LGPS Pension Transfer Advice

Goodfella211

I have a deferred pension from my previous company. The scheme was closed a year before I left and the pension is 33 years old and so I consider it a tidy nest. I have now started work with local government and am a member of LGPS. I am not sure if I can transfer the deferred or if there is any benefit in doing so. If anyone has a view then thanks in advance.

DairyQueen

May be worth changing the title of the thread to 'LGPS Transfer-In Advice'. That is sure to catch the attention of, for example, SilverTabby. What she doesn't know about the LGPS can be written on a postage stamp.

Also, is your deferred pension a DB or DC scheme?

Goodfella211

Excuse my lack of education but DB or DC???????

GDB2222

He's asking whether your old scheme is just a money purchase pot or a defined amount of pension. I imagine the latter, given the vintage.

Albermarle

Excuse my lack of education but DB or DC???????

Have a read of this :
https://www.moneysavingexpert.com/savings/discount-pensions/

xylophone

DB means "Defined Benefit". DC means "Defined Contribution".

With regard to a transfer in to LGPS, this may or may not be possible according to the rules of the Local Authority in question.

http://www.yourpension.org.uk/Dorset/Scheme/LGPS-Guide/Transfers.aspx

Not all authorities will permit a transfer in.

Even if your deferred pension is a DB scheme (or other scheme with "safeguarded benefits") valued at more than £30,000, as the LGPS is itself a Defined Benefit Scheme, a transfer (if permitted), should not require the advice of a Pension Transfer Specialist since you would not be transferring to a scheme offering flexible benefits.

However, as pointed out in FAQ in link above, it might not be to your advantage to transfer.

For example, your old scheme might permit you to take benefits without actuarial reduction at an earlier age than permitted by LGPS.

Pensions in payment might be linked to RPI rather than CPI.

There might be a right to a higher than normal tax free pension commencement lump sum.

The survivor's pension might be more generous etc.

Therefore you might feel that you needed advice before making any permitted transfer.

DairyQueen

+1 to xylophone's guidance.
If it's a 'defined benefit' scheme ('DB') then this is a valuable (and rare outside of the public sector) type of pension. The scheme will provide a guaranteed annual income from the scheme's retirement age, and for the rest of your life. Often, some/all of this will be index-linked. All of the risk of this type of scheme is carried by the sponsoring employer.

A 'DC' scheme is now the most common type available in the private sector. This type of scheme invests your's (and your employer's) contributions on the stock market. The value of your pension is directly related to investment returns. All of the risk is with you.

I would be very reluctant to transfer a DB scheme without taking independent advice. Usually such advice is mandatory but, as xylophone mentions, this is not the case with a transfer to another DB scheme.

You admit that your knowledge of pensions is limited. I strongly recommend that you take advice and, especially, if the annual pension offered from the deferred scheme is of any size.

Silvertabby

First thing to do is to ask your employer/your LGPS provider if they will accept a transfer in from a private pension scheme. This is an employer discretion and, if the answer is no, then you are dead in the water.

If they do accept transfers in, then you could ask for a quote of what the transferred benefits would buy you in the LGPS. You will then be able to compare the figures, and make a decision.

Note that it's not just £ for £ - for example, your old scheme may be payable in full from 60 or earlier, whereas if you take your LGPS benefits before your State pension age they would be reduced for early payment.

Also note that there's a 12 month limit on all transfers in, so don't leave it too long to set the ball rolling. You won't be committed to anything by just asking for a quote.

xylophone

from a private pension scheme.

Just one more thought - might the OP's old scheme be a member of the Public Sector Transfer Club?

https://www.civilservicepensionscheme.org.uk/members/public-sector-transfer-club/

Goodfella211

Thanks everyone, my deferred is obviously a DB as it will give me a set sum forever as and when I decide to take it. Deferred is BTPS (BT) and I know is extremely competitive, it allows me to draw it from the age of 50 (next year) if I wanted to but have no intention of doing so until 55+. LGPS would I think allow it to be transferred as it is allowing a smaller one of 2 years to be transferred. I guess its a case of getting proper advise but I'm leaning on the idea of leaving it be as I can't grumble at its current forecast.