Transfer a Small Deferred DB LGPS Pot into a Private Pension?

Flump55
Flump55 Posts: 6 Forumite
in Pensions, annuities & retirement planning
Hi,
I’m a 52 year old man, not in great health, so am hoping to retire in 3 or 4 years time. I’m looking at options to fund my early retirement until my NPA of 60. My current DB scheme will pay an estimated £20K p.a. at age 60 plus a £50K lump sum, which I’m happy with. I also have an AVC pot currently worth £70K. (The Mrs will also retire at the same time, with a pension of £10K p.a. plus lump sum).

My questions relate to my deferred LGPS pension which is currently estimated to pay £1,100 per year at age 60. I haven’t got a cash equivalent transfer value (CETV) yet. I appreciate that this represents a secure guaranteed income post-60, but believe it could provide me with greater value by transferring it into a private pension or SIPP to help fund post-55 early retirement. (LGPS regulations mean I can’t transfer it into my current DB or AVC schemes). Together with my AVC pot, I believe that I can take uncrystallised lump sum withdrawals (say £20K or £25K p.a.) to make early retirement a possibility.

So, assuming the above makes sense and I haven’t overlooked something,
(1) Are there even more restrictions on where I can transfer my LGPS pot to? Or any recommendations for a Personal Pension or SIPP?
(2) As I presume the CETV will be nowhere near the £30K threshold for IFA approval, do the LGPS insist on IFA sign-offs for smaller pots (e.g. say £15K)?
(3) As LGPS won’t allow transfer into my AVC, is there anything to stop me transferring into a PP or SIPP, and then transferring it into my AVC pot at a later date?

Many thanks in advance for any advice you can offer.
Cheers, Flump55
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Comments

  • hyubh
    hyubh Posts: 3,530 Forumite
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    Flump55 wrote: »
    (LGPS regulations mean I can’t transfer it into my current DB or AVC schemes).

    What 'LGPS regulations' say that? (Irrespective of whether it would be a good idea or not!)
    So, assuming the above makes sense and I haven’t overlooked something,
    (1) Are there even more restrictions on where I can transfer my LGPS pot to?

    There aren't any more restrictions than if it were a private sector DB pension.
    Or any recommendations for a Personal Pension or SIPP?

    Keep it where it is.
    As I presume the CETV will be nowhere near the £30K threshold for IFA approval

    Why do you presume that?
    do the LGPS insist on IFA sign-offs for smaller pots (e.g. say £15K)?

    No. Your problem will be at the other end, i.e. finding someone to accept it.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
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    Is your poor health likely to be life-shortening?

    I gather from other threads that LGPS don't pay high CETVs. So it might be worth considering the reverse option: take the LGPS pension at 60 and transfer your principal pension at 55. What's its CETV ratio?
    Free the dunston one next time too.
  • Flump55
    Flump55 Posts: 6 Forumite
    Hi, Thanks for the reply.

    "LGPS regulations mean I can’t transfer it into my current DB or AVC schemes"
    hyubh wrote: »
    What 'LGPS regulations' say that? (Irrespective of whether it would be a good idea or not!)
    My LGPS scheme regulators say that the benefits cannot be transferred to any "in-house" AVC, which mine is apparently. Also, as my benefits were accrued in the early 1990s, they are beyond the 12-month deadline for transfer into my current DB main scheme.
    hyubh wrote: »
    There aren't any more restrictions than if it were a private sector DB pension.
    Based on the above LGPS restrictions (e.g. ban on transfer to an AVC), I just wondered if they had restrictions on transfers to certain types of other pensions.
    hyubh wrote: »
    Keep it where it is.
    Why? £20 a week when I'm 60, isn't going to help me retire any earlier. Investing it somewhere else so that I can access it post-55 is the question I'm trying to ask. I'm hoping the CETV invested in a personal pension will help fund a year's early retirement.

    "As I presume the CETV will be nowhere near the £30K threshold for IFA approval"
    hyubh wrote: »
    Why do you presume that?
    I don't think the LGPS are going to pay out anywhere near £30K for a pension currently worth £1,100 p.a.

    "do the LGPS insist on IFA sign-offs for smaller pots (e.g. say £15K)?"
    hyubh wrote: »
    No. Your problem will be at the other end, i.e. finding someone to accept it.
    The Pru were happy to transfer it for me, until the LGPS said NO to transferring it into my Pru AVC.

    I would have thought that if I don't need IFA advice (if my £1,100 pension equates to a pot of £15K or £20K), then there is no comeback to anyone that takes my money?

    Any suggestions for a suitable PP or SIPP which will take this transfer?
  • Flump55
    Flump55 Posts: 6 Forumite
    kidmugsy wrote: »
    Is your poor health likely to be life-shortening?
    Possibly. Two small heart attacks and osteoarthritis. That is why I like the prospect of (1) retiring early and (2) having more liquid (pension) assets for the wife and kids, rather than the LGPS £10 a week widow's pension if the worst does happen.
    kidmugsy wrote: »
    I gather from other threads that LGPS don't pay high CETVs. So it might be worth considering the reverse option: take the LGPS pension at 60 and transfer your principal pension at 55. What's its CETV ratio?
    The reduction in a £20K pension at 60 to a smaller pension at 55 is not worth it to preserve a LGPS pension of £1,100 at 60. I also think that my current DB pension offers good protection against any future ill health or forced early retirement on health grounds.

    In essence, I'm of the opinion that cashing in my LGPS pot is the best option in my circumstances, i.e. a lump sum pot for the family if I peg out; funding for a year or two extra retirement if I don't; or a nice pot if I do fancy carrying on working.
  • Silvertabby
    Silvertabby Posts: 9,009 Forumite
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    edited 13 March 2017 at 11:55AM
    “ No. Your problem will be at the other end, i.e. finding someone to accept it.
    Originally posted by hyubh ”
    The Pru were happy to transfer it for me, until the LGPS said NO to transferring it into my Pru AVC.
    Is your AVC an in-house deal linked to your LGPS pension? If so, that's the only reason you can't transfer your LGPS into it. If the Pru are happy to accept the transfer from your LGPS main scheme then you just need to set up another pension account with them.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    First Anniversary Name Dropper First Post Combo Breaker
    Flump55 wrote: »
    Possibly. Two small heart attacks and osteoarthritis. That is why I like the prospect of (1) retiring early and (2) having more liquid (pension) assets for the wife and kids, rather than the LGPS £10 a week widow's pension if the worst does happen.


    The reduction in a £20K pension at 60 to a smaller pension at 55 is not worth it to preserve a LGPS pension of £1,100 at 60. I also think that my current DB pension offers good protection against any future ill health or forced early retirement on health grounds.

    In essence, I'm of the opinion that cashing in my LGPS pot is the best option in my circumstances, i.e. a lump sum pot for the family if I peg out; funding for a year or two extra retirement if I don't; or a nice pot if I do fancy carrying on working.

    You've obviously given this considerable thought. Good luck with your decision.
    Free the dunston one next time too.
  • Flump55
    Flump55 Posts: 6 Forumite
    Silvertabby wrote: »
    Is your AVC an in-house deal linked to your LGPS pension? If so, that's the only reason you can't transfer your LGPS into it. If the Pru are happy to accept the transfer from your LGPS main scheme then you just need to set up another pension account with them.
    My AVC is with the Teachers Pension Scheme (TPS). I thought (as did the Pru) that it would be a straightforward transfer, but the LGPS administrators are adamant I can't transfer benefits from their main scheme to the TPS AVC. They have put this in writing to me and the Prudential. It does beg the question though, that if I can transfer it to something like a SIPP, then what's to stop me then moving it into my AVC?
  • Silvertabby
    Silvertabby Posts: 9,009 Forumite
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    edited 13 March 2017 at 7:11PM
    “ Is your AVC an in-house deal linked to your LGPS pension? If so, that's the only reason you can't transfer your LGPS into it. If the Pru are happy to accept the transfer from your LGPS main scheme then you just need to set up another pension account with them.
    Originally posted by Silvertabby ”
    My AVC is with the Teachers Pension Scheme (TPS). I thought (as did the Pru) that it would be a straightforward transfer, but the LGPS administrators are adamant I can't transfer benefits from their main scheme to the TPS AVC. They have put this in writing to me and the Prudential. It does beg the question though, that if I can transfer it to something like a SIPP, then what's to stop me then moving it into my AVC?
    Right, that makes sense. You are basically asking to transfer your LGPS benefits into TPS - but your LGPS benefits can only be transferred to your actual TPS pension fund, not the attached in-house AVC. I'm assuming that you have been with TPS for more than 12 months, and so are outside the timeframe for a transfer in? Yes, you could transfer to a Pru personal pension plan (with the appropriate financial advice) - but could you then make an internal transfer to your Pru TPS AVC? Honest answer is that I don't know - have you asked the Pru if that is possible?
  • hyubh
    hyubh Posts: 3,530 Forumite
    First Anniversary Name Dropper First Post
    Silvertabby wrote: »
    You are basically asking to transfer your LGPS benefits into TPS - but your LGPS benefits can only be transferred to your actual TPS pension fund, not the attached in-house AVC.

    Where in the regs does it say that...?
  • Silvertabby
    Silvertabby Posts: 9,009 Forumite
    First Anniversary Name Dropper Photogenic First Post
    edited 13 March 2017 at 9:58PM
    “ You are basically asking to transfer your LGPS benefits into TPS - but your LGPS benefits can only be transferred to your actual TPS pension fund, not the attached in-house AVC.
    Originally posted by Silvertabby ”
    Where in the regs does it say that...?
    No idea - just SOP in the LGPS I worked for.

    If OP had LGPS benefits and a LGPS in-house AVC - and wanted to transfer to TPS then main scheme benefits would be transferred to TPS main scheme, and the AVC transferred to a TPS AVC.

    Most likely reasons for refusal are:

    OP has been in TPS for more than 12 months and so can't transfer deferred LGPS benefits into TPS (in house AVC would count as AVC fund could, under certain circumstances, be used to buy extra TPS pension benefits).

    and/or:

    Transfers from LGPS to TPS are under club scheme regs - which couldn't be applied to an AVC.

    Perhaps OP could ask his LGPS exactly why they won't/can't do the transfer?
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