looking for is  (as far as  is achievable) to have your cake and eat it?

You could opt out of the scheme now, make your pension deferred and then attempt the transfer out process.

You should however be aware that it is by no means certain that you would get a recommendation to transfer - without this, finding a scheme to accept the transfer may not be an easy process.

ANewBeginning

xylophone said:

I never saw my long and pretty successful career ending like this! 

A long and successful career which had enabled you to accrue a generous DB pension with all its associated benefits.

It just seems really unfair that I can’t transfer out my pot, just because I have to give up my job because I’m ill. 

LGPS is one of the few DB schemes where a transfer out to a scheme offering flexible benefits is possible.

In effect what you are looking for is  (as far as  is achievable) to have your cake and eat it?

You could opt out of the scheme now, make your pension deferred and then attempt the transfer out process.

You should however be aware that it is by no means certain that you would get a recommendation to transfer - without this, finding a scheme to accept the transfer may not be an easy process.

Bit harsh. I’ve worked my backside off for 30 years, long hours, over and above my contracted hours, for no pay, because I cared about my job. Local Government definitely isn’t the walk in the park that is often peoples perception. 

If I was fit and healthy I’d be staying until my usual retirement age. I am gutted I am leaving. But I have become too unwell to carry on. 

So it’s not about having my cake and eating it, it’s about equity. My questions are valid and don’t really warrant snarky comments. 

I get a CETV every year, so I can see how it is ‘maturing’. So had done a rough calculation around mortgage redemption, credit balances, helping my 2 grown up kids out a bit etc If I can’t retain my enhanced benefits and transfer out, I think the best way is looking like commenting the maximum and taking a reduced annual sum. However if I die prematurely my husband will only get a small pension, so ultimately the system wins.