Moving LGPS to a new Local Authority

griffinsaver26

I’ve been paying into a LGPS for just coming up to 24 years. There have been a number of changes over the years which I’ve not really kept up with, I pay in and my employer does too. I’m moving to a new local authority later this year and just presumed I would move my current pot with me and combine it into one new one but I’m not sure if it’s as simple as that with me having better benefits linked to my current one before all of the changes. 

I know that’s a bit vague but do you have any advice? Am I better keeping them separate? I will be moving to a better paid position. A colleague who combined their 3 pension pots recently told me he was hit with a massive tax bill. I’m just not sure where I need to go to for advice. 

Lemon_dr1zzle

Unless you elect not to combine within the first 12 months at your new LA it will be automatically combined. 

By better benefits I assume you are talking about 85 year rule, this will be carried over. 

You may have an annual allowance charge if the combine results in a large growth of the pension. Your new LA can quote this for you. 

Sarahspangles

griffinsaver26 said:

I’ve been paying into a LGPS for just coming up to 24 years. There have been a number of changes over the years which I’ve not really kept up with, I pay in and my employer does too. I’m moving to a new local authority later this year and just presumed I would move my current pot with me and combine it into one new one but I’m not sure if it’s as simple as that with me having better benefits linked to my current one before all of the changes. 

I have two separate LGPS pots and am planning to take mine at different ages. When considering whether to combine, it’s not necessarily a straight ‘which pays highest’ decision, unless you’re sure you will want to work right up to State Pension Age.

In the period you’ve worked so far, I think about 9 years would be covered by Rule of 85 meaning if you took the pension early (you can’t take part) you might be be able to take it at 60 with 9/24ths of it unreduced. And I think service up to March 2014 would be unreduced from age 65. If you combine this pension with further service with a new Authority you can’t use it to facilitate working part-time pre-retirement.

If your LGPS scheme has a calculator you can play with the dates and see what the reductions are if you input your birthdays as possible retirement dates past 60.

Silvertabby

It's not just R85 to consider - pensionable pay is also a factor.

If the new post is on a lower salary/pensionable pay than the old, then joining them would result in the pre 2014 final salary accrual being re-calculated using the new, lower, pay.  This is why the option to keep records separate exists, instead of automatic aggregation.

On the other hand, if the new salary/pensionable pay is higher, then combining may give a higher final salary accrual at retirement.  I say may, because, if left deferred, the old record will increase in value each year in line with inflation, while the new final salary link will only increase by pay rises/promotion.  (Only the CARE element is revalued in line with inflation each year).