LGPS Separate Funds and R85

Sarahspangles

Thanks to reading this forum I think I may be able to use the 85 year rule to take an LGPS pension unreduced at 60 but I’m not confident I understand what I’m reading on LGPS sites.

I was in service 1992 to 2009.  I assumed when I left that the 85 years was service + age, so I’d be 68 and already retired when that point was reached (normal retirement age for this pot is 65).  But can I also count my deferred years, in which case I’m already at the 85 years mark and just need to wait until I’m 60?

The Fund’s website has a calculator, which seems to confirm this.  Inputting my 60th birthday as my retirement date gives me a figure close to the one given in last year’s deferred benefit statement for retirement at 65.  If I try the calculator for a retirement age below 60 I can see a reduction has been applied.

I was also in service 2013 to 2017, a different employer and LGPS Fund.  If I commence payment of the earlier deferred pension, do I have to start this one as well?  I haven’t formally notified either Fund that I have two sets of LGPS service but one of the Funds provided an advisor at an HR event who said there was no benefit from combining the funds, one DB, one CARE.

Silvertabby

No, you can take your earlier benefits from 60 and leave your later one until the early payment reduction is less or no longer applies.

In the case of your service from 1992 to 2009, only your pre April 2008 has R85 protections, hence the slight difference between your calculation run and your annual benefit statement.  Your NRA in respect of your service from April 2008 to your date of leaving is 65, hence the slightly reduced pension at 60 - but with  that amount of pre 2008 accrual there would be no benefit in not taking this pension from 60.  In fact, quite the opposite.

You should really have told your latest employer that you had previous LGPS benefits, even if you had decided not to combine.  No harm done, as they will be paid separately.  BUT - and this is a big but - when you come to take your later benefits, they may initially be offered to you as a one-off lump sum instead of a small monthly pension.  This is called trivial commutation, and only applies when the notional value of your pension is less than £30K, and that you have no other pensions (other than the State) that will take you over this limit.  At this point, you will have to declare that you are not eligible for a trivial commutation payment because of your pension with X LGPS.

P.S.  Back to first benefits.  Yes, your deferred membership also counts towards R85.

Sarahspangles

@Silvertabby Thank you!  It’s very kind of you to help.  Starting that pension is going to be a key piece of my ‘flexible retirement’ jigsaw.  And I can let my other LGPS employer know that I have other pensions, to save them any unnecessary admin.

I think I just assumed that R85 wasn’t ever going to be relevant to me - that’s made my weekend!

Sarahspangles

For completeness in case someone else is searching ‘85 year rule’ I’ve done a detailed calculation of the difference this makes.

There are 16 months of my service that aren’t included in the period covered by the rule, so my pension would be reduced by £340 a year if I take it at 60 rather than 65.  However I gain £54,200 with the additional five years in payment so I only lose out if I live until I’m 219.

The TFLS is non optional in this scheme, and as that pays out 5 years earlier I do lose 5 years ‘protection’ for that as while it’s still in the pot it’s increased by CPI.  

sevenhills

This looks like a good website, is it applicable for all local authority pension funds?
I am in the WYPF

https://www.lgpsmember.org/

Sarahspangles

sevenhills said:

This looks like a good website, is it applicable for all local authority pension funds?
I am in the WYPF

https://www.lgpsmember.org/

Yes, I used that one to look at the reduction tables.  It’s a clear site but has to cover a lot of information given the complexity of individuals’ circumstances where there is long service under multiple schemes.

I already had login details for the websites of the two funds I have joined including WYPF.  That one’s not as helpful as the one for my larger pot, but the annual benefit statements do give a forecast for 55, 60 and 65.

Silvertabby

sevenhills said:

This looks like a good website, is it applicable for all local authority pension funds?
I am in the WYPF

https://www.lgpsmember.org/

The basics are the same, but note that employer discretions may differ.

The first one that springs to mind is that not all employers allow transfers in from DC schemes.