LGPS deferred pension

Unclefoobar

I'm hoping someone can help or explain..

I left my previous employer (local government) in March 2022, after starting May 2013.

Prior employer was also LG from August 2008 - March 2013

When I commenced with my previous employer in 2013, I transferred my previous LG pension and other pensions which bought me 16 years 89 days

Membership details (from my latest LGPS dashboard) state 'date joined scheme' as July 1996

About 2 months after leaving my previous employer ( May 2022 ish) I was given access to my deferred pension, and figures supplied for claiming pension at aged 55 in 2027 was an annual pension of £14700 with a lump sum of £22000 (I have a screenshot for my information).

Access was then denied (could not log in) pending information required from the previous payroll to LGPS. Had to wait till now (March 2023) to again have access to my deferred pension and figures given now (again for claiming pension aged 55 in 2027) are annual pension of £15700 with a lump sum of £0

I understand the uptick in the annual pension given the annual increase but can't understand the loss of my automatic lump sum.

Using the LGPS dashboard calculator, I can still get a lump sum, but I have to decrease the annual pension

Were the original figures from May 2022 incorrect? Am I not entitled to an automatic lump sum given my length of (pension) service?

When I checked any figures whilst in LG employment, there was always provision for an automatic lump sum

I am currently in full time employment, but no longer in local government 

hyubh

Unclefoobar said:

I'm hoping someone can help or explain..

I left my previous employer (local government) in March 2022, after starting May 2013.

Prior employer was also LG from August 2008 - March 2013

When I commenced with my previous employer in 2013, I transferred my previous LG pension and other pensions which bought me 16 years 89 days

Membership details (from my latest LGPS dashboard) state 'date joined scheme' as July 1996

If your actual 'date joined scheme' was August 2008, presumably the July 1996 date relates to those 'other pensions' that you allude to...?

About 2 months after leaving my previous employer ( May 2022 ish) I was given access to my deferred pension, and figures supplied for claiming pension at aged 55 in 2027 was an annual pension of £14700 with a lump sum of £22000 (I have a screenshot for my information).

An automatic lump sum will pertain to pension on pre-April 2008 membership. If you first joined the LGPS in August 2008, then you won't have one, as any any non-LGPS transfer in would have bought reckonable service in the 2008 scheme.

Access was then denied (could not log in) pending information required from the previous payroll to LGPS. Had to wait till now (March 2023) to again have access to my deferred pension and figures given now (again for claiming pension aged 55 in 2027) are annual pension of £15700 with a lump sum of £0

I understand the uptick in the annual pension given the annual increase

May 2022 to March 2023 doesn't pass a pension increase date. Even March 2022 to March 2023 may not (increases are applied on the first Monday on or after 6th April, and the first increase is pro-rated for the part year).

 but can't understand the loss of my automatic lump sum.

To be honest, it sounds like the interfund transfer was not entered in properly, and that's now been corrected.

Using the LGPS dashboard calculator, I can still get a lump sum, but I have to decrease the annual pension

Yes, and the 'commutation rate' (12/1) is poor.

Were the original figures from May 2022 incorrect?

If you first joined the LGPS in August 2008, yes they were.

Am I not entitled to an automatic lump sum given my length of (pension) service?

The benefit structure before April 2008 was a pension based on an 'accrual rate' of 1/80 and an automatic lump sum ('retirement grant') of 3/80. From April 2008, this changed to a pension based on an accrual rate of 1/60 (so, much better) but no automatic lump sum. If you ignore the commutation rate (12/1), a pension of 1/80 with lump sum of 3/80 vs. a pension only of 1/60 were/are considered to be of the same value.

When I checked any figures whilst in LG employment, there was always provision for an automatic lump sum

That changed in April 2008 (April 2009 in Scotland) for pension on LGPS membership going forward.

I am currently in full time employment, but no longer in local government 

That will have no bearing on your LGPS pension, including when you might draw it.

Silvertabby

The LGPS accrual rate up to April 2008 was 1/80th pension plus an automatic lump sum of 3 X annual pension.

This changed on 1 April 2008 to an accrual rate of 1/60th with no automatic lump sum.  However, a tax free lump sum could still be taken by commuting part of the annual pension.  Overall, there's not that much difference in the value of the 2 accrual rates, but the 1/60th scheme gives more flexibility for those who would chose the maximum possible  index linked annual pension over a one-off tax free lump sum.

Then, with the introduction of CARE in April 2014, the accrual rate increased to 1/49th (no automatic lump sum).

As you were denied access to your on-line account for a while, it is possible that your LGPS did indeed spot an anomaly  on your records, and carried out a 100% check.

Unless you were on an incredibly high salary when you left, it looks like both lots of your LGPS service and your transferred in service have all been combined onto one record.  Did you receive a paper deferred benefit statement after you left?  If so, how is your transferred in (16 years) recorded?

Do you have a contact telephone number for your LGPS?  If they have adjusted your records, then there will be notations on your data confirming what had gone wrong, and what action had been taken to fix it.

Unclefoobar

 Thank you hyubh and Silvertabby for the detailed responses. I always suspected there was an error with regards to my start date / length of service / pre 2008 service, I just never bothered to follow it up. It now appears that becoming a deferred member prompted them to double check the figures. I will still ask them to clarify and report back with their response.

Just one more question if I may?

I appreciate these dates / ages may change and I may well have my (perceived) facts wrong

As things stand, I intend to start taking my LGPS pension at 55 (along with a Pru AVC I built up alongside the LGPS) and if possible work part time or maybe even finish (max pension, minimal cash as I'll get that through the AVC)

My current State pension age is 67

I can claim my LGPS at 55 which is in 4 years time (2027)

The age I can claim my LGPS is increasing from 55 to 57 from April 2028 meaning I'll then have to wait till 2029

Using a generic LGPS early retirement table, I am subject to 44% reduction for taking my LGPS 12 years early (age 55) and 37.7% reduction for taking my LGPS 10 years early (age 57).

If I wait till I'm 57, and in the meantime the minimum age I can take my LGPS increases to 57, I presume I will then still be subject to the 44% reduction? If the minimum age further increases to 58, I presume that will also be subject to the 44% reduction?

Am I correct in those assumptions?

Silvertabby

Your pension accrued up to 31 March 2014 has a NRA of 65.  That will never change.

Only pension accrued from 1April 2014 has a NRA of State pension age.  The 44% reduction is based on X number of years between drawing the pension and NRA so, in theory, if payment date and SPA both increase by 2 years, then the number of years paid early/reduction %age will remain the same.

But do note that the reduction %ages aren't cast in concrete and could change.....

Unclefoobar

If I wait till I'm 57, and in the meantime the minimum age I can take my LGPS increases to 57, I presume I will then still be subject to the 44% reduction? If the minimum age further increases to 58, I presume that will also be subject to the 44% reduction?

Am I correct in those assumptions?

Apologies, ignore this point, brain not properly engaging and probably over thinking this