Transfer private pension into LGPS

Aylesbury_Duck

I'm starting a new job in the summer working for the local authority and with it comes the LGPS. I have built up two private pension pots over the last 20 years, each worth around £100k today. I'm 47 and after asking a question about AVCs with Prudential (which is something the LGPS offer), a helpful member on here advised me that I can transfer private pension sums into the LGPS to buy extra pension.

With the sum involved, it seems sensible to seek professional advice but I'm two months from starting the job so I'd like to get a bit more knowledge before engaging that advice. A couple of questions I'd appreciate some views on please:

In principle, it sounds like a good option to pursue (transferring in), trading the potential for good or poor returns on my private funds for the relative security of the LGPS. The downside seems to be the relative inflexibility because if I stay as is, I could draw my private funds at any point from 55 and leave my LGPS to 67 (along with the Prudential sum which I could access entirely tax-free if I take it at the same time). Are those the main pros and cons?

Secondly, I presume I could adopt a mixed approach, transferring one of the pots in and leaving the other, or perhaps half of each of that's an option? That might give me a more balanced approach, giving a little more risk/reward and foregoing the extra security that LGPS offers.

Silvertabby

You have 12 months in which to transfer previous pensions into the LGPS.

You will have to wait until you have been in your new job for at least a month (to allow for your employer to pass your details to your LGPS provider) before you can ask for an estimate of how much LGPS pension your £100K would buy you. You will then be better placed to consider your options.

Note that if you do transfer to the LGPS, the pension quoted will be index linked - but would be reduced for early payment if accessed before your NRA (same as your State pension age).

You would be given separate figures for each of your previous pensions so, yes, you could transfer in one and leave the other as a DC pension. It depends on your current pension scheme(s) rules if they would allow a partial transfer out.

zagubov

Be aware that when you retire Prudential does one drawdown product and you'll have to transfer to a SIPP with another provider and after you've jumped through a few hoops.

Is it the best option? If you self-assess you also have the option of APCs. Have you explored this?

Aylesbury_Duck

zagubov wrote: »

Be aware that when you retire Prudential does one drawdown product and you'll have to transfer to a SIPP with another provider and after you've jumped through a few hoops.

Is it the best option? If you self-assess you also have the option of APCs. Have you explored this?

Thanks.

I am self-assessed. A bit of background: I've been a higher-rate taxpayer since 2006 and was very naive about the benefits of overpaying into my pension to be tax efficient. Between 2006 and 2015 I simply paid in around 5% of my salary into my pension, with my employer matching that. Once I realised the tax efficiency advantages I've been paying in more and more each year, culminating in the last year where I was (and still am) paying in 40% of my salary and my employer puts in 5%. I have no mortgage and savings of several years' salary including a cash fund which would last over a year if needs be.

My thought was to pay enough into the Prudential linked scheme each year to take me out of higher rate tax, so my pot will continue to grow with big contributions each month. I haven't explored APCs, so thanks for pointing me in that direction. I take it it's a way of buying additional LGPS rather than adding to the linked scheme?

zagubov

Aylesbury_Duck wrote: »

Thanks.

I am self-assessed. A bit of background: I've been a higher-rate taxpayer since 2006 and was very naive about the benefits of overpaying into my pension to be tax efficient. Between 2006 and 2015 I simply paid in around 5% of my salary into my pension, with my employer matching that. Once I realised the tax efficiency advantages I've been paying in more and more each year, culminating in the last year where I was (and still am) paying in 40% of my salary and my employer puts in 5%. I have no mortgage and savings of several years' salary including a cash fund which would last over a year if needs be.

My thought was to pay enough into the Prudential linked scheme each year to take me out of higher rate tax, so my pot will continue to grow with big contributions each month. I haven't explored APCs, so thanks for pointing me in that direction. I take it it's a way of buying additional LGPS rather than adding to the linked scheme?

I think so; I know people on the scheme but I'm on the tPS myself. I found buying extra pension very useful and cost-effective but not widely promoted like AVCs are. There are downsides to it- I think AVCs can be inherited whereas pensions die with you unless you have a spouse and/or young children. Thorough research is needed before you commit yourself.