LGPS Transfer in Quote

snowqueen555

Hi all

Planning on transferring my previous employee pension of £25000 into the LGPS.

They have given me a quote of around £3400 from age 68.

If I were to leave the £24k invested with my provider and assuming around 4-6% growth and taking into account inflation, I think the pot would be worth around £90-140k at 68 (35 years of investing).

The LGPS therefore makes sense to me, any feedback?

Apodemus

LGPS is often better value than the alternatives but I guess it depends on the pension you are transferring in (you don’t mention whether this is defined benefit or defined contribution, payment terms etc). You also lose the flexibility that might arise from being able to take the two pensions at different times, flexible drawdown, cash lump sums, actuarial reduction rates for leaving before 68 etc. I appreciate that there is a lot to consider and usually a short window in which to do this, but you need to look at all the permutations, not just the absolute value at age 68.

Silvertabby

If you do go ahead with the transfer in, this £3,400 per annum pension will be index linked - so don't make the mistake of comparing just £3,400 with what your £25,000 could be worth at 68.

On the downside, if you take early retirement then your extra pension will be reduced for early payment in the same way as your main scheme benefits.

JoeCrystal

And beside, the pension pot is small enough that you won't miss it and you can always open your own DC private pension to contribute on top.

Apodemus

JoeCrystal wrote: »

And beside, the pension pot is small enough that you won't miss it...

Not sure I agree with that! £25k with a 35 year investment horizon insignificant? I’m currently doing the pre-retirement sums to see if I can go now and an additional £3,400 per annum would be pretty welcome!

snowqueen555

Thanks for all the replies. I am leaning towards putting it into the LGPS, provided I work 2 years and get eligibility.

I will eventually create a small amount into a separate fund, my plan is to semi retire and use this little pot to bridge the gap between 60-68.

The £25k is in a standard defined contribution scheme.

snowqueen555

Updated, transfer has gone through, £25k pot = £3700 per annum.

Good deal?

I feel like I need to start SIPP as a secondary form of pension, ideally to fund my retirement from age 60 to 68.

I am in my early 30's.

hyubh

snowqueen555 wrote: »

Thanks for all the replies. I am leaning towards putting it into the LGPS, provided I work 2 years and get eligibility.

By the way, transferring in will now by itself have given you preserved benefits irrespective of how long you remain in the scheme.

OldBeanz

Look into your LGPS AVC. They allow you to build a tax free lump sum if taken with your pension or as an additional pension when taken early.

FIRSTTIMER

Interesting to read these figures. I had a DB transfer pot of 70k and was going to transfer into TPS and they quoted me £2500 per annum from age 68. I declined. The pot could be worth circa 100k and I have decided to use it as a bridge gap between 60-65.

JoeCrystal

snowqueen555 wrote: »

Updated, transfer has gone through, £25k pot = £3700 per annum.

Good deal?

I feel like I need to start SIPP as a secondary form of pension, ideally to fund my retirement from age 60 to 68.

I am in my early 30's.

I think it is a pretty good deal. Assuming you had a pension fund and did not make any more contribution into it, the index-linked annuity it would buy would be worth £1,130 annuity in today's money. In order to match £3,700 annuity by 68 based on the annuity rate today, you would need to contribute about £150 per month over the next 35 years.