Small transfer to LGPS

MX5huggy

They have calculated that my £3.5k in a stakeholder pension is worth £550 in the LGPS. I don't know what this means.

JoeCrystal

.... Seriously? It sound like that by transferring in £3.5k, the LGPS will pay you £550 per year once you reached SPA? That sound extremely good deal! Again, you are the only one with the full information on your documents so double check with whomever is giving you the information.

MX5huggy

The letter is brief:- https://ibb.co/iwM65vit is 30 years to go.

Kynthia

It seems like your £3.5k can buy you £550 every year from state pension age until death, or possibly longer if it also includes giving a spousal pension at a reduced percentage until their death if later than yours. It's a DB pension so you get a promise to pay an amount every year rather than build a pot of money in your name.

Seems like a fantastic deal to me. However it's very individual as some want to build a pot of money in a DC pension in order to retire earlier than state pension age, when your state pension and lgps pension start, and live on that money.

hyubh

MX5huggy wrote: »

They have calculated that my £3.5k in a stakeholder pension is worth £550 in the LGPS. I don't know what this means.

The £3.5k is, essentially, the whole 'pot'. The £550, in contrast, is an annual amount, in today's money, that becomes payment at your LGPS normal pension age (NPA); it will also track inflation both before and after that point. Given this, transferring probably sounds a no-brainer.

However, with 30 years to go before NPA, you should be looking to expect the £3.5k to be worth somewhat rather than that, in today's terms, by SPA. Also, your NPA in the LGPS is a moving target - state pension ages are bound to go up, and when they do, this will directly affect the value of the transfer in, and retrospectively too (e.g., if your SPA ends up as 75, then £550 will only be if you drew the pension at 75).

hyubh

(PS - I'd do the transfer.)

System

Hi

A slightly longer version might say....

There is a Market Value Adjustment, any GMP to factor in, Length of time before Payment (Investment period) and type of scheme.

An old old example below.


Example 3 (non-Club Transfer-In)
Member data:
Date of birth: 6 November 1953
Sex: Female
NPA: 65
Date of joining: 1 July 2014
Relevant date: 1 July 2014 (if transfer value received before 1 July 2015)
Transfer value: £20,000
Pre-88 GMP: nil
Post-88 GMP: £100 pa
Factors (female, aged 60 last birthday at Relevant date)
non-Club
FACTOR 15.52 P-IN
FACTOR 1.58 S-IN
FACTOR 3.16 GMP-IN
ADJ 1.00 P-14

Non-Club calculationAdjusted Transfer Value £20,000 + £100 x 0.15 x 3.16
£20,047.40
Earned pension
transfer credit offered:-
£20,047.40 / [(15.52 x 1.00) + (49/160 x1.58)]

£1,252.66

MX5huggy

Thanks I'll give them a ring tomorrow to check, but as you say it seems a bit of a deal. Although I'm very aware of this chance of not reaching SPA my father didn't but mum continues to benefit from various Public sector pensions.

MX5huggy

johndough wrote: »

Hi

A slightly longer version might say....

There is a Market Value Adjustment, any GMP to factor in, Length of time before Payment (Investment period) and type of scheme.

An old old example below.


Example 3 (non-Club Transfer-In)
Member data:
Date of birth: 6 November 1953
Sex: Female
NPA: 65
Date of joining: 1 July 2014
Relevant date: 1 July 2014 (if transfer value received before 1 July 2015)
Transfer value: £20,000
Pre-88 GMP: nil
Post-88 GMP: £100 pa
Factors (female, aged 60 last birthday at Relevant date)
non-Club
FACTOR 15.52 P-IN
FACTOR 1.58 S-IN
FACTOR 3.16 GMP-IN
ADJ 1.00 P-14

Non-Club calculationAdjusted Transfer Value £20,000 + £100 x 0.15 x 3.16
£20,047.40
Earned pension
transfer credit offered:-
£20,047.40 / [(15.52 x 1.00) + (49/160 x1.58)]

£1,252.66

Interesting, but frustratingly the last figure is not given any name as in my letter, is it per week, month, year , Luna phase, value added to the pot or value out, index linked? Payable from when? Any additional death in service benefit? But I understand now, per year index linked from SPA

hyubh

MX5huggy wrote: »

Interesting, but frustratingly the last figure is not given any name as in my letter, is it per week, month, year , Luna phase, value added to the pot or value out, index linked? Payable from when? Any additional death in service benefit? But I understand now, per year index linked from SPA

You were possibly overthinking things - it gets added to your CARE pension account, so is index linked before and after NPA in the same way as your regular benefits in the scheme (CPI while an active member, CPI with an effective underpin of 0% if leave before retirement, CPI with an effective underpin of 0% after retirement). As pension benefits in your annual benefit statement will be quoted in annual terms, so will any transfer in credit.

Dare I ask, as you found the details lacking, did you contact the administrator, and if so, what was their response...?

kidmugsy

In a sense it might be reversible since LGPS is the only large government DB scheme from which you are allowed to transfer out to a money purchase scheme. If ever you leave LGPS that might be useful to you.