LGPS and is Transfer right for me.

djobuk

Hello All, first time poster.

I have a relatively small LGPS with a transfer value of £44,470 and no other pensions. I am male, 56 in October, single, no dependants. I have a remaining mortgage of today £21,617 with 5yrs 7mths left. Mortgage payment is £350/mth and £35/mth life assurance.

I read that best advice is to leave an LGPS as is but wonder if a transfer could be right for me. I understand the tax liabilities. So I wonder if transferring out my LGPS and paying off my mortgage would be a good move? My maximum conversion to lump sum in the LGPS is £8,669

My long term plan, if I don't have a pension, lies in the property. It is currently valued at £180k. The house is divided into 2 small flats (my elderly mum lives downstairs, hence the life insurance) so I could rent part of it out, or, sell the house and buy a modest mobile home and have the balance.

I am currently on ESA but do expect to return to work at some point, although only part time.

To me, paying off the mortgage sounds good but I don't want to chip away to much of the value for tax and an IFA.

Any advice would be very helpful.
Thank you.

xylophone

Is this an LGPS deferred pension?

Or are you still employed by the local authority and planning to return to work after a period of illness?

Have you obtained a state pension statement?

https://www.gov.uk/check-state-pension

Should you not be regarding this modest pension together with your state pension as your security for old age with the possibility of renting out the GF flat once your mother no longer needs it?

https://www.royallondon.com/about/media/news/2018/may/five-good-reasons-to-transfer-and-five-good-reasons-not-to-royal-london/

To effect a transfer would require the advice of a Pension Transfer Specialist - this would not be cheap.

Joey_Soap

I imagine the OP has about zero chance of any advisor agreeing to take this transfer business on. And the OP should be rather grateful that in this case at least, the government really is protecting the person in spite of their own possibly misguided actions.

djobuk

Hello xylophone
Thank you for the reply.

Yes this is a deferred pension. I am not employed by the local authority any more but do plan on returning to work. I doubt that will be with a local authority though.

Thank you for pointing out the info for checking my state pension. It's not in great shape as I did a lot of travelling and lived in the US for many years and did not contribute. It currently stands at £88.86/wk and rises to £140 if I contribute until 2029.

My thinking on the house, is that £100kish after buying a mobile home probably when I am 65? gives me more than the £44470, or am I looking at that wrong?

Marcon

djobuk wrote: »

I read that best advice is to leave an LGPS as is but wonder if a transfer could be right for me. I understand the tax liabilities. So I wonder if transferring out my LGPS and paying off my mortgage would be a good move? My maximum conversion to lump sum in the LGPS is £8,669

I hate the phrase 'best advice' in this context, because it completely ignores the most important aspect of any possible transfer: the situation of the pension scheme member and their aspirations.

Given your transfer value is over £30,000 you are required by law to have received advice from a suitably qualified and regulated individual before the LGPS could proceed with any transfer. 'Receive advice' is not the same thing as 'follow that advice' - but receiving it would cost you a fair amount, always assuming you could find an adviser who was willing to advise (and they are out there).

Perhaps before doing anything else you need to sit down with a paper and pencil (or spreadsheet, as you prefer!) and do some basic arithmetic in terms of how much it would cost you to transfer/take enough cash to pay off your mortgage and then look at what the saving would be if you did redeem your mortgage early (any penalty for doing so?).

Then you need to think about realistic figures for your income in retirement.

Easy? Not at all - very time consuming, but also very important.

djobuk

Thank you Marcon
Yes I understand I have to receive advice from a suitably qualified and regulated individual. I don't plan on doing anything rash or in a hurry. My mortgage company Halifax tell me the settlement fee is built into the balance, £425 today.

Good advice on a spreadsheet, thank you. I'll try and get myself some figures.

xylophone

https://www.royallondon.com/global/documents/goodwithyourmoney/topping-up-your-state-pension-guide.pdf

[

B]My thinking on the house, is that £100kish after buying a mobile home[/B]

Would you really want to live in a mobile home in old age?

You say that you expect to return to work - your new employer should offer a pension scheme.

If you transferred out the LGPS and took anything over the 25% PCLS you would be restricted by the MPAA in respect of contributions to a DC pension.

djobuk

Yes the 100k would be after a buying a mobile home.

With the house divided the way it is right now the living space is bijou. A mobile home would be more spacious, and around me here in Devon there are some beautiful parks with lovely views. Views that I would never be able to afford in a house. And I like a vista!

Thank you for the replies. Along with a couple conversations I have had today with IFAs, I have a better understanding of the process, the pitfalls and the costs even if a transfer were possible.

Much to think about.
Thank you