Local Council Final Salary Scheme. Transfer in?

MrYoung

I worked for 14 years for the NHS. During that time I paid in to the local authority final salary scheme. When I left 10 years ago I was on a salary of £35,000pa.

I then went in to the private sector and took out a private pension.

I have recently moved back into the private sector but on a much lower salary than when I left, approximately £15,000pa. I've been given the opportunity to transfer any old pension into the local authority final salary scheme pension, which I have done immediately with my private pension.

My question is, should I transfer my 14 years of final salary pension @35kpa into this scheme (the benefits are identical). If I do and I retire tomorrow, will the transfered funds be worth less because my 'final salary' is much less than it was?

chesky369

Just to get things clear - do you have two final salary schemes, one local government and one other?

jem16

MrYoung wrote: »

My question is, should I transfer my 14 years of final salary pension @35kpa into this scheme (the benefits are identical). If I do and I retire tomorrow, will the transfered funds be worth less because my 'final salary' is much less than it was?

Have you asked for a transfer value? That's the only way you will know although I would expect it wouldn't be worth it as you are earning a great deal less now. Unless of course you expect your salary to rise again.

CAE

Do you mean you have recently moved back into the PUBLIC sector?

If you originally worked for the NHS I expect you would have been in the NHS Pension Scheme, not Local Authority Pension Scheme (LGPS).

Which scheme are you currently in?

MrYoung

This is why it's all so confusing.

>>>Just to get things clear - do you have two final salary schemes, one local government and one other?

>>>If you originally worked for the NHS I expect you would have been in the NHS Pension Scheme, not Local Authority Pension Scheme (LGPS). Which scheme are you currently in?

I'm currently in a scheme that is administered by local government and covers law enforcement. Local government covers public sector. They are all pretty much the same. I have 12 years in a local government final salary scheme. That came from a combination of working in the NHS and at a University. It's all the same thing, public sector, government. It's also irrelevant to my question. I'm not interested in the quality of each scheme because they are all local government, all almost identical.

My question is this...

This is called a "FINAL SALARY SCHEME". So, if my final salary say in 5 years time is likely to be less than it was 15 years ago. How does that affect the scheme.

To try to put it simply.

Lets say I earned £100 per year in 1970 working for the NHS and have been told that when I retire I'll get £10 per year pension.

Lets say I now earn £50 per year working for the justice dept and expect to retire at that salary level in 2 years time. I have the chance to buy in to my new (identical) pension.

If I do that, will my £10 per year pension be halved because my final salary is half of what it was.

God this is difficult! : )

Retired_I.F.A.

it doesn't work like you think. What happens is an actuary looks into your retained benefits and making assumptions to future investment returns, inflation, and life expectancy calculates the value now of your retained benefits as one figure which is the transfer value. Another actuary looks into your current final salary scheme and using simlar though not the same assumptions and your actual salary and assumed escalation of such he calculates the number of added years+days service that the transfer could buy.

You will have absolutely no idea if transfering is worth it or not as neither actuary will disclose the assumptions and not being identical means they are not comparable anyways so without help making the decision to transfer or not is a complete guess you may as well toss a coin.

You need to seek out an IFA who can get a transfer value analysis done which uses the same set of assumptions and compares all your options including transfering to a personal pension.(to which in my experience is more often than not the better route)

jem16

MrYoung wrote: »

I'm currently in a scheme that is administered by local government and covers law enforcement. Local government covers public sector. They are all pretty much the same. I have 12 years in a local government final salary scheme. That came from a combination of working in the NHS and at a University. It's all the same thing, public sector, government. It's also irrelevant to my question. I'm not interested in the quality of each scheme because they are all local government, all almost identical.

Whilst each of the public sector schemes are similar thay are in no way almost identical so I don't think this is irrelevant. There have also been quite a few changes to each scheme recently and those changes may affect the decision as to whether to stay or transfer.

As I said earlier you need at least to get transfer values as it's not as simple as saying one year in your old scheme will equal one year in your new scheme.