Local Government Pension Scheme?

Ian_W

CAE wrote: »

This option applies to all pension benefits, not just those accrued after 1st April 2008.

Does it apply to deferred benefits accrued prior to April 2008 which I think is the OP's situation?
As I stated earlier I don't know - but would have assumed the paying authority would have offered the option if it exists?

treliac

For pension contributions made pre April 08, there's no choice - you get pension + 3 x annual pension as a lump sum.

For contributions made post April 08, it's not about being able to take a higher lump sum, it's about being able to take it all in pension with no lump sum at all if you choose.

It's related to when the contributions were made and not when the pension is drawn, i.e. was it paid into before April 08 or after. The standard contribution rate was 6% before April 08, now it is banded according to earnings and anyone earning over £18,000 per annum will be paying more into the scheme.

So the changes are related to what and when you pay into the scheme and not to when you start to receive your pension.

Someone whose contributions span the 1st April date will be paid their pension in two different ways, the pre April part and the post April part.

Pre April accrued benefits are worked out as Pension = Pay x Membership divided by 80. Plus the automatic lump sum of 3 x that pension. There's no choice on this.

Post 1st April accrued benefits are worked out as Pension = Pay x Membership divided by 60. Then it will be possible to give up pension at the rate of £1 of pension for each £12 of lump sum (up to 25% of the pension value) if and as you choose on this part of the fund.

joe2cool

Cheers again guys all been really helpful appreciated

Andy_L

treliac wrote: »

For pension contributions made pre April 08, there's no choice - you get pension + 3 x annual pension as a lump sum.

Not quite right. pre 08 servive has 1/80ths pension with a compulsary 3x lump sum. Post 08 is 1/60ths pensin 9ie more) with the option to commute for lump sum (at 1:12).

Rule changes allow the older scheme members to commute for a higer lump sum, with the existing lump sum counting as ~15%, leaving an extra 10% of the, nominal, value avaliable.

http://www.lgps.org.uk/contributing/adjusting-benefits.html

treliac

Andy_L wrote: »

Not quite right. pre 08 servive has 1/80ths pension with a compulsary 3x lump sum. Post 08 is 1/60ths pensin 9ie more) with the option to commute for lump sum (at 1:12).

Rule changes allow the older scheme members to commute for a higer lump sum, with the existing lump sum counting as ~15%, leaving an extra 10% of the, nominal, value avaliable.
http://www.lgps.org.uk/contributing/adjusting-benefits.html

Andy L, your link gives out of date information. For the latest changes, for employees in England and Wales from April 08, look at

http://www.lgps.org.uk/latest/how-benefits-are-worked-out.html

CAE

Taken from the page linked to by Treliac

Up to 25% of the overall value of the pension benefits can be taken as a lump sum, with £12 lump sum for each £1 of annual pension given up.

Anyone taking benefits after 6th April 2006 is entitled to a lump sum up to 25% of the overall value of their benefits. The lump sum will be made up of the automatic lump sum from pre 1st April 2008 membership, plus any additional lump sum gained from giving up part of the total pension.

For deferred members, the option will be given to them shortly before they take their benefits.

The normal pension entitlement will be calculated in two parts 80ths and 60ths.

To summarise, the benefits quoted by the OP are correct, but he can give up part of the pension to provide a higher lump sum if he so wishes when he comes to take his benefits,

Andy_L

treliac wrote: »

Andy L, your link gives out of date information. For the latest changes, for employees in England and Wales from April 08, look at

http://www.lgps.org.uk/latest/how-benefits-are-worked-out.html

It's a bit vague but I don't think it makes any/much difference. From your link
"Up to 25% of the overall value of the pension benefits can be taken as a lump sum, with £12 lump sum for each £1 of annual pension given up."

There's the bit in the next paragraph which only mentions commutation as an option for post 08 service. Depends if that specifically bans commutation of pre 08 service. I wouldn't of thought so following A-day changes & the fact that commuting at 12:1 is a good deal for the (council)tax-payer.

CAE

OK, below is an extract of Reg 21 of

The Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations 2007
which covers increasing a lump sum.

Election for lump sum in lieu of pension
21. —(1) A member in respect of whom a benefit crystallisation event within the meaning of the Finance Act 2004 occurs on or after 1st April 2008 may choose in writing to the appropriate administering authority before any benefits become payable to commute his pension, or a part thereof, at a rate of £12 for every £1 of annual pension entitlement surrendered .

(2) But the total amount of the member's commuted sum, including any sum received as benefits provided in the form of a lump sum in accordance with regulation 15 shall not exceed 25% of the capital value of his accrued rights.

(3) For the purposes of this regulation, a member's accrued rights include rights accrued in respect of any payments made by or for him in accordance with the 1997 Regulations.

(4) The capital value of a member's accrued rights shall be calculated in accordance with guidance issued by the Government Actuary.

(5) And for the purposes of paragraph (1), a member's pension is his pension after any reduction pursuant to regulation 18 or 30.

This makes it clear it is all accrued benefits which are taken into account for determining the amount of lump sum a member may receive. It may not be the clearest piece of English written, but this is what you get when you have to deal with Statutory Pension Schemes. I'm not sure whether the OP was even considering this. This does apply to deferred members with benefits coming into pay in the future.

To make things even more complicated where deferred members are concerned, some still retain rights under old provisions.

This is the type of question I deal with every day, so it should be correct. You should also be aware that the scheme is very complicated, and there is no such thing as a simple answer! :rolleyes:

I hope this information is helpful and useful.

Carol