How to estimate LGPS early retirement figures

Dave_5150

Can any LGPS experts help me estimated my likely pension for early retirement please?

• I am considering early retirement within the next year or two..

• I joined the LGPS in 1989 so I have time in the pre-2008, pre-2014 and current schemes.

• The 85 rule will not apply as I will under age 60.

• Other MSE's have estimated using their projected NPA benefits minus early payment penalty.

That doesn't feel correct because I will not have contributed all the way to NPA. Is there a better way to estimate potential retirement figures?

Webby68

I'm due to become "economically inactive" LOL in early March after joining the LGPS in 1989 and will draw my pension at some point in the next couple of years.

Fyi - You will have R85 protection as long as your age + service years > 85.

Your scheme may have an online calculator that you can model different retirement dates so check that first.

I've calculated mine using the amounts from my last annual statement and reducing them by the early retirement reduction percentages found at https://www.lgpsmember.org/your-pension/planning/taking-your-pension/

Let's use 57 as my retirement age and the calculation is:-

• Pre-2008 - NPA 60 (R85 applies) - reduced by 3 years (13.5%) and the lump sum by 4.9%
• 2008-14 - NPA 65 - reduced by 8 years (30.3%)
• 2014 Care - State Pension Age (67 for me) - reduced by 10 years (35.6%)

Hopefully that makes sense and I'm sure others will chip in if I've got this wrong!

daveyjp

Does your LGPS members page have a mypension portal?  If so you can use that to get an estimate.

Dave_5150

daveyjp said:

Does your LGPS members page have a mypension portal?  If so you can use that to get an estimate.

Yes but it is only updated once a year so it always out of step with pay increases and in-year contributions etc.

Dave_5150

Webby68 said:

I'm due to become "economically inactive" LOL in early March after joining the LGPS in 1989 and will draw my pension at some point in the next couple of years.

Fyi - You will have R85 protection as long as your age + service years > 85.

Your scheme may have an online calculator that you can model different retirement dates so check that first.

I've calculated mine using the amounts from my last annual statement and reducing them by the early retirement reduction percentages found at https://www.lgpsmember.org/your-pension/planning/taking-your-pension/

Let's use 57 as my retirement age and the calculation is:-

• Pre-2008 - NPA 60 (R85 applies) - reduced by 3 years (13.5%) and the lump sum by 4.9%
• 2008-14 - NPA 65 - reduced by 8 years (30.3%)
• 2014 Care - State Pension Age (67 for me) - reduced by 10 years (35.6%)

Hopefully that makes sense and I'm sure others will chip in if I've got this wrong!

Thanks I will give that a try tomorrow. Looks like I do have R85 after all so I presume I don't reduce my pre-2008 figures?

daveyjp

Dave_5150 said:

daveyjp said:

Does your LGPS members page have a mypension portal?  If so you can use that to get an estimate.

Yes but it is only updated once a year so it always out of step with pay increases and in-year contributions etc.

The mypension portal is different to the annual statement, it holds all your pension and employment details.

You enter your desired date of retirement and it calculates your expected pension based on your current annual salary taking into account membership of different schemes and reduction for early retirement (automating the calculation given above).

However not all LGPS schemes have the system.

SarahB16

Webby68 said:

I'm due to become "economically inactive" LOL in early March after joining the LGPS in 1989 and will draw my pension at some point in the next couple of years.

Fyi - You will have R85 protection as long as your age + service years > 85.

Your scheme may have an online calculator that you can model different retirement dates so check that first.

I've calculated mine using the amounts from my last annual statement and reducing them by the early retirement reduction percentages found at https://www.lgpsmember.org/your-pension/planning/taking-your-pension/

Let's use 57 as my retirement age and the calculation is:-

• Pre-2008 - NPA 60 (R85 applies) - reduced by 3 years (13.5%) and the lump sum by 4.9%
• 2008-14 - NPA 65 - reduced by 8 years (30.3%)
• 2014 Care - State Pension Age (67 for me) - reduced by 10 years (35.6%)

Hopefully that makes sense and I'm sure others will chip in if I've got this wrong!

That's how I calculate my forecasts too (please note I have not reviewed the percentages quoted as I'm currently working on an assumption of 9% reduction for taking two years early and retirement is still a bit of a way off for me). 

I can't comment on the pre-2008 element but the 2008-14 is simple to calculate as that is number of years x final salary forecast (when you leave) less any reduction for taking before 65.

The post 2014 element is on your last annual statement (what you have accrued to date) and based on your current salary you can make assumptions (i.e. how many more years you will work for) and add to this tranche of your post 2014 pension and then apply the reduction if you take before 67 (SPA is 67 for me).  

Silvertabby

Note that R85 is still linked to a minimum retirement age of 60.  So, even if you technically meet R85 at age 57, your pre 2008 benefits would be reduced for early payment by 3 years.

Dave_5150

Silvertabby said:

Note that R85 is still linked to a minimum retirement age of 60.  So, even if you technically meet R85 at age 57, your pre 2008 benefits would be reduced for early payment by 3 years.

Thanks. That is what I had originally thought. 

Spreadsheet_Addict

As much for Silvertabby as OP - won't the McCloud remedy have some impact on this with all of the previous pension up to 2022 being able to be counted under the old schemes if it benefits OP. E.g everything up to 2022 being on 80ths with NRA 60 and a 3× pension lump sum?

I admit I'm not sure if it would just be the 2008 scheme it went back to for McCloud or all the way to the previous scheme as I've only looked into my own which started in 2010 so for me it's the better of the 2008 or CARE schemes I'll get to 2022.

hyubh

Spreadsheet_Addict said:

As much for Silvertabby as OP - won't the McCloud remedy have some impact on this with all of the previous pension up to 2022 being able to be counted under the old schemes if it benefits OP. E.g everything up to 2022 being on 80ths with NRA 60 and a 3× pension lump sum?

I admit I'm not sure if it would just be the 2008 scheme it went back to for McCloud or all the way to the previous scheme as I've only looked into my own which started in 2010 so for me it's the better of the 2008 or CARE schemes I'll get to 2022.

The 1/80 pension 3/80 accrual ended for everyone in 2008. McCloud concerns the 2014-22 period, so the final salary benefit structure concerned is the 2008 scheme one (1/60 pension, no standard lump sum, NRA 65). That said, a member would need to have had particularly high pay rises (likely involving a promotion/move to a better paid role) to beat the CARE accrual over the same period, even with the CARE scheme's higher NRA (although, this gets more possible the younger someone is and therefore the more to go in their career).