LGPS

[mustard]

Hey all,

Was wondering if someone with more of a brain than I could give me some advice on some wording within my ill health pension.

 

I have been in this scheme (LGPS - local government pension scheme) since July 2003 until now. It is looking like I will be awarded ill health retirement. I'm still waiting to hear which tier out of the 3 possibles I will be given, and I am hoping for tier 1.

 

Now my question is on the wording of tier 1 and what that actually means in terms of monies received.

 

There is obviously some level of enhancement for early ill health retirement, but working out what that is seems to be a messy can of worms.

 

The wording is as below:

 

First Tier: If your employer determines that there is no reasonable prospect of you being capable of undertaking any

[Stumbler]

Mustard,

 

I agree that the wording is not very clear and is open to interpretation. I'd contact your union as they would be best placed to answer your query.

 

Hope this helps.

 

[mustard]

Whoo that is spooky at the same time as you replied to this my union rep message meon facebook. Slightly odd. He manages to not reply to my work emails or at least not in a helpful way, and then adds me as a friend and sends me IMs on FB! #awkward!!!

 

You are right though Stumbler, think I'll go to the regional office or something, or just walk in to the pensions office of the county council as I live right opposite them! Maybe I'll steal the idea of an old friend who walked in to his bank with a violin and sat on the floor playing it until they would speak to him. He couldn't play violin.

[Christina]

It's not very clear is it? But I think it means that, say you take ill health retirement at age 30, they will increase the years by 100%, to age 65. So that means you would get another 35 years pension entitlement on top of the 8 yrs you already have. I think that's it, but not certain. I'm not sure how likely you are to receive this first tier Sarah, that's the only thing, but if you do, it means a much better outlook, as you will be entitled to maximum pension based on your final salary.

When I was given ill health retirement from the NHS, my pension was made up to 25 years, from 15 years of full time actual service, plus a lump sum based on 25 years. I imagine you will also be entitled to a lump sum?

Chris x

[mustard]

Blimey I hope that's what it means, surely it can't though? Even the police don't get that and their pensions are notoriously generous. Although I suppose rules on ill health might be very different as the chances of a police officer going out on ill health is much more likely than an office worker.

I am entitled to a lump sum yes but it would be very small, or I could obviously opt for bigger for slight reduction in payments which would of course be foolish at my young age!

Apparently 80% of people end up in tier 1, when the government introduced the tiers back in 2008 it was predicted 80% would be in tiers 2 and 3 but it hasn't actually worked that way, (according to the occ health doctor I saw) so I suspect won't be long before they change it around again.

 

From the report of the independent doctor I can't see how they can argue I'd fall in to tiers 2 or 3. They have accepted I have a degenerative condition with already permanent symptoms, and tiers 2 and 3 both mean your prospect of gainful employment will increase after a certain amount of time.

I know it is so unlikely I'll get tier 1 at my age but having looked through all the wordings, I don't see how they can argue otherwise, although no doubt a way will be found.

 

Their definition of gainful employment is '30hours a week or more for a period of 12months or more' and I haven't been able to work for 30hrs a week or more for nearly 2yrs when this all began, whether or not I'm 're-missing or relapsing'

 

Don't get me wrong, I DO want to work, just can't ever see it happening full time is all.

[Christina]

Yep, I was wondering what the criteria might be for 2 and 3. From what you say, you look to have a good case for First Tier. Anyway, I ran your question past my husband and he agreed with my take on it, but we could both be wrong! I guess what it means in practice is that you might get a full pension, based on your current salary. Ill health rules are quite different I believe.

Let us know what you find out Sarah.

Chris x

[mustard]

Wow that would just be so amazing if that were to be the case, I wouldn't have to worry about claiming means tested benefits or anything, I'd be no where near as okay as I am now, but between me and the boyfriend, we would manage and I wouldn't be accountable to anyone and I'd be able to do what work I felt I could and it'd only benefit me financially rather than playing cat and mouse degrading games with DWP.

 

I can't quite let myself believe this will be what it means (no offence to you and your husband Chris!!) it just does seem too good to be true.

 

I will be sure to let you know as soon as I hear. I am not even sure if the ind docs word is law so to speak, or if they are just making a recommendation and it is up to the employer in the end. Even if it is, they'd have to have pretty good cause to go against the ind doc, the neuro and the GP surely?!

 

I just feel so edgey for that part of my life to be over and sorted out so I can properly move on and look forward without it hanging over me.

 

Oh, another question, do you know what happens about NI contributions when you are being paid a pension? Are they still paid out of the pension or do you have to arrange other ways to pay them? Also, is there one law on income tax for pensions as an income, or is every scheme different on that? I know the payments are taxed (and the lump sum is not) is it taxed at the same rate as if it were a normal wage, with the same personal allowance etc?

[Christina]

Hi Sarah

 

I didn't mean your pension will equal your current salary It will be a proportion of your salary, so a lot less than what you currently earn. You will probably still need to claim other benefits or work part time hon. My pension is fairly small, but it is index linked.

Occupational pensions are taxed, but it depends on how big they are of course. I pay some tax as I also get IB (soon to be transferred to ESA, fingers crossed) which is added to the pension for tax purposes. I get NI contributions paid by The DWP and I know I have enough for a full State Retirement Pension.

 

At some point you might want to check with the Pensions Agency on how many contributions you've paid and they can give you a forecast for State pension too. I believe you can do it online these days.

I will check in my Disability Rights Handbook later and let you know what it says. My memory for the detail of these things isn't what it was

 

Chris x

 

 

Edited 22 Mar 2012, 7:52 am by Christina

[Scully]

Hello Mustard,

 

Have found the following link. I expect you've already looked at this. But is does seem to intimate that the 100% contributions are added for 'prospective future employment' which would indicate that the contributions are paid till retirement age. In turn, this would mean that when you reach retirement age 65, or later, your pension would be a full 100% pension. Unfortunately, I don't think you will get any income from it now? I may be wrong but it's just the way I've interpreted it.

 

http://www.wragge.mobi/analysis_1282.asp

 

Just checking the NI contributions now........OK, it's not clear....lol

 

It seems that your NI contributions need to be made on a voluntary basis in one document I read, meaning you would need to buy the "stamp" yourself.

OR

Signing on at the job centre and going down the ESA route as a way of having your NI contribution paid for you.

 

I think I would be inclined to the following options.

Ask at the pensions office.

Ask the union rep

Call the DWP and ask the hypothetical question e.g. "If I retire due to I'll health how's my NI paid?"

 

Hope his helps

 

Scully

x

Edited 22 Mar 2012, 8:18 am by Scully

[happyandy]

If you have a final salary or similar scheme, if you worked until you were 65 then you would be awarded a pension based on how ever many years service you would have worked divided by some arbitrary figure say 60 multiplied by your final salary

 

An example

 

Mustard would have worked a maximum of 30 years and final salary was

[Nick]

That's a worthwhile point Scully,

 

I rely purely on a private 'ill health' pension and because of that am not eligible for ESA which is (in effect) means tested when it comes to 'income from an occupational pension' (the same applies to JSA ) It is important to understand that point in your own situation. You can however be 'classed' as 'NI Credits only' Firstly this ensures that you will have the required contributions record for your state old age pension (Presently 30 years worth of contributions) It also means that you may continue to accrue value towards the 'state second pension' known as S2P. S2P is for people whose pension arrangements are 'contracted in' (some are, some are not) In this present budget there is some talk of pension reform in regard to state and S2P arrangements. I'm not sure on that but think they will simplify the system with one single arrangement.

 

So after that long explanation what I am saying is that it may be worth looking into the value of obtaining NI contributions either by paying in, or via benefits route.

 

When I was working I never gave a single thought to all these difficulties! However they are very important. One last bit of advice for everyone is do get yourself a 'Pensions forecast' The integrity of your NI record is very very important, apart from the record on your payslip there is no way apart from getting a regular pensions forecast of knowing what your present NI status is. These are easily obtained by either ringing up or doing them on line via this link

http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/StatePensionforecast/DG_10014008

 

NI contributions go in 'units' of one year. Changes of employment (particular those around the end of the financial year) can mean that you could lose a whole year's worth of contribution simply by having a gap in the contributions. The only way you will know this is by getting the forecast on a regular basis. I was very lucky over that a number of years ago when told to check up this way and found that due to redundancy that I had suddenly 'lost a year' By having the information I was able to correct the error!

 

Hope this helps.

 

Nick

Edited 22 Mar 2012, 9:52 am by Nick

[Christina]

I knew others would be along with the facts and figures, and explained it much better than I could.

[mustard]

Chris - oh god no didn't think I'd get the same salary I get now, just if it is actually based on as if i'd paid in to it 30yrs rather than 8, then it'd be a lot better than I thought. & with the boyfriends income too we would be able to manage, at least while I get us in to debt studying!

 

Scully - With IHR you do definitely get the pension early, that's why I'm fighting for it rather than redundancy. All very good points in relation to NI.

 

Andy - It is a final salary scheme, your explanation is very similar to the one in the booklet (and actually very close to facts in your example!) I just still can't bring myself to believe I will get the pension now as if I was 65 and paid in to it all those years.

 

Nick - Yes this is the worry, by getting a small pension it is quite possible that now neither me or the boyfriend will be entitled to any means tested benefit.....will just have to wait and see, as long as I can pay my bills and feed my cats (and ourselves!) I really don't care!

 

Thank you all so much for your help.

 

Mustard x

[Nick]

the 'relevant bit to understand is...Quote:

Pension income rules

If you receive contribution-based Employment and Support Allowance and have a gross pension income of more than

[mustard]

Yes that is what I had read too Nick - I have no idea of the difference between contribution based and income based ESA though! I know one is about how many NI credits you've paid? But don't know how many you have to have paid to get it etc. Isn't the contribution based one the one you can only claim for 12months too?

[Nick]

I've never really fully understood that part myself! At the end of the day if your pension income is above the stated limit, it is first reduced, and then quickly eliminated, dependent on how much you receive from that pension. (easily calculated by reading my previous link) That applies just as much to 'income related' as it does to 'contributions related' Also bare in mind that if you do have a capability to work it also applies to JSA, So as far as I can see you are removed from these benefits once you take the pension.

That's OK if you understood it in the first place, its simply hard to accept that really all those years of contributions count for little. I believe that in places like the Netherlands and France (I stand to be corrected) the benefits are tied in with your 'contributions record' I know that they also pay more as a proportion of salary for the safety net of welfare but in a situation such as the onset of disability you are in fact much better protected. We of course do have the non 'means tested' DLA yet again this is also 'interesting' in that political reform here takes no account of entitlement based on how much in the past you have contributed. This would perhaps seem 'fair enough' but the name 'National Insurance' should be dropped, it is simply confusing!

[Bigbird]

Nick

I'm still not sure why you aren't getting contributions based support

I get contributions based ESA at the maximum level (support group ie not fit to work). This is independent of my husbands income (ironically he works for DWP in a different division) or any savings I/we have. it is based purely on what I have paid in whilst working.

 

Mustard

My understanding of the pension is what has been said previously. You may in fact be able to have some pension paid now but it will mean a reduced amount from what you are entitled to at retirment age, if we ever get there.

[Christina]

1332424540[/url]' post='81543']

Yes that is what I had read too Nick - I have no idea of the difference between contribution based and income based ESA though! I know one is about how many NI credits you've paid? But don't know how many you have to have paid to get it etc. Isn't the contribution based one the one you can only claim for 12months too?

 

Hi Mustard

I think you need to have paid in 2years NI contributions to qualify for contributory ESA, in the same way you did for IB. if you don't have the contributions then Income based ESA will be the one you get. The new welfare rules say you can only be paid contributory ESA in the work related group for 52 weeks and then it stops. Previously there was no time limit to IB, so this is a big blow to those of us in that situation. If you're put in the support group, the new rules don't apply. It goes withoutsaying there are lots more people in the WRAG group than in support.

Chris x

[happyandy]

I can only think that I was put in the wrag instead of support group was that the doctor could not distinguish between a progressive condition and relapsing remitting. For some reason her questions led me to believe that she thought I would return to normal as I had RRMS. She failed to appreciate that i was in remission and that is the best I will ever be and therefore my condition had progressively made me more disabled.

 

How do they sleep at night

 

Andy

[Christina]

It's worrying Andy. Do you think it our be worth appealing or is it too late?

Chris x

[mustard]

Just a little update, I have just spoken to the pensions people for LGPS, and they confirmed that tier 1 of an ill health pension does indeed mean that your pension is paid to you NOW at the amount as if your have worked until you are 65. It is based on your salary over the last year and assumed that you would've earnt that until age 65. It is also index linked. You get a tax free lump sum plus an annual income, you can choose to increase the lump sum for a reduced annual pension (which is taxed). For me it works out ( very roughly) that I could get about 4k lump sum, or 60k lump sum. Quite a difference. If I choose latter, it reduces the annual pension by about 5k a year.

I think that is a tough choice to give to such a young'un who does not like to think ahead!! The boyfriend reckons I should take the bigger lump sum and start a business or something, but I have no inclination to start my own business,I still want to go to uni. Yes the bigger lump sum could be a basis for starting something lucrative and amazing, but it could also be very stressful and stress is something I obviously need to try and avoid. The reduced annual pension that I'd get if I took the bigger lump sum would not be enough to pay all the bills, and if all went tits up and the lump sum was gone, I'd have no fall back.

 

Is it a cop out to go for the security?

 

I am only 30 ( well, nearly) so to me it seems like a no brainer to opt for the smaller lump sum and higher annual income option, but as the boyfriend seems to disagree, I am interested in others thoughts in case I am missing something ?

 

I know of course it is ultimately my choice that I have to make alone, but am just interested to hear others thoughts, as I am not very well versed in the likes of pensions and tax and things, so could be missing something reply obvious!!

Edited 20 Apr 2012, 4:08 pm by mustard

[Christina]

Well if I'm calculating this right, over the next say 40 years or so, if your pension is reduced by

[Stumbler]

Mustard, you do need to ensure that you keep the proverbial wolf from the door, so ensuring that living expenses are covered would be a primary concern.

 

If you did take the lump sum, would you retain it to give you an income? If so, interest rates are pretty s**te, so going for a higher pension income, which is index-linked does seem to be the obvious choice.

 

But, it's your call.

 

[happyandy]

I know with my ill health pension it is given on the basis that I will never work again. The trustees have the right to stop it at any time if i no longer meet the criteria ie being able to work

 

Something to bear in mind

 

Which ever way you choose, its a bit of a result

 

Andy

[mustard]

It sure is a result, given the circumstances. Obviously I'd rather not have ms. It is based on the likelihood of "gainful employment" of which their definition is 30hrs a week or more, for a period of 12 months of more. I have no idea if there is any kind of reassessment process, I am led to believe there isn't for tier 1.

However if I improve to the point of being able to work for more than 30hours and maintain that for more than a year, I will be shouting the fact from the roof tops and proudly ringing up the pensions dept to tell them I no longer need it.

I would much rather not have ms, be working in the job I loved, and getting this pension in 35years time, however these are the cards I was dealt. It is hard to accept I am getting a pension at my age, but I am trying to look at it as a kind of insurance I paid in to over the years should the unthinkable happen, it has happen and it sucks balls but I ain't gonna feel guilty for the few positive things that it brings. (not that I am going to be well off or anything, I'll be worse off of course, but at least I will be able to manage at the same time keeping a sense of independence.)

I hope, after a period of part time studying, to be able to work part time and have the pension as a stable top up.