After a little advice please

Oakdene

Hi All

I have paid into 3 pensions over the 12 years of my professional life which are as follows:

Local Government Pension Scheme - about 8 years
NEST Pension - about 1 - 1 1/2 years
Universities Superannuation Scheme - so far 4 months as I'm new in post.


I'm fairly un-educated in terms of pensions so Im not sure whether it is best to look at combining them or am I best leaving them seperate.

AnotherJoe

[STRIKE]Its likely that only the Nest scheme, which probably only has a pittance in it, can be moved in any case.[/STRIKE]

PensionTech

You can't transfer NEST pensions - yet. You can transfer LGPS, but it may not be a great idea; you can also transfer USS, but it sounds like you're active and you would have to leave the scheme to transfer so don't do that.

You have three pensions: two "defined benefit" pensions with LGPS and USS, where the scheme promises to pay you a guaranteed index-linked income throughout retirement (and you have the option to give some of that up for a tax-free lump sum at the point of retirement as well), and one "defined contribution" pension, where contributions from you and your employer are invested until you retire, at which point you can use them to provide a guaranteed income, a cash sum, or a range of other types of retirement benefit.

Defined benefit pensions - particularly public sector, or close-to-public-sector, such as the ones you have with LGPS and USS, are generally regarded as the gold standard of pensions and you are usually better off leaving them where they are, particularly if you aren't a confident investor and will need some security in retirement. If you are currently contributing to a defined benefit pension - which you are with the USS - then you should try to stay in the scheme at all costs. You can transfer these pensions elsewhere, but you usually need to seek (and pay for) regulated financial advice to do so, and it's usually a bad idea. Transfer values - the amount you are given to invest in another pension scheme if you transfer away from a defined benefit scheme - are quite high at the moment, making transfers a better idea than they used to be, but most would still approach this with great caution particularly if you are (no offence intended) a naive investor.

Defined contribution schemes can usually be moved about quite easily (apart from NEST - bad luck, but the regulations prohibiting transfers out of NEST should be removed at some point), and you're really just looking for a) lowest annual charges and b) most suitable range of investments. Before any IFA turns up and tears me to shreds, I should point out that annual charges should always be viewed in context; some managed funds may be expected to perform better than passive funds, so net return after charges may still be expected to be higher. But that isn't my area so I'l stop there.

NEST charges, incidentally, are very reasonable - the charge is heavily weighted onto the contribution itself rather than the ongoing management, so as you are (I assume) reasonably young and no longer contributing, you'll probably benefit from their charging structure. The ongoing charge is 0.3%pa. Given that the maximum limit on charges for auto-enrolment schemes (the kind that employees are automatically signed up for, like NEST) is 0.75%pa, and that's already quite low, you can perhaps see that this is quite good. (NEST also operate a one-off contribution charge of 1.8%, but the effect of this fades the longer the contribution is invested, so on balance, NEST contributions when you're younger are cheaper than NEST contributions when you're older.)

So, in summary:
- You can move your LGPS pension - but you probably shouldn't.
- You can move your USS pension - but you probably shouldn't, plus you would have to leave the scheme, and you REALLY shouldn't do that.
- You can't move your NEST pension yet, but you will be able to do so in the future - however, it's probably fine where it is for now, and you'd have to open another personal pension to transfer it into.

Oakdene

Ok thanks both for that...

I guess I'll just leave them all where they are then!

AnotherJoe

Thanks for the correction Pension tech.

Silvertabby

It's worth having a look at the figures for a transfer from the LGPS to the USS. You can ask to see a quote then decide - you won't be committed to anything.

Malthusian

A quick Google suggests that you can only transfer pensions into the USS money purchase scheme, not the defined benefit scheme. But it may be worth checking with them directly.

Assuming I'm right it would likely be a bad idea to transfer the LGPS scheme and probably rather pointless to transfer NEST (when you have the option).

Silvertabby

Not necessarily - it depends on the current club scheme transfer factors. OP only has 8 years service with the LGPS - assuming he left that to join the USS, then he won't have any early payment protections (R85 etc). It's worth having a look at a quote.

Oakdene

Silvertabby wrote: »

Not necessarily - it depends on the current club scheme transfer factors. OP only has 8 years service with the LGPS - assuming he left that to join the USS, then he won't have any early payment protections (R85 etc). It's worth having a look at a quote.

Not the case, I took a job in the private sector (paying into NEST) in between the LGPS & USS.

PensionTech

Not necessarily - it depends on the current club scheme transfer factors. OP only has 8 years service with the LGPS - assuming he left that to join the USS, then he won't have any early payment protections (R85 etc). It's worth having a look at a quote.

I looked at that but it looks like he joined USS after April 2016 - wouldn't that make him ineligible for PSTC?

Silvertabby

“ Not necessarily - it depends on the current club scheme transfer factors. OP only has 8 years service with the LGPS - assuming he left that to join the USS, then he won't have any early payment protections (R85 etc). It's worth having a look at a quote.
”
I looked at that but it looks like he joined USS after April 2016 - wouldn't that make him ineligible for PSTC?

PensionTech - I stand corrected. USS withdrew from the PSTC on 31 March 2016 - which is after my retirement earlier last year. However, I would still get a quote for a transfer in on a non-club basis - I know that the factors have been reduced recently, but the quotes I dealt with upt to March 2016 were incredibly generous. OP just has to ask - would be interested in the result.