85 year rule & final salary pensions question...

The 85 year rule applied to many public sector pensions. For many pensions you may not be allowed to retire early, or if you did you were paid at a reduced rate. (because they would have to pay you for longer)

The 85 year rule was to protect long-standing employees and said that if your age and your years of service added up to 85 (or more) you could retire at any point without a reduction in your pension. So 55 years old with 30 years in the pension scheme would allow you to retire.

Neb

If you do a Google on "85 year rule ", you get lots of hits - including

It seems to apply to local government employees, and is about retiring early. If your age plus length of service add up to 85 or more, your pension won't be reduced if you retire early. Otherwise it will.

"Nebulous" wrote

Really? I've only ever seen it applied to the Local Government Scheme. Not NHS, nor Teachers, nor PCSPS....

"Nebulous" wrote

You need(ed) to be at least age 60 to apply the Rule of 85 in LGPS.

Thanks for the replies. I have a 'frozen' pension (18 years worth) with my previous employer which could be transferred to my current employer.

My current pension is a final salary schene of which I have 10 years membership.

The last time I asked about this (some years ago) my current employer said my 18 year pension would buy me 12 years in the current scheme. (Both are final salary schemes).

Why would I lose 6 years of pension in transferring? Does the 85 year rule still apply if you have 2 pension schemes?

chas

Suppose you don't transfer your frozen pension. When you eventually retire, that will provide you with a pension based on your salary at the time when you changed employers - hopefully plus a modest amount of inflation proofing. But it won't be as much as if you calculated it based on 18 years in your new scheme and on your salary at the time of retirement.

Assuming you stay in your current job until you retire, your current scheme will provide a pension based on your salary at the time of retirement (or maybe the average of the last 3 years or something) and the length of service in that scheme. Hopefully your salary in your new job will have increased faster than inflation - but the transfer value of your old pension will only allow for inflation - if that. It would thus cost your new pension scheme a lot of money to give you year for year on your transfer - so it ain't going to happen. In other words, if they *did* give you year for year, your old pension would be worth a lot more by transferring it than by leaving it where it is - and someone would have to pick up the bill for the difference.

Sadly, you virtually *always* lose out when transferring from one scheme to another.

The 85-year rule only applies to length of service in the current scheme at the point of retirement, and won't count service in previous schemes.

Thanks for explaining that Roger.

chas

I think that's slightly misleading: "Public service scheme members can also transfer accrued pension rights by way of the Public Sector Transfer Club. The Club is a network of public and private sector occupational pension schemes which makes it easier for employees who move between employers covered by separate participating schemes to transfer their accrued pension rights."

Thom

That's a fair comment - maybe I should have added a "private sector" qualifier.

I was answering a specific question from which it was reasonably obvious that the person asking it had moved from one private sector employer to another - and thus didn't have the benefit of the Public Sector Transfer Club.

As an aside, I guess that those public sector workers whose jobs are being privatised have good reason to be worried about the effect on their pensions.