Cashing in my wife's LGPS pension

LHW99

Also worth calculating what if the worst happens and one of you passes early - could the remaining partner manage on what pension(s) are left - most DB pensions will pay a spouse pension at probably around 50% and probably also index linked.

jerrysimon

LHW99 wrote: »

Also worth calculating what if the worst happens and one of you passes early - could the remaining partner manage on what pension(s) are left - most DB pensions will pay a spouse pension at probably around 50% and probably also index linked.

Thanks yes as stated my wife gets 50% of mine plus her SP and would likely sell our house and down size nearer to my daughter in a modern house. As for me I will have my full pension plus state pension plus a house to sell and move in with my daughter (joke).

Dazed_and_confused

My wife currently has am LGPS pension worth around £3K lump sum and £3K/year. or 10K lump sum 1.5K/year even if we take it now.

I guess our easiest option is to max the lump sum to 10K and reduce the monthly pension. At least that will be indexed linked and payable for the rest of her life.

Maybe I've misunderstood but an extra £7k lump sum seems an incredibly poor option compared to £1.5k. Even allowing for 19/20/21% tax it wouldn't take long to be better off with the higher pension.

jerrysimon

Dazed_and_confused wrote: »

Maybe I've misunderstood but an extra £7k lump sum seems an incredibly poor option compared to £1.5k. Even allowing for 19/20/21% tax it wouldn't take long to be better off with the higher pension.

True. Sigh all this monthly income but I want more capital


Strange how when you have and spend capital you want to then replace it.

Dazed_and_confused

Assuming she's in good health she could assign the £1.5k to me.

I'd happily let her have £10k now and she'd have the £3k lump sum from LGPS as well. Much better deal than just the £10k from LGPS!!

Everyone's a winner

Seriously though would it be more sensible to get a personal loan for the £7k and keep the £3k pension. Payable for life.

jerrysimon

Lol. Or I could draw it and save it and have 10K in 5-6 years and then 1.5K for the rest of her life.

Re loan yes indeed of course you are right.

PS glad I posted here, as usual all good balanced suggestions before I ran away with myself.

Clearly any short term gain, does not compare to the long game given we are still quite young.

enthusiasticsaver

What are the figures if she does not draw on it until 60? I agree that taking the larger lump sum now and sacrificing 50% of the annual pension is short sighted. By taking the extra £7k now and sacrificing £1500 a year she will be worse off in less than 5 years.

jerrysimon

Ok dug out the paperwork as I was going on memeory last time I got the quote was in Jan 2017.

Take pension straight away (2017) 3K lump sum 2k/year pension

Max conversion again when I got the quote 10k lump sum 1.5K/year pension.

At 60 i.e in 2021 3.5K lump sum 2.6k/year pension.

Max conversion again at 60 is 12.5K lump sum and 1.9K/year pension.

Transfer value 51K.

Looking again at figures if I dont transfer out its probably worth leaving till she is 60. As stated the max conversion figures also look very unfavouritable.


PS If she was to die I would get 1.3k/year pension. and no lump sum I don't think.

woolly_wombat

jerrysimon wrote: »

Ok dug out the paperwork as I was going on memeory last time I got the quote was in Jan 2017.

Take pension straight away (2017) 3K lump sum 2k/year pension

Max conversion again when I got the quote 10k lump sum 1.5K/year pension.

At 60 i.e in 2021 3.5K lump sum 2.6k/year pension.

Max conversion again at 60 is 12.5K lump sum and 1.9K/year pension.

Out of interest, what would your wife expect to receive from her LGPS at 67?

Transfer value 51K.

Hmm, Silvertabby has, from memory, repeatedly warned that transfer values from LGPS are poor.

Commutation rates are also notoriously poor from LGPS.

xylophone

Silvertabby has, from memory, repeatedly warned that transfer values from LGPS are poor.

Yes- https://forums.moneysavingexpert.com/discussion/5586910/lgps-cetv-and-rule-of-85

Although there was this recent article which may be of interest.

https://www.ftadviser.com/pensions/2018/11/21/local-government-scheme-halts-pension-transfers/

http://www.room151.co.uk/local-government-pension-scheme-investment/lgps-temporarily-halts-pension-transfers/

I can't find a reference to the result of the consultation.

Commutation rates are also notoriously poor from LGPS.

12:1 is the standard ( though see here for an exceptional circumstance)

https://forums.moneysavingexpert.com/discussion/5836750/lgps-deferred-pension-lump-sum&page=3