TPS vs LGPS

JollyProfessor

Hi everyone are there any pension geeks out there who know the ins and outs of the Teachers Pension Scheme vs the Local Government Pension Scheme?

I work at Sheffield Hallam University and the management are proposing moving most of us academic staff out of the TPS and into the LGPS.

Are we going to better or worse off in terms of our pensions if we move from TPS to LGPS???

thanks

daveyjp

I'm sure it is straightforwards to compare the benefits for new starters by looking at the scheme information on websites.

The issue with any transfer for existing staff is it will be dependent on the individual circumstances. Age, years of service, pay level, years to retirement etc etc so 'worse off' my not be a simple calculation. Will it be a full transfer to LGPS, or will TPS be deferred and a new LGPS started?

If it were the other way the LGPS has seen some major changes over the last 20 or so years, but existing members have protected and valuable benefits. If TPS has also seen changes knowing how they may be affected by the move is something to understand.

You also need to consider other benefits of each scheme, in particular death in service, survivor pension and AVC options. Some LGPS employers offer salary sacrifice AVCs, which some members may consider a valuable benefit.

huw01

AVCs in the LGPS schemes are the only ones that can ne taken in full as a cash free lump sum

LHW99

Things to consider could include:

Do you have any DB in the TPS?

What are the normal pension ages in your TPS vs the LGPS you would go into?

Can you preserve the TPS benefits and only go into the LGPS from now on, or do you have to transfer everything over and if there's a choice, would one be more flexible / likely give better pension provision?

hugheskevi

A key point is that the TPS has lower accrual but higher in-service revaluation, whereas the LGPS has higher accrual but lower in-service revaluation. In general, that will mean LGPS favours older workers and those who only serve for a short period whilst TPS will favour younger workers who remain in the scheme for many years.

The LGPS AVC arrangements are a very key benefit to explore, given the low lump sum commutation factors used in public service pension schemes (12:1).

You definitely want to keep the enhanced in-service revaluation of the TPS pension, which is protected if you make a club transfer of TPS benefits to LGPS, but the change may involve a different type of transfer. You should make sure you understand how future revaluation of accrued TPS benefits would be calculated whilst you remain in service.

It might be worth asking about protected minimum pension ages, and how they apply to the TPS and LGPS benefits.

jimi_man

It's unlikely to affect you and probably won't feature in the decision making, but it's worth knowing that the TPS is an Unfunded scheme - i.e. Govt funded and the LGPS is a Funded scheme. AFAIK it makes little difference.

Out of the four Public Sector pensions that Mrs J and I have, the LGPS was the second easiest to deal with and it was pretty smooth when she came to take it.