LGPS transfer in value?

AnotherJoe

I would not transfer anything, and keep the ones you have, SIPP and DC, for three reasons.


First, the LGPS has a very late pension age. You can take your SIPP /DC benefits much earlier, 12 years at present. If you xfer you are giving up some of the opportunity for a phased taking of retirement benefits.



Second, its big one way gamble, if you decide you dont like it and move elsewhere after a year or three, you've irrevocably put all those benefits, albeit only half, into the LGPS.


Third, the LGPS has a very late pension age (OK i realise its the same as point one but its so important i thought I'd mention it twice"

Silvertabby

!!!8220; Does LGPS have a system for buying additional years of pension as you roll along? If so it might be more tax efficient to use that and to keep the current pensions separate for funding early retirement.
Originally posted by kidmugsy !!!8221;

Yes. Contributions are taken from salary, and therefore attract the same tax relief benefits as normal pension contributions. On the downside, employers don't chip in - so the employee has to pay the full whack.

Silvertabby

AnotherJoe wrote: »

I would not transfer anything, and keep the ones you have, SIPP and DC, for three reasons.


First, the LGPS has a very late pension age. You can take your SIPP /DC benefits much earlier, 12 years at present. If you xfer you are giving up some of the opportunity for a phased taking of retirement benefits.



Second, its big one way gamble, if you decide you dont like it and move elsewhere after a year or three, you've irrevocably put all those benefits, albeit only half, into the LGPS.


Third, the LGPS has a very late pension age (OK i realise its the same as point one but its so important i thought I'd mention it twice"

Actually, benefits can be transferred out of the (funded) LGPS to a private scheme - but that should only be done as a last resort due to the low transfer factors that would be applied.

AnotherJoe

Silvertabby wrote: »

Actually, benefits can be transferred out of the (funded) LGPS to a private scheme - but that should only be done as a last resort due to the low transfer factors that would be applied.

Sorry I should have said that, when I said "irrevocably" I meant "effectively irrevocably " due to the 12:1 rate.

hyubh

AnotherJoe wrote: »

First, the LGPS has a very late pension age. You can take your SIPP /DC benefits much earlier, 12 years at present. If you xfer you are giving up some of the opportunity for a phased taking of retirement benefits.

The actuarial reduction for taking an LGPS pension early, while clearly noticeable, is not intended to penal however.

Second, its big one way gamble, if you decide you dont like it and move elsewhere after a year or three, you've irrevocably put all those benefits, albeit only half, into the LGPS.

Length of membership will have zero impact on the value of the transfer in because what is bought with the latter isn't linked to final salary (or length of membership itself for that matter). In fact, if there's a reasonable chance the OP's time in a good DB scheme will be short, then that gives reason to maximise the benefit while they can.

hyubh

AnotherJoe wrote: »

Sorry I should have said that, when I said "irrevocably" I meant "effectively irrevocably " due to the 12:1 rate.

That's the commutation rate, nothing to do with transferring out.

Drp8713

As hyubh says, the LGPS may not remain a DB scheme forever.

To be able to transfer in and get a guaranteed £30k p.a pension index linked, and still have 20+ years to pay into a SIPP or S&S ISA, means you can pretty much have your cake and eat it.

A risk free indexed income, plus heavy investments in equities for the growth.

I think I should be able to live off my S&S ISA/S&S LISA/SIPP when im older if I can maintain my current contribution level and get 5% growth, but having a risk free LGPS pension to fall back on is a good safety net. Especially if The Great Depression 2: The Sequel decides to kick off two years before you retire.

My LGPS is only worth £5k p.a at the moment, and at age 30, I need it to stay the same until im 45 to get the minimum £18k I want as a safety net.

kidmugsy

Alexland wrote: »

Not sure but I am starting to wonder how much additional money we really need pension wrapped going forward.

My morning paper carried its annual speculation about the ending of 40% tax relief. I suppose it's a one-way bet; it's hard to conceive of a government increasing that tax relief. Potential users of it might care to take advantage while it lasts.

AnotherJoe

Its got to happen sometime km.


And who could argue that "rich" taxpayers should get a better deal than "poor" 20% taxpayers especially when all that tax relief that was going to the "rich" will now be going into the NHS.


Most likely it will be a flat rate, lets say 25-30% for all, and with the number set so theres, oh i dont know, maybe an extra £350M a week coming in?



And then there's going to be an awful lot of people whining in here that their cunning plan to first overpay their 1.5% mortgage to clear it and only then start putting more into pension, has just been nuked from orbit, and cost them many tens of thousands over the next 10-20 years.

AnotherJoe

hyubh wrote: »

That's the commutation rate, nothing to do with transferring out.

Its everything to do with it !!



Point is, OP puts his £125k in, gets additional LGPS benefit, but when (if ) he wishes to chnage his mind and withdraw it (and i think it has to be all or nothing, he cant just take out what he put in) there's a very low unattractive commutation rate so his money is in effect stuck in there.