LGPS into NHS pension scheme:

Lloyd90

Hello,

I have looked up a few past threads and am aware that I need to contact the NHS pension scheme and ask them how much my current LGPS value would "buy" me of NHS pension. 

I am currently employed in the LG and in the LGPS I have 7 years of service. I am on a salary just over about £70k, and have been offered a job in the NHS for around £68k, but with better hours and conditions etc, much better for family life with a baby around.

My current LGPS is worth £7,393.29 if I leave the scheme right now, but leave it in the LGPS. This is if I retire at 68.

I am currently 34, so I have potentially another 34 years of work (although would intend to take it as soon as possible I would think, likely to be 58 by the time I get there). 

Whilst I get a quote from the NHS scheme of what my £7,393.29 PA at 68 would buy in the NHS scheme, is there anything else I need to be aware of or take into account when weighing up the options? 

I understand I could leave my LGPS alone, and take it at 68. Access it early at a reduced rate. I could access the NHS pension early if I kept them both separate and take the LGPS at 68 for a top-up etc. 

Just want to check with the more experienced pension experts of things I may not have considered. 

I joined the LG around 2017 so am not in any historic payment protected deals etc. 

Thanks for your time   

Dazed_and_C0nfused

One thing definitely worth checking is the revaluation rate.

A deferred LGPS may be increased by CPI.

https://www.lgpsmember.org/2024/02/22/pensions-increase-2024

But a current (2015 scheme) NHS pension scheme member gets CPI +1.5%.  

https://faq.nhsbsa.nhs.uk/knowledgebase/article/KA-02728

If this applies to a transfer in it could worth doing even if you don't get a straight like for like swap.  But transfers in may have their own revaluation rules?

JoeCrystal

I agree; it is essential to clarify how transferred income is revalued. You may find that the transfer value from LGPS may be insufficient to buy at least £7,393.29 per year from the NHS.

Something to remember is that LGPS is a properly funded pension scheme, so it has tangible assets to back its liabilities to its pensioners. At the same time, there is no money in the pots for the NHS pensioners apart from getting a tops-up from HM Treasury to cover the shortfalls should contributions paid by the NHS employees/employers be insufficient to cover the NHS pensioners' pensions.

I am unsure if the NHS pension will even provide you with the quote since (from the sound of it) you have not even started your NHS job; it is only offered, right?

hugheskevi

A transfer would be on Club terms.

You would receive like-for-like benefits, and the transferred-in pension would continue to increase in line with CPI, as it would in the LGPS. The amount credited into the NHS scheme could change slightly (up or down) due to differences in the benefit structures (eg around survivor benefits, etc). 

Transfers from the LGPS or Civil Service are much less important than from the NHS or Teachers scheme, as the NHS and Teachers scheme have enhanced in-service revaluation which is protected by a Club transfer. As the LGPS and Civil Service do not have enhanced in-service revaluation the main reason to transfer is removed.

Remember the LGPS has an integrated DC AVC scheme which the NHS does not have, which is a very valuable feature.

Sarahspangles

Rather than retiring outright, you may prefer flexibility in your late 50s or early sixties. Scenarios including spending time with aging parents, or with grandchildren. Many people find their capacity for long hours and stress reduces too. Semi-retirement can be enabled by having separate DB pensions. Both the NHS scheme and LGPS do include features to allow older employees to phase into retirement, but it’s normally ‘by negotiation’.