Should I keep my deferred benefits separate or transfer them to count with my new membership?

Question:
Should I keep my deferred benefits separate or transfer them to count with my new membership?
Answer:

There are a number of considerations to be made so you you should read all the options before making a decision.

 

Keeping your deferred benefits separate: If you do this, you will build up new benefits with your new job, so you will have two sets of benefits. Your deferred benefits will be worked out using the membership and final pay when you left plus any Pensions Increase due from the date you left up to the date that we pay them to you. The benefits from your new job will be worked out using the membership you have built up in that job and your final pay when you leave or retire from the new job.

Linking your deferred benefits: If you transfer your deferred benefits to count with the membership in your new job, you will have only one set of benefits and these will be worked out using the total membership you have built up in both jobs and the final pay in your new job. However, if you were to leave within 12 months of starting your new job, your final pay figure would be worked out using some of the pay from your previous job.

If your pay in your new job is higher or is likely to be higher than the pay your deferred benefits are based on (plus any inflation increases), then transferring your membership may produce the best results. But if you think your pay in your new job is unlikely to end up higher, you may want to leave your deferred benefits separate.

There are several other things to bear in mind, including:

  • If there is a big gap between the two jobs, your benefits in respect of the new job may have a later retirement age than your deferred benefits based on the previous job.  If you transfer your earlier membership you might end up with a later retirement age for this too
  • If you die before you retire, the benefits would depend upon whether you kept your periods of membership separate or not
  • You can decide to transfer within the first 12 months of joining, but not normally after this

Even if in the future you take up another job covered by the LGPS, you will not normally get a second chance to transfer your deferred benefits; so these will normally stay separate.