Potentially moving from LGPS to CS pension - need some advice, please.

hazel_davey

I'm currently in a job in HE, on £44,000 pa with an LGPS pension - with a 60 mile round commute. This is linked to 10 years of final salary LGPS pension from a previous public sector role, so with the current annual spine increments and negotiated cost of living awards, that benefits my old final salary pot.

I've been offered a new role in the Civil Service that's on c. £38,000, shorter commute. My LGPS pension would be frozen. Financially it doesn't stack up, but the commute is killing me.

One of my worries is the impact on that final salary element of my LGPS pension. How bad would the hit be on my pension when I draw it, compared to the Civil Service, and am I barking mad to even consider this?!

And if I made the jump, would it be worth my while adding AVCs etc. to the LGPS before I left?

TIA!

Marcon

hazel_davey said:

I'm currently in a job in HE, on £44,000 pa with an LGPS pension - with a 60 mile round commute. This is linked to 10 years of final salary LGPS pension from a previous public sector role, so with the current annual spine increments and negotiated cost of living awards, that benefits my old final salary pot.

I've been offered a new role in the Civil Service that's on c. £38,000, shorter commute. My LGPS pension would be frozen. Financially it doesn't stack up, but the commute is killing me.

One of my worries is the impact on that final salary element of my LGPS pension. How bad would the hit be on my pension when I draw it, compared to the Civil Service, and am I barking mad to even consider this?!

TIA!

The term 'frozen' means different things to different people. For the avoidance of doubt, your LGPS pension would continue to increase in value while in deferment (ie from the time you leave active membership to the time you draw your benefits from the LGPS).

You could look at transferring your LGPS pension to your new CS pension. Ask for a quote as soon as you join the CS - you've only got 12 months to do so from the time you become eligible to join the CS scheme.

Brie

re the drop in salary and shorter commute.  

a few years back I went from hour each way commute plus £8 a day parking to a commute which I could walk in 30 minutes or ride a bike in under 10 minutes.  and no petrol, wear on the car or parking charges.  The drop in commuting expense just about matched my drop in salary.  Have you done a similar sense check?

as for AVCs - I don't know either plan well enough but I'd check if either offers more service credit for the extra money paid in (I suspect not) or are they similar DC pots along side the DB element (in which case it won't much matter which scheme you add more ££ to).

edited to add - check also if a normal retirement age is the same and what happens if you take one either early or late.  There may be some benefit being able to start them at different times vs the convenience of having everything in the same pot.

michaels

Lgps has advantages with tfls and avcs that CS alpha pension doesn't.

Silvertabby

Rule of thumb is that unless you know that your new salary will at least match your old, then leaving your LGPS benefits deferred and starting with the CS as a new joiner may be the way to go.

But Club Scheme transfers are aimed at giving you comparable benefits with the new scheme, so your old higher salary etc will be factored into the calculation.  

Once you have joined the CS ask for a transfer in quote.  You will then be able to compare this with your preserved LGPS figures before making a decision.  

hazel_davey

Brie said:

re the drop in salary and shorter commute.  

a few years back I went from hour each way commute plus £8 a day parking to a commute which I could walk in 30 minutes or ride a bike in under 10 minutes.  and no petrol, wear on the car or parking charges.  The drop in commuting expense just about matched my drop in salary.  Have you done a similar sense check?

as for AVCs - I don't know either plan well enough but I'd check if either offers more service credit for the extra money paid in (I suspect not) or are they similar DC pots along side the DB element (in which case it won't much matter which scheme you add more ££ to).

edited to add - check also if a normal retirement age is the same and what happens if you take one either early or late.  There may be some benefit being able to start them at different times vs the convenience of having everything in the same pot.

No, I hadn't done that sense check - sadly mine drops from 32 miles away to 25 (but with more days working from home), otherwise there's be no contest! Still worth running those calculations though, thank you. 

michaels

Also think about after tax £ per hour based on the number of hours of your time you are giving up, ie all hours outside of your home not just contracted hours.

hyubh

Silvertabby said:

But Club Scheme transfers are aimed at giving you comparable benefits with the new scheme, so your old higher salary etc will be factored into the calculation.

Surely the opposite holds...? The old scheme final pay is used to calculate the new scheme reckonable service credit in a final salary Club transfer to not discourage people moving round the public sector taking higher salaried jobs. (If a higher new scheme salary was used to calculate a service credit based on a CETV using a lower final salary, then other things being equal the service credit in the new scheme would be smaller than the one forgone in the old.)

If however the new scheme full time equivalent pay is lower, in real terms, than the old, then the usual assumption is mucked up - hence your original suggestion that keeping benefits separate may be better. (Or, were it possible - which I don't think it would be this way round - that a non-Club TV could be preferable to a Club TV.)

Andy_L

Silvertabby said:

Rule of thumb is that unless you know that your new salary will at least match your old, then leaving your LGPS benefits deferred and starting with the CS as a new joiner may be the way to go.

But Club Scheme transfers are aimed at giving you comparable benefits with the new scheme, so your old higher salary etc will be factored into the calculation.  

Once you have joined the CS ask for a transfer in quote.  You will then be able to compare this with your preserved LGPS figures before making a decision.  

Especially if you consider that an unpopular group of staff like the CS are very unlikely to get the sort of above inflation pay rises of, eg, the NHS that would be needed for your transferred FS pension to do better than the CPI indexation it gets if you leave it with the LGPS

I thought that FS club transferers ignored any change in salary, so treating it as if you'd moved within your existing employer with any any pay rise being a bonus for FS calculations (as if you'd been promoted with your former employer) and a pay drop being your problem/fault.

Silvertabby

hyubh said:

Silvertabby said:

But Club Scheme transfers are aimed at giving you comparable benefits with the new scheme, so your old higher salary etc will be factored into the calculation.

Surely the opposite holds...? The old scheme final pay is used to calculate the new scheme reckonable service credit in a final salary Club transfer to not discourage people moving round the public sector taking higher salaried jobs. (If a higher new scheme salary was used to calculate a service credit based on a CETV using a lower final salary, then other things being equal the service credit in the new scheme would be smaller than the one forgone in the old.)

If however the new scheme full time equivalent pay is lower, in real terms, than the old, then the usual assumption is mucked up - hence your original suggestion that keeping benefits separate may be better. (Or, were it possible - which I don't think it would be this way round - that a non-Club TV could be preferable to a Club TV.)

Other factors apply, ie NRAs, which would make the club transfer more equal.  Certainly no harm in getting a quote for comparison, but my gut feeling would be that OP may wish to consider leaving the LGPS benefits deferred.  

hazel_davey

Andy_L said:

Silvertabby said:

Rule of thumb is that unless you know that your new salary will at least match your old, then leaving your LGPS benefits deferred and starting with the CS as a new joiner may be the way to go.

But Club Scheme transfers are aimed at giving you comparable benefits with the new scheme, so your old higher salary etc will be factored into the calculation.  

Once you have joined the CS ask for a transfer in quote.  You will then be able to compare this with your preserved LGPS figures before making a decision.  

Especially if you consider that an unpopular group of staff like the CS are very unlikely to get the sort of above inflation pay rises of, eg, the NHS that would be needed for your transferred FS pension to do better than the CPI indexation it gets if you leave it with the LGPS

I thought that FS club transferers ignored any change in salary, so treating it as if you'd moved within your existing employer with any any pay rise being a bonus for FS calculations (as if you'd been promoted with your former employer) and a pay drop being your problem/fault.

"Especially if you consider that an unpopular group of staff like the CS are very unlikely to get the sort of above inflation pay rises" - yes, we get those in my current role. Let's just say I'm seriously questioning my life choices! Unfortunately I'm in a shrinking profession.