Another LGPS possible transfer out?

Joey_Soap

Good afternoon all. Mrs Soap has stopped working a couple of months ago. She is 57 and intends not to work again due to caring commitments. She has a deferred LGPS pension that will pay £4.4k a year plus a £5k lump sum at age 67. Ten years away. A recent poster suggested his wife of a similar age may take her transfer value into a SIPP. I think this is worth at least enquiring about to see what the transfer value would be for Mrs Soap. I know private sector transfer value is often in excess of 30x the benefit. But I suspect the LGPS will be far less generous? We are at the thinking stage and Mrs Soap's LGPS is a nice to have rather than an essential source of income. But - does anyone have experience of typical LGPS transfer values?

Thanks.

GunJack

Set by GAD and a lot less than 30x... one of the LGPS experts should gve you a more accurate idea...

chiefie

There is a bad formula but despite everything I can!!!8217;t fathom it. It felt like a level brain surgery trying to do it !!!55357;!!!56839;!!!55357;!!!56881;

Silvertabby

A lot of factors apply in the calculation - age, dates of service, NRA, marital status etc etc.

Impossible for me to even guess - but I'm prepared to say that it will be a lot less than 30x.

The only way to get an accurate figure would be to ask your LGPS for a transfer value.

Joey_Soap

Silvertabby wrote: »

A lot of factors apply in the calculation - age, dates of service, NRA, marital status etc etc.

Impossible for me to even guess - but I'm prepared to say that it will be a lot less then 30x.

The only way to get an accurate figure would be to ask your LGPS for a transfer value.

For an accurate figure, quite agree. That is the only way. Mrs Soap is asking since she just got her statement. Really, just wondering what other people's experience was in similar-ish circumstances.

OldBeanz

I would hope that anyone who uses this forum knows that if you pay into an AVC with the LGPS it is close on the worst pension to transfer out of. The OP's wife could have another £29k from taxable income in an AVC to draw in cash tax free. Outside the emergency services and the forces (for obvious reasons) and MPs it must be the best going. Hence why few will have applied.
As for the OP, assuming your wife is going to get a full state pension (and you should be checking this) then the LGPS pension will mean she will pay no or little income tax. The LGPS annual pension is sitting at a sweet spot. Ensuring the wife max's out her tax free allowance every year is one of our targets.

Silvertabby

OldBeanz - you'd be amazed at the number of people who actually do transfer out of the LGPS.

When the 'Pension Freedoms' were first announced, even though they didn't apply to DB schemes, the LGPS were swamped with calls from people - both current members as well as deferred - ringing 'about the new rules'. After explaining that they would first have to transfer their benefits into a private scheme/SIPP, and what they would be giving up, many still wanted to go ahead on the grounds that 'the money would be better off in their account rather than the Council's' or 'it's my money - I need it now for a wedding/holiday/new car'.

It was even worse after 2015, when most other public sector schemes stopped transfers into DC schemes. The myriad pensions advice cold callers then targetted LGPS members - and hit bullseye (for them) in far too many cases.

Joey_Soap

Thanks for the thoughts. To clarify, this is a "nice to have" pension, not an essential one. It "might" be useful to access it at age 57 rather than wait another 10 years. The best way "might" be to use the money in a SIPP. Or, it may not be. At a transfer value of 25x benefits, it would be attractive to take the benefit now as a 4% draw down rather than wait. Whether that would be offered seems in doubt. We'll see when we get the transfer value offer.

Silvertabby

Joey_Soap wrote: »

Thanks for the thoughts. To clarify, this is a "nice to have" pension, not an essential one. It "might" be useful to access it at age 57 rather than wait another 10 years. The best way "might" be to use the money in a SIPP. Or, it may not be. At a transfer value of 25x benefits, it would be attractive to take the benefit now as a 4% draw down rather than wait. Whether that would be offered seems in doubt. We'll see when we get the transfer value offer.

Once you get the transfer valuation, compare that 4% draw down with taking the (actuarily reduced) pension now. Just so you have all of your options...

[Deleted User]

Hello Joey Soap,
I have seen a recent quote for a transfer from LGPS. The CETV was circa 10(ten) times annual pension.
Regards
Billy

Joey_Soap

Ouch! Thanks.