LGPS transfer in value?

Silvertabby

“ That's the commutation rate, nothing to do with transferring out.
Originally posted by hyubh

AnotherJoe wrote: »

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.

hyubh is right. The commutation rate (of 1:12) comes into play when the fund member starts to draw their benefits from the LGPS and has the option of taking up to 25% of the notional fund value as tax free cash in return for a lower annual pension. ie, £12 of tax free cash for every £1 of pension given up.


A transfer out to another pension fund, however, is an entirely different kettle of fish. GAD supply the transfer factor tables, but the calculation is based on other factors as well - age, NRA, membership, marital status, etc. About the only thing that doesn't appear in a transfer calculation is the formula 1:12!

AnotherJoe

Silvertabby wrote: »

hyubh is right. The commutation rate (of 1:12) comes into play when the fund member starts to draw their benefits from the LGPS and has the option of taking up to 25% of the notional fund value as tax free cash in return for a lower annual pension. ie, £12 of tax free cash for every £1 of pension given up.


A transfer out to another pension fund, however, is an entirely different kettle of fish. GAD supply the transfer factor tables, but the calculation is based on other factors as well - age, NRA, membership, marital status, etc. About the only thing that doesn't appear in a transfer calculation is the formula 1:12!

OK fair enough I stand corrected and apolgise



So, is the rate substantially better than 12:1 ?
Lets say the OP at that time is 45 & married and NRA is still 67.

Silvertabby

AnotherJoe wrote: »

OK fair enough I stand corrected and apolgise

So, is the rate substantially better than 12:1 ?
Lets say the OP at that time is 45 & married and NRA is still 67.

No probs.

A transfer out calculation is incredibly complex - it isn't just a case of picking up one factor from the GAD tables. However, your example would be lucky to get as much as 15 x their pension - probably less.

A transfer out of the LGPS should be a very last resort - but a lot of people do it.

Alexland

Drp8713 wrote: »

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.

If you put it like that it does sound quite attractive however as I would want to retire 10 years earlier at 58 then trading in both pensions plus a couple of years of 1/49th contributions would buy an inflation linked circa £20k pa. Still that's more than enough to cover our current family living expenses even with the mortgage payment.

I guess this boils down to choosing between a bird in the hand versus one in the bush.

Alex

AlanP_2

Don't forget you will also have access to the LGPS AVCs as well which can be used to fund the tfls. Has the same date as main scheme benefits but still a very attractive benefit.