Transfer of Stakeholder to LGPS

Mayfield4

I am unsure of whether I should transfer an Aviva stakeholder pension I have into the Local Government Pension Scheme which I had to join six months ago. I am 61 and not sure if there are benefits or not. Thank you.

hyubh

Mayfield4 wrote: »

I am unsure of whether I should transfer an Aviva stakeholder pension I have into the Local Government Pension Scheme which I had to join six months ago.

You can opt out, but that wouldn't be wise.

I am 61 and not sure if there are benefits or not.

In effect it would be using the stakeholder to buy a CPI-linked joint life annuity payable at 65/SPA (if higher). While I would imagine the amounts involved in this 'annuity' would be rather better than with one bought privately for the same money, if you would rather use the stakeholder monies under the new 'freedom and choice' regime, then presumably that wouldn't be much of an incentive.

If you're unsure, I'd suggest you initiate getting a formal quotation of the DB pension the transfer would buy.

Mayfield4

Thank you very much. Could I just ask what "DB" means.

bigadaj

Mayfield4 wrote: »

Thank you very much. Could I just ask what "DB" means.

Defined benefit, so the lgps scheme in this case.

hyubh

Mayfield4 wrote: »

Thank you very much. Could I just ask what "DB" means.

Defined Benefit, i.e. where a pension scheme where what you get is defined by the rules of the scheme, rather than investment performance of a pot attributable to yourself.

Historically a DB scheme typically meant a final salary scheme, in which what you got was directly connected to your final salary whilst a member. In that situation a transfer-in would typically purchase (and in the LGPS, would have purchased) x amount of added years/months/days in the scheme. With the LGPS now a career average ('CARE') scheme however, what you get from a money purchase transfer-in is unconnected to your future (or for that matter, current) pay: the figure provided in a formal quotation, then, will be an accurate statement of what you will actually get from completing the transfer, in today's money.

AlanP_2

I think there is a 12 month window from joining to effect transfers so I would suggest you start the process of getting the quotation sooner rather than later.