Skandia CRA transfer to LGPS

ktmman

I would like some advice on transferring my Skandia CRA pension to LGPS.
My Skandia plan is currently worth £173000.

I have received the following values: based on my 28k salary.
Both based on retiring at 65 years old

Transfer of skandia pension would buy me 23 years with an annual pension of £10298 contingents spouse of £3861.

IFA advices that my Skandia(should I choose not to transfer)pension will provide £10300 p/a but my account will need to grow to £242k by retirement.

I have a few months left to make a decision as I have to transfer in 1 year of starting LGPS. I have only been with the local council for 11 months.

I am aware if the recent new budget rules on private pensions , should I transfer , use the flexibility of the Skandia plan or choose the safer final salary option.

Any advice would be gratefully received.

Drp8713

How old are you? Also have you taken a step down in terms of job role /salary?


As £173k is quite a lot for somebody on £28k a year, the cost of one year wont be hugely high and thus youre getting a lot of years, if you have taken a step down, and are going to likely progress then the £10298 will go up as your salary does.


Regarding the amount the investment needs to grow, again your age will help define how realistic this is

hyubh

I have a few months left to make a decision

Are you sure? Once you have had the estimate you usually have a month, otherwise the transfer process has to start from the beginning again (and in your case, probably on LGPS 2014 not LGPS 2008 terms).

ktmman

hi i am 50 yrs old. Unfortunately my salary has dropped quite a bit over the years and now with the local council this will rise to a maximum 29500 p/a.

I beleive I have 3months from the initial request .

The advice from my IFA is to leave it with Skandia , is this due to his potential commision trail loss or a genuine piece of good advice?

kidmugsy

(i) Is there any chance that you'll want to access the pension money before your LGPS retirement age?

(ii) Is it possible to hedge your bets by transferring part of the pension?

ktmman

no , wont need to draw the lgps until 65.

Apparently its all the transfer or nothing , I thought about a 50/50 split , but no its not allowed.

It seems a minefield with no clear answer. With my limited knowledge of pensions, I calculate I would need to have a guaranteed return of at least 5k p/a to achieve what LGPS are offering.

Drp8713

Your IFA and fund/platform has charges the LGPS doesnt

kidmugsy

OK. Can I take it that "with an annual pension of £10298" means that at age 65 they'd expect to pay you an annual pension that's worth the same in purchasing power as £10298 is today?

You'd be giving up a lot of potential flexibility; on the other hand the chance to buy into a good final salary scheme is a rare event today.

I'd ask myself two questions.
(i) Is there any realistic chance of being sacked or made redundant? If so I might be reluctant to lose flexibility.
(ii) Is there any realistic chance of a decent pay rise e.g. on promotion? Then the final salary scheme increases in attraction.

One more, but perhaps minor, matter. Would any extra benefits of the LGPS matter to you e.g. free death-in-service insurance?

dunstonh

The advice from my IFA is to leave it with Skandia , is this due to his potential commision trail loss or a genuine piece of good advice?

It gives you options. Your trail is not enough to to make any noticeable difference to the IFA. Do you want options (such as 100% lump sum now possible) or earlier retirement?

It seems a minefield with no clear answer.

A clear answer would need a crystal ball. LGPS is better if you live a long time and out live your spouse. The CRA will be better for earlier retirement, if you die before your spouse or dont have a long life.

ktmman

many thanks for all the advice .

would you agree the best way forward is leave the pension with Skandia(and the gamble markets will perform well) , retire at 60 or there abouts , live of savings for the next 4 or 5 years then draw the pension combined with a lump sum.

Assuming I work with the local council for the next 10 years (ie until i am 60_) , then I will still have 10 yrs lgps.

If I died before my spouse then she would inherit all of my skandia pension anyway.Is this correct?

Drp8713

ktmman wrote: »

would you agree the best way forward is leave the pension with Skandia(and the gamble markets will perform well)

Not personally, but we are not financial advisers, so its just down to personal opinion.


Positives of transferring to the LGPS:


No risk, all the risk is with the employer.


If you transfer in, then get made redundant over the age of 55, you get your whole pension paid without reductions.


Same with ill health, transferred in pension paid at any age if you retire on ill health


Index linked.


Death grant if you die within 10 years of retirement.


Spouses and children's pensions on top of the death grant.


The market does not have a say when you retire, eg a crash a few years before might mean you have to work longer.


The salary of 29500, you say will be the most you can earn, 29500 x 23 years x 1/60 = 11308, over £1000pa more than what you will have at the time of transfer, so some acting up or a secondment could make it rise even more.






When I joined the LGPS, I transferred in my DC pensions, then opened a S&S ISA, SIPP and AVCs to get the best of both worlds