Transfer £58K SIPP to LGPS?

Type_45

Wanted to start a new thread for this specific question, as I was asking about this in a thread about state pensions. (Thank you to those who responded)

I am 43 years old and my pension savings to-date consist of £58,000 which is invested via a SIPP in Vanguard Life Strategy 80%.

18 months ago I started working for a council and have started a local government pension scheme (LGPS) in a low-paid role which I enjoy. I don't have much mortgage and i can afford to do it. (I also have an ISA invested in VLS 60 with Halifax.)

My question is: should I transfer the £58K to my LGPS? Or leave the £58k invested in Vanguard Life Strategy and have a separate pension with the council?

JoeCrystal

I am afraid your point is moot as the rules on transferring in your pension schemes have to be done within 12 months of starting work unless your employer allows a longer time. Well, what does it buy?

Silvertabby

As part of the process, the LGPS will tell you how much LGPS pension this £58K will buy you before you have to decide.

Bear in mind that whatever figure they give you will be reduced for early payment if you take your benefits before normal retirement age (same as your State pension age).

Type_45

JoeCrystal wrote: »

I am afraid your point is moot as the rules on transferring in your pension schemes have to be done within 12 months of starting work unless your employer allows a longer time. Well, what does it buy?

Yes, you are quite right about the 12 month rule. However, I asked them today and they said they would allow me to transfer.

So I have filled out, and returned back to them, a basic form. There's no mention of money on the form. It's just an "authorisation" form.

So I am now waiting to see what I can buy with £58k.


I guess a big "pro" of VLS is that it should, in theory, double in value every 10 years. So in 20 years time my £58k could be £232k as I approach retirement.

But a pro of the LGPS is that it won't ever run out.

I guess what I'm waiting for is to see which options makes the most money in the long term...

System

The flip side of the large amounts that people are being offered to transfer out of DB pensions is that your £58K won't buy you much pension income in the LGPS.

Silvertabby

Economic wrote: »

The flip side of the large amounts that people are being offered to transfer out of DB pensions is that your £58K won't buy you much pension income in the LGPS.

Not the same thing at all. LGPS transfer in factors are set by GAD and are quite generous. On the other hand, transfer out factors - also set by GAD - are rather poor.

Type_45

Economic wrote: »

The flip side of the large amounts that people are being offered to transfer out of DB pensions is that your £58K won't buy you much pension income in the LGPS.

Yes, that's what I'm very wary of.

Type_45

Silvertabby wrote: »

Not the same thing at all. LGPS transfer in factors are set by GAD and are quite generous. On the other hand, transfer out factors - also set by GAD - are rather poor.

I do hope so. I will come back with what I am offered.

Albermarle

I guess a big "pro" of VLS is that it should, in theory, double in value every 10 years. So in 20 years time my £58k could be £232k as I approach retirement

Although predicting the future is not possible it seems to be generally accepted that the performance of the last 10 years in financial markets will not be repeated in the next 10 .If for no other reason that in 2009 they started at the bottom after the crash. Now we are probably somewhere around the top of the cycle . I think for a careful pension calculation better to look at +50% over the next 10 years .
Also inflation will be maybe 30% so your real gain could be 20% , although only guessing of course.
As for the next 10 years after that , who knows...…..

Type_45

Another "pro" of the SIPP is that it's it's available from age 55, rather than 67 (or whatever the retirement age will be when I get there).

xylophone

You might want to retire from LG earlier than normal pension age and not want to take the pension early,so suffering an actuarial reduction.

You could continue to contribute to your SIPP as well as contributing to LGPS so as to build up an early retirement pot.

This would keep you going until you could take your unreduced pension from LGPS and your state pension.

Have you obtained a state pension forecast?

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