Transferring lgps deferred pension

Johnsti

Hello

I took voluntary redundancy 3 years ago from local government and have a deferred pension, which I was told before leaving I would not be able to receive until I am 60 (I am currently 51).

From looking on the web it seems I could transfer my lgps pension to a private plan. The potential advantage of this is that I could draw my pension at 55 which would make a huge difference to me as I should be able to be mortgage free and have a decent income as I currently earn not much above minimum wage. I would also hope (?!) it would grow faster over the next 3+ years as lgps only rises in line with rpi.

I have emailed asking for a value for my pension if I choose to transfer but they seem slow in replying and I haven't been able to find a calculation online.

Can anyone help by telling me how the value of my pension pot would be worked out? My deferred pension is £7293pa + £18,500 lump sum.

I would also be grateful for any views of potential pitfalls/benefits of this strategy.

Thank you

Johnsti

xylophone

You would need an IFA to sign this off as it is not usually considered advisable to transfer out of a defined benefits scheme.

For this reason you might find it difficult to find one who would sign off the transfer.

http://www.lgps.org.uk/lge/core/page.do?pageId=101760

http://www.lgps.org.uk/lge/core/page.do?pageId=101769 might be worth a look.

atush

Why try to transfer a pension that is like Gold dust, just to get it early? and be mtg free? Even if you could (doubtful as no IFA would sign off) it would be very unwise.

Unless...... you have no spouse and are of ill health and likely to die young.

Why not save to pay off your mtg seperately?

Johnsti

Thanks for the responses. Saving is not much of an option for me as it is a struggle to keep my head above water. My thinking is if I could receive my pension at 55 it would mean another 3 years struggle rather than 8 years struggle.

I am single and have no dependents so this would not be an issue.

Forgive my ignorance in this but what are the advantages of lgps over a private plan once membership is deferred? I understand that it is gauranteed/ backed by government, but by getting my pension early it seems I would save many thousands of pounds and annuities can have a cost of living increase built in.

Thanks

Johnsti

xylophone

Forgive my ignorance in this but what are the advantages of lgps over a private plan once membership is deferred?

Have you read the links above?

hyubh

Johnsti wrote: »

Forgive my ignorance in this but what are the advantages of lgps over a private plan once membership is deferred?

The 'cash equivalent transfer value' (CETV) from any final salary scheme (not just the LGPS) will not actually match what it will cost you as an individual to buy an equivalent annuity.

dunstonh

Forgive my ignorance in this but what are the advantages of lgps over a private plan once membership is deferred? I understand that it is gauranteed/ backed by government, but by getting my pension early it seems I would save many thousands of pounds and annuities can have a cost of living increase built in.

Annuity would not come close to matching the index linked benefits of the LGPS.

Your biggest problem is finding an IFA that would be willing to do it. Nothing you have said indicates any justification.

Neasy

Have you asked whether your former employer would be prepared to pay the pension early? According to the link above (http://www.lgps.org.uk/lge/core/page.do?pageId=101769):

"You can request early payment of your deferred benefits from age 50, but you must have your former employer’s permission for payment before age 60 and your benefits may be reduced."

Good luck,

Neasy

atush

Thanks for the responses. Saving is not much of an option for me as it is a struggle to keep my head above water.

If you are struggling now, how much more will you struggle in retirement without your full index linked, no risk to you, pension? instead having a much smaller income?

Johnsti

Thanks to all who responded. I get the message! I now have transfer value of my LGPS pension and it clearly isn't a good idea to transfer out.

Thanks

Johnsti

Johnsti

I have been searching the web for info on requesting early payment of my deferred LGPS pension (between 55 and 60) as suggested above.

I qualify under the 85 year rule when I turn 55 which means (I think) I would only loose a percentage of my pension from 1 April 2008 and the rest would be protected.

I'm not sure why my former employer would release deferred pensions early (other than for ill health reasons). Has anyone had a deferred LGPS pension released early? Also is this something I should request now as I won't turn 55 for over 3 years, or should it be requested when I am 55?

Thanks

Johnsti