In LGPS for 6 months, refund or transfer?

danielson81

Hi,

I've been in the LGPS for six months (since 01/02/14), paying about £130 a month in, about £780 in total.

I'm starting a new job in the Private Sector in a few weeks, they have a non contributory pension. They basically match my contributions (6%) I think.

As I've only been in the LGPS a short time is it better getting a refund, or transferring. As I imagine deferring is pointless due to the small amount.

I'm 32. I admit this may not be easy to answer as I don't know about my new jobs pension scheme in much detail.

Thanks Dan

Your_Hero

A refund would basically give you next to nothing, because you will need to pay income tax on the money and NI. In addition to this, the LGPS is a contracted out scheme meaning they would then need to charge you more NI to contract you back into S2P and buy your benefits.

Probably better to transfer it to your new employer if possible.

greenglide

they have a non contributory pension. They basically match my contributions (6%) I think.

If the pension really is non contributory then there would no concept of matching contributions because there wouldn't be any!

kidmugsy

There's a case for deferring it (if permitted) if there's a reasonable chance that you'll work for a local government again in future.

Teaandscones

Taking a refund is a terrible idea. The real choice is between transferring your pension and leaving it deferred. Personally I would leave your LGPS fund as deferred and look towards increasing your new fund above the minimum.

hyubh

kidmugsy wrote: »

There's a case for deferring it (if permitted) if there's a reasonable chance that you'll work for a local government again in future.

The scheme's vesting period went back up from 3 months to 2 years in April, however as the OP started before then he can elect for a DB indeed.

On the other hand, rejoining local government at a later date would only have relevance if done within 5 years, and only to tie the two months final salary pension against the pay of the new job (the OP's April to July membership gives a CARE pension, so shuffling it between LGPS funds won't make any difference).

kidmugsy

hyubh wrote: »

On the other hand, rejoining local government at a later date would only have relevance if done within 5 years

5 years: not too bad - it might well justify deferring; at least, it seems to me a reasonable gamble on a modest amount of money.

hyubh

kidmugsy wrote: »

5 years: not too bad - it might well justify deferring; at least, it seems to me a reasonable gamble on a modest amount of money.

The 5 years is purely to have the FS component of the original pension go against the new job's salary. Personally I'd take a DB regardless.

atush

transfer it.

hyubh

atush wrote: »

transfer it.

Why do you suggest transferring it over taking a DB...?