LGPS small pot and Teachers Pension

SeeTheDoughnut

Hi all, hope someone can help.

I have a small pot with LGPS from a job I had years ago . I received an options letter which had an option to take this as a small pot, as it is only just over £3000.

i had to complete a form to declare other pensions and I said that I have a teachers pension, which I still pay into as I’m still working.

They have now said that I can only take the small pot if I also take my teachers pension within 12 months!

Does this sound right? I’m 55 and planning to keep teaching for at least another ten years.

SeeTheDoughnut

Apologies for typos, typing on phone!

Silvertabby

SeeTheDoughnut said:

Hi all, hope someone can help.

I have a small pot with LGPS from a job I had years ago . I received an options letter which had an option to take this as a small pot, as it is only just over £3000.

i had to complete a form to declare other pensions and I said that I have a teachers pension, which I still pay into as I’m still working.

They have now said that I can only take the small pot if I also take my teachers pension within 12 months!

Does this sound right? I’m 55 and planning to keep teaching for at least another ten years.

Yes, unfortunately.

But other factors may also apply here.  First of all, when was your LGPS service?  If it includes pre 1997 service, then you will have an element of GMP - and so it can't be commuted before your GMP age (still 60 for women, 65 for men).  A lot of junior pension administrators still miss that (been there, chucked it back at the checking stage).  

The £3K quote will have been substantially reduced for early payment, so leaving it until you retire from teaching will mean that not only will the early payment deductions not apply, but it will have increased by 10 years of cost of living increases (uncapped CPI) which could very well take the notional value over £10K and therefore ineligible for de minima (small pot) commutation.  On the plus side, you would get a little tax free lump sum and annual pension to top up your TPS income. 

SeeTheDoughnut

Thank you for the reply, it was 2012/2013.  I have been able to take another small pot without any trouble, so was hoping that what they said was incorrect. It would have been very handy to pay an upcoming tax bill!

SeeTheDoughnut

Update for anyone who comes across the same issue!

It turns out that I can take this as a one off lump sum under something called ‘trivial commutation’. I emailed to ask whether I was eligible under the criteria for this and the LGPS contacted me to say that there had indeed been an error and I am able to take the lump sum after all. Yay! And I can continue to pay into my teachers pension too.