Need advice re combining old LGPS and new LGPS

Bluetractor23

Hello, 

I'd appreciate any advice (or re-direction for advice) specifically about the benefits / disadvantages of combining LGPS pensions. 

At present, I have three, two deferred and one current:

1) 2006-2013 
2) 2013-2014 
3) 2024 - present 

I've had a letter from my current one saying they will auto combine them if I do not explicitly state not to - I am aware that there were certain benefits to the pre 2014 one in terms of retirement age and feel as though it is better to keep them separate. 

I am also not likely to be paying into the current one long term (pending local government restructures / devolution!)

I approached my pension advisor, who said he cannot advise on LGPS and to contact them. They however won't provide any 'advice' and i'm lost in piles of paperwork with no clear direction. 

Any advice would be really appreciated, thank you

Silvertabby

Did the 2006 one start before or after 1 October?

Asking because joiners on or after 1 October 2006 don't have any R85 protections.  That said, even if you did join before 1 Oct, any protections would only apply to your pre 2008 benefits and so isn't a huge factor.

Are all of these records with the same LGPS or with different Local Authorities?  What was the reason for the 2013 split - was it a drop in pensionable pay?

If you do opt to combine, then your previous 2 records will be converted to CARE benefits.  Yes, your NRA will then be the same as your SPA, but those differences will be factored into the conversion.

How old are you?  If anywhere near 55 (rising to 57 soon) and may be made redundant in the future, then payment of your LGPS benefits on redundancy terms (no reductions for early payment) would only apply to your current LGPS record.  So, if you didn't combine, then your earlier two posts would remain payable from age 65 (ish).

Bluetractor23

Thank you for your reply Silvertabby 

The 2006 one started in February of that year. 

They are with different - the first two are with Bedfordshire and the new one is Hertfordshire. 

I ended one job in local authority in May 2013 and then started a new education based job in August 13. This only ran for a year as they moved over to Teachers Pension in 2014 (I did not join that one)

I'm 42, so a little way off retiring...! 

Silvertabby

Then your choice is down to leaving the first two where they are, and drawing them from age 65 even if you are still working elsewhere (your tiny bit of R85 protections in respect of your pre April 2008 accruals will be minimal) or combining.

Your new LGPS should produce an estimate of how much CARE benefits your old posts would 'buy' you.  You could then compare the two before making a final decision.

Bluetractor23

Thank you, I'll go back to them and ask that specifically and I'll feel more informed to make a decision then,

Appreciate your time in replying 

Kernowshep

Isn't another big factor in deciding whether to combine deciding which you think will be higher, current salary + pay rise expectations or salary at the time of the older pensions + inflation?

Silvertabby

Kernowshep said:

Isn't another big factor in deciding whether to combine deciding which you think will be higher, current salary + pay rise expectations or salary at the time of the older pensions + inflation?

Not in this case.  As there's more than 5 years between leaving the second post and starting the third, the transferred benefits would be converted to CARE, which doesn't have a final salary link.

I_on_retirement

This is a timely post and I would very much appreciate some advice (sorry for jumping on your post Bluetractor!).  I have around 7 weeks to decide whether to keep two LGPS pots separate or combine.

 1.   From June 2005 to June 2015 which contains some final salary and CARE
2.     From Sept 2024 likely to run to Dec 2025 as a fixed term contract

 I am asking for clarification from pot 2 as have been told by email that pot one “will come across as the same” i.e. a mix of FS and CARE which is contradictory to the letter I was sent that says it converts/buys CARE only – I am checking as I think the email advice/wording is incorrect.  They say they do not normally provide calculations of what the combined benefits will provide (so unhelpful!).

 I am aware of the benefits of pot 1 which relate to keeping an earlier retirement age and having the lump sum, also that underpin may apply for a small period of time. 

I am also aware of the benefits of combining which would mean for redundancy or ill health you get both elements to draw on.

 I am a bit stuck on what to do!  My current salary is probably 60% higher than it was when I left pot 1.  Would the career average from pot 1 bring down the career average of pot 2?  Or will they base the ongoing accrual of pot 2 on the current salary I have. Is there anything else I need to consider? 

I believe that whether I combine or keep separate when I leave pot 2 with under two years I will get the deferred pension as my total service exceeds 2 years.

I am 52, single parent with 13 yo dependent.  I also have a single private pension from other roles, which I top up when I have any cash.  I would like to retire early 60’s.  Any advice on other considerations would be appreciated!  Thanks so much.

Silvertabby

I_on_retirement said:

This is a timely post and I would very much appreciate some advice (sorry for jumping on your post Bluetractor!).  I have around 7 weeks to decide whether to keep two LGPS pots separate or combine.

 1.   From June 2005 to June 2015 which contains some final salary and CARE
2.     From Sept 2024 likely to run to Dec 2025 as a fixed term contract

 I am asking for clarification from pot 2 as have been told by email that pot one “will come across as the same” i.e. a mix of FS and CARE which is contradictory to the letter I was sent that says it converts/buys CARE only – I am checking as I think the email advice/wording is incorrect.  They say they do not normally provide calculations of what the combined benefits will provide (so unhelpful!).

 I am aware of the benefits of pot 1 which relate to keeping an earlier retirement age and having the lump sum, also that underpin may apply for a small period of time. 

I am also aware of the benefits of combining which would mean for redundancy or ill health you get both elements to draw on.

 I am a bit stuck on what to do!  My current salary is probably 60% higher than it was when I left pot 1.  Would the career average from pot 1 bring down the career average of pot 2?  Or will they base the ongoing accrual of pot 2 on the current salary I have. Is there anything else I need to consider? 

I believe that whether I combine or keep separate when I leave pot 2 with under two years I will get the deferred pension as my total service exceeds 2 years.

I am 52, single parent with 13 yo dependent.  I also have a single private pension from other roles, which I top up when I have any cash.  I would like to retire early 60’s.  Any advice on other considerations would be appreciated!  Thanks so much.

I wonder if whoever sent that e-mail misread your date of leaving your first post as June 2025 instead of June 2015?  That would explain the wrong answer.

If kept separate, your first record will increase each year in line with CPI.  You have a tiny bit of R85 protections, meaning that your pre April 2008 accruals will be payable in full from age 60 (although you won't be able to take just these benefits by themselves).  Accruals to April 2014 will retain their NRA of 65, with post April 2014 accruals having a NRA of SPA.

There's no right or wrong answer here.  As you are aware, if you were to combine and then be made redundant from 57 then you would be able to draw all of your pension on redundancy terms.  But, left separate, you will be able to draw them even if you are still working for a Local Authority.

Just in case anyone mentions it - you are right in saying that if you do leave at the end of your fixed term contract, the usual vesting period of 2 years won't apply to you due to your previous service.

I_on_retirement

Thanks very much for taking the time to reply and confirm some of my understanding.  It's really hard to know what to do, esp as it's not a given that I will stay in local government.