transferring previous LGPS and SIPP to new LG scheme

billm

Hi all, some advice if I may.

Have been offered a position in a LA, salary £42,000.

I previously worked in Local Government and have a deferred pension of £3200 (8 years service) payable at age 60 (85 year protection). Currently 48 years of age.

If I was aiming to retire at age 60 - 62, would it be worthwhile transferring the previous LG pension to the new scheme taking into account that it would not be payable until I am 67, and if I wanted to take early would mean an actuarial reduction if taken early?

2nd question, I have a DC pot from current employer (£40,000) if I was to transfer this into the LGPS, what sort of figures would I be looking at? Again, would be reduced if taken early.

Question, is it better to transfer both pensions to new scheme and accept will be reduced, or keep them separate and use the Sipp to drawdown between 60/62 and 67 to ensure no reduction in new scheme pension.

Or should I transfer all in, and build a new pot to cover for period of early retirement.

I currently earn £50K + and salary sacrifice 22% (including employer conts) and am steadily increasing this each year, so even with £10K drop in salary, as LGPS conts are so low, I wouldn't actually be much worse off, if at all, with the benefit of a much better (DB) pension at the end of it all.

Further detail, wife will have approx £15K LGPS pension and we both will receive full SRP (have checked this, we both already have enough contributions for full SRP)

Would like approx £40 - 45K combined in retirement, so we have about £36K (gross) already in guaranteed income, so not too far away from requirements, so feel comfortable that can retire a little early.

Any thoughts?

atush

It seems to me, as i am no expert, if retiring early it is best to keep the old LGPS and the DC pension where they are. use both to retire early.

Apodemus

You will need to check the rules around your “rule of 85” protection. It looks to me like, at best, it will only apply to your earlier 8 years and you will be 62 before you reach the 85 figure for combined age and service, so you will face an actuarial reduction on the rest of your LGPS pension if you take it early.

If you look up the LGPS website you will find an APC calculator where you can play with figures for buying additional pension. I’m not sure, though, how you would manage to transfer in from the SIPP. I would have thought that it might be better to keep the SIPP for early retiral and avoid accessing the LGPS early.

AlanP_2

Ask LGPS for quote on what SIPP transfer in would get you as easier to decide when real numbers are used.

Double check your SP as having enough contributions at 48 to get full amount sounds fast to me.

Silvertabby

When did you leave your old LG post, and when will/did the new post start. A gap of 5 years or more makes a considerable difference in the options available.

billm

Checked SRP and definitely covered. 32 years full contributions. Was actually enough for full new SP last year... Guess I was one of the losers from the new SP as had built up a fair bit of Serps 2 previously, and now unable to increase any further. Appreciate NI also pays for NHS etc, but doesn't feel great having to pay 20 extra years with no SRP benefit, but hey ho, that's life.

Haven't actually accepted job yet, so unable to ask about how much extra service my SIPP would earn. Think if I do accept, I will keep Sipp as is and contribute as a second fund. Its with Fidelity so easy enough to continue contributions.

Does anyone know how my existing 8 years deferred final service works. I have checked online with no success. as its more than 5 years gap between service, I assume its not automatically transferred in as 8 years service under new Care scheme. Its not a huge amount, so would only expect to be worth a couple of years service under new scheme and salary.

Thanks again all for advice, much appreciated.

billm

Sorry Silvertabby, posted before seeing your post..

Left in 2003, and if I do accept, will be a 16 year gap.

Thanks again

hyubh

billm wrote: »

Does anyone know how my existing 8 years deferred final service works. I have checked online with no success. as its more than 5 years gap between service, I assume its not automatically transferred in as 8 years service under new Care scheme.

Correct - the default for all LGPS memberships that finished under the final salary scheme (so, pre-April 14) is separate benefits with the option to combine or transfer, with time limits for electing for that (the default then gets switched for old memberships that ended under the CARE scheme).

In addition, a gap of over five years gap means a CETV would be calculated on the old pension, which would then buy a credit for your new CARE pension (so, NRA as SPA, and revaluing until retirement by CPI rather than linked to your new final salary - but the opening credit isn't current salary related at all). Kept where it is (i.e. not transferred), and the old DB will revalue by CPI and be available to draw, separately and unreduced, at 60.

On the flip side, if it was less than five years, you wouldn't have previously joined in time to benefit from the 85 year rule, so not all bad Personally, given the much earlier point at which you could draw the benefits unreduced and your desire to retire 60-62, I'd keep the old DB where it is even if you did take up the new LA job.

(Small caveat - there's a thin chance when you get to 60, if employed in a role with LGPS membership, 'abatement' for pre-14 memberships could still be a thing. Currently it's an administering authority discretion, though the usual thing is for a policy not to abate. See Berks' explanation for why their policy to that effect here - this reasoning will be common: http://www.berkshirepensions.org.uk/info/8/non-members/100/abatement_policy)

Silvertabby

billm wrote: »

Sorry Silvertabby, posted before seeing your post..

Left in 2003, and if I do accept, will be a 16 year gap.

Thanks again

Then aggregating your benefits will mean that your first service will be converted into a sum of money (cash equivalent transfer value cetv) and this will be used to 'buy' CARE pension benefits. ie, you will lose the final salary link and your Rule of 85 protections.

If you are still unsure, you could ask for a quote before making your final decision.

billm

Thanks all. Likely best to leave as is.

Many thanks, makes things much easier.