Transferring USS into LGPS - Gov. delay has cost me c. £2,000, help? Need help by 7th Nov!

hazel_davey

Hi all,

Hoping someone could give some guidance here, please.
I's started the process of transferring my USS pension into my new LGPS pension last autumn.
The original transfer valuation was c. £5,000.
Due to this:-

"The Government announced a change to the Superannuation Contributions Adjusted for Past Experience (SCAPE) discount rate on 30 March 2023, consequently calculations for member’s looking to transfer pension benefits in and out of the LGPS were suspended until revised factors were issued by the Government Actuary’s Department (GAD), to reflect the change in the SCAPE discount rate."

-the transfer process was delayed until the end of Sept.
The original valuation is now out of guarantee, and a new one has a value of c. £3,000 - so the delay has cost me £2,000. I'm more than a little livid about that.

Has anyone got any suggests for complaints etc. or am I stuck with this?

The other issue is I'm now not sure whether to leave this sum with USS in the hope it'll make up some of that loss, or transfer it into LGPS which would lock in that loss, but LGPS might be the better place for it? 

I need to make a decision on this by 7th November. I'd really appreciate any help - this is the third and final transfer and I'm brain dead!

Thank you!

FIREDreamer

hazel_davey said:

Hi all,

Hoping someone could give some guidance here, please.
I's started the process of transferring my USS pension into my new LGPS pension last autumn.
The original transfer valuation was c. £5,000.
Due to this:-

"The Government announced a change to the Superannuation Contributions Adjusted for Past Experience (SCAPE) discount rate on 30 March 2023, consequently calculations for member’s looking to transfer pension benefits in and out of the LGPS were suspended until revised factors were issued by the Government Actuary’s Department (GAD), to reflect the change in the SCAPE discount rate."

-the transfer process was delayed until the end of Sept.
The original valuation is now out of guarantee, and a new one has a value of c. £3,000 - so the delay has cost me £2,000. I'm more than a little livid about that.

Has anyone got any suggests for complaints etc. or am I stuck with this?

The other issue is I'm now not sure whether to leave this sum with USS in the hope it'll make up some of that loss, or transfer it into LGPS which would lock in that loss, but LGPS might be the better place for it? 

I need to make a decision on this by 7th November. I'd really appreciate any help - this is the third and final transfer and I'm brain dead!

Thank you!

Is this a pension of £5,000 per annum for the incoming transfer value being reduced to £3,000 per annum?

hyubh

hazel_davey said:

The other issue is I'm now not sure whether to leave this sum with USS in the hope it'll make up some of that loss, or transfer it into LGPS which would lock in that loss, but LGPS might be the better place for it?

If this USS DB? So pre-2016 and/or 'retirement income builder' section only? If so, what's the USS pension and lump sum increased to date vs. the LGPS additional pension purchased by the CETV...?

Universidad

The posts above are super relevant, a lot of stuff about your numbers and statements raises questions!

But my question would just be "Why are you transferring from USS to LGPS?"

I'm not commenting on the quality of either scheme with that question, just wanting to know the reason you have for transferring, as it is likely to inform the other answers.

hazel_davey

FIREDreamer said:

hazel_davey said:

Hi all,

Hoping someone could give some guidance here, please.
I's started the process of transferring my USS pension into my new LGPS pension last autumn.
The original transfer valuation was c. £5,000.
Due to this:-

"The Government announced a change to the Superannuation Contributions Adjusted for Past Experience (SCAPE) discount rate on 30 March 2023, consequently calculations for member’s looking to transfer pension benefits in and out of the LGPS were suspended until revised factors were issued by the Government Actuary’s Department (GAD), to reflect the change in the SCAPE discount rate."

-the transfer process was delayed until the end of Sept.
The original valuation is now out of guarantee, and a new one has a value of c. £3,000 - so the delay has cost me £2,000. I'm more than a little livid about that.

Has anyone got any suggests for complaints etc. or am I stuck with this?

The other issue is I'm now not sure whether to leave this sum with USS in the hope it'll make up some of that loss, or transfer it into LGPS which would lock in that loss, but LGPS might be the better place for it? 

I need to make a decision on this by 7th November. I'd really appreciate any help - this is the third and final transfer and I'm brain dead!

Thank you!

Is this a pension of £5,000 per annum for the incoming transfer value being reduced to £3,000 per annum?

It's the transfer value - the total value of the pension pot with USS has dropped from £5,000 to £3,000 (I worked for a Uni for 9 months).  

hazel_davey

hyubh said:

hazel_davey said:

The other issue is I'm now not sure whether to leave this sum with USS in the hope it'll make up some of that loss, or transfer it into LGPS which would lock in that loss, but LGPS might be the better place for it?

If this USS DB? So pre-2016 and/or 'retirement income builder' section only? If so, what's the USS pension and lump sum increased to date vs. the LGPS additional pension purchased by the CETV...?

Sadly no, it's post-2016 retirement income builder only.
That's a good point. I need to get that new USS valuation in for an answer from LGPS, really. 

hazel_davey

Universidad said:

The posts above are super relevant, a lot of stuff about your numbers and statements raises questions!

But my question would just be "Why are you transferring from USS to LGPS?"

I'm not commenting on the quality of either scheme with that question, just wanting to know the reason you have for transferring, as it is likely to inform the other answers.

I'd heard that USS wasn't as good as LGPS now. I understand they're looking at re-adjusting for some of the recent reductions, but as I left the USS in May 2021, I don't think that'll apply to my USS pension pot.  
I believe because I'm a 'short-term member', I won't get as a good a return on this pot as an LGPS pot - but that is an assumption based on comments like the below from USS (my italics, as that's what my benefits will be based on):

'Boost to short-term members’ benefits.

What's changing and what does that mean for me?

What’s changing?

Members who leave USS within two years of joining from 1 April 2022 will be able to choose to receive full deferred benefits from the Retirement Income Builder – a pension of 1/85 of salary and a lump sum of 3/85 of salary up to the salary threshold for each year that they’ve paid into USS – instead of benefits based on what they’ll have paid in multiplied by an actuarial factor. The exception to this will be members who give writ' ten notice on or after 1 April 2022 to retrospectively withdraw from the scheme within three months of joining.

hyubh

hazel_davey said:

Universidad said:

The posts above are super relevant, a lot of stuff about your numbers and statements raises questions!

But my question would just be "Why are you transferring from USS to LGPS?"

I'm not commenting on the quality of either scheme with that question, just wanting to know the reason you have for transferring, as it is likely to inform the other answers.

I'd heard that USS wasn't as good as LGPS now. I understand they're looking at re-adjusting for some of the recent reductions, but as I left the USS in May 2021, I don't think that'll apply to my USS pension pot.  
I believe because I'm a 'short-term member', I won't get as a good a return on this pot as an LGPS pot - but that is an assumption based on comments like the below from USS (my italics, as that's what my benefits will be based on):

'Boost to short-term members’ benefits.

What's changing and what does that mean for me?

What’s changing?

Members who leave USS within two years of joining from 1 April 2022 will be able to choose to receive full deferred benefits from the Retirement Income Builder – a pension of 1/85 of salary and a lump sum of 3/85 of salary up to the salary threshold for each year that they’ve paid into USS – instead of benefits based on what they’ll have paid in multiplied by an actuarial factor. The exception to this will be members who give writ' ten notice on or after 1 April 2022 to retrospectively withdraw from the scheme within three months of joining.

The treatment of short service periods in the USS was indeed terrible - a deferred benefit based on employee contributions only. Public sector schemes, in contrast, was/is a transfer out on the basis of notional deferred benefit calculated normally (or in the LGPS for some years, just a straight deferred benefit).

However... that's all rather by-the-by. Transferring wouldn't mean changing the time you were in the USS to being time in the LGPS instead. Rather, it would mean exchanging your tiny deferred benefit in the USS for a CETV, and then using the CETV to purchase additional pension in the LGPS.

The fact your USS CETV has fallen doesn't, in itself, imply getting less additional pension in the LGPS, since the actuarial cost of the LGPS pension may have gone down too. Admittedly LGPS funds having to use common transfer out factors based on SCAPE distorts this somewhat, but the general principle still holds.

Universidad

Yes, OK. If your USS pension had vested properly - i.e. you had the requisite service period to not be a "short term member" - then staying with USS would probably offer the best overall return in my opinion. 

To be clear, on most accounts LGPS offers a better DB pension scheme than USS, both before and after the recent USS cuts. However, USS is no longer part of the transfer club, and on a pension transfer in, LGPS will only offer you a value commensurate with what you're transferring in, and USS don't offer very strong transfer out values in my experience.

However, because you are a short term member it's not at all as clear. What you'd really need to compare is roughly what USS pension you could expect as a short term member with roughly what LGPS pension 3000 would buy you. 

Neither of them represent a huge pension, so other factors may come in to play.

For example, you won't be entitled to keep any pension with LGPS unless you pay in for 2 years* - but transferring in this USS pension will reduce that vesting period by ~9 months. That would mean that you could know for certain you had an LGPS pension nearly a year faster than otherwise - which in uncertain times might give you comfort.

I'm keeping my (vested) USS pension, but transfering a smaller, old occupational pot in large part for this reason - so that my plan to move jobs specifically for the pension scheme can be set in stone faster. 

Two years is a long time to wait to see if your life plans are working out.

* To be clear, they won't just keep all your contributions, but they will pay you back a very low cash value and tax it, if you don't transfer to another pension instead.

hyubh

Universidad said:

Yes, OK. If your USS pension had vested properly - i.e. you had the requisite service period to not be a "short term member" - then staying with USS would probably offer the best overall return in my opinion. 

That's irrelevant, given the time for comparing accrual rates has been and gone when one pension is already deferred.

If your USS pension had vested properly - i.e. you had the requisite service period to not be a "short term member" - then staying with USS would probably offer the best overall return in my opinion. 

The comparison is a small DB in the USS with 'soft capped' increases vs. LGPS additional pension that revalues and increases fully. How can you say the former will be better without knowing what latter is...?

To be clear, on most accounts LGPS offers a better DB pension scheme than USS, both before and after the recent USS cuts. 

That's only relevant if you're comparing two job opportunities and looking to take into account the respect pension offerings.

However, USS is no longer part of the transfer club

Being a non-Club transfer won't, in itself, make it not worthwhile.

and USS don't offer very strong transfer out values in my experience.

Until very recently at least, public sector transfers in have been notoriously generous due to the government's preference for a discount rate methodology that no private sector scheme will use (in other words: the less prudently you value your liabilities, then better transfers in will be for the member, assuming transfers in are allowed).

However, because you are a short term member it's not at all as clear. What you'd really need to compare is roughly what USS pension you could expect as a short term member with roughly what LGPS pension 3000 would buy you. 

You don't guess, you initiate the transfer in order to receive a formal quotation

Universidad

hyubh said:

Universidad said:

Yes, OK. If your USS pension had vested properly - i.e. you had the requisite service period to not be a "short term member" - then staying with USS would probably offer the best overall return in my opinion. 

That's irrelevant, given the time for comparing accrual rates has been and gone when one pension is already deferred.

Relative merits of fully vested vs short term USS benefits is not irrelevant, it's an explanation of why the questions we all posed were pertinent. I'm not implying the actual service period can now be changed in deferment - just noting that the response given is germane to the discussion.

hyubh said:

To be clear, on most accounts LGPS offers a better DB pension scheme than USS, both before and after the recent USS cuts. 

That's only relevant if you're comparing two job opportunities and looking to take into account the respect pension offerings.

Again, this info is given for context. Many people new to the forums will have heard or read that LGPS is better than USS on many points, and in general it is. But that recieved wisdom should not be the driver for a transfer, which I then explain. You are in agreement with me.

hyubh said:

However, USS is no longer part of the transfer club

Being a non-Club transfer won't, in itself, make it not worthwhile.

No, but consider the inverse - being a club transfer would mean that you should recieve equivalent value, whereas a non-club transfer does not mean that. If the starting CETV from the transferring scheme is low, you have much less chance of coming out on par or ahead. Transfer values offered by USS are generally low.

hyubh said:

However, because you are a short term member it's not at all as clear. What you'd really need to compare is roughly what USS pension you could expect as a short term member with roughly what LGPS pension 3000 would buy you. 

You don't guess, you initiate the transfer in order to receive a formal quotation

On this point your clarification does add value - this is definitely what to do in order to make the comparison. Hazel - if you initiate the transfer, you aren't commited to complete it until you sign off on the value LGPS have offered.