LGPS - Transferring DC pension pot into the LGPS

BikerFit

I am thinking about leaving my present job with a private employer to join my Local Authority. I have built up a considerable pot in my current DC scheme and am considering transferring this to buy me LGPS pension if I joined the LA. I was wondering if there is a limit to either the size of the pot that can be transferred, or the number of years service that I could be credited for on transfer? Thanks for your help.

Dazed_and_C0nfused

Are you happy losing the flexibility of the DC pot?

I don't mean it's a bad idea just wondered if you had considered the negatives as well as the positives.

BikerFit

Yes, it’s a good point. My thinking is that I’d rather de-risk by handing it to the LGPS to manage. I’m also thinking that LGPS can translate my pot into a bigger annual pension than, say, I’d get with an annuity.

Dazed_and_C0nfused

There are probably more positives than negatives but one of the negatives for some people would be ending up with 100% of their non State Pension) provision being payable at the same date.

BikerFit

Yeah, that’s true. I don’t want to get ahead of myself but I’ve been thinking that even if I retired early (from my LA job I don’t even have yet!), the reduced pension I’d get would still be more than whatever my DC pension could get me.

Silvertabby

First thing would be to check that your employer will accept a transfer in from a dc scheme.  Not all do. Then ask for a quote before making a final decision.

xylophone

https://www.lgpsmember.org/tol/thinking-leaving-when.php
Consider the normal pension age and the probability of actuarial reduction if benefits are taken before that age.
Retaining a DC pension could give you the flexibility to leave Local Government before NPA, leave your benefits deferred and draw on your DC pension to fill the gap.
If you join LGPS, you can ask for a quotation for a transfer in.
Example
https://www.kentpensionfund.co.uk/local-government/deferred-member-no-longer-paying-in/transferring-pension/transferring-in-pension-rights/the-process-of-transferring-in-pension-rights

BikerFit

Thanks Silvertabby, and thanks xylophone. I appreciate your advice, especially as I know you are both so knowledgeable. I was hoping one of you might reply, but I got both of you 🙂 . I asked the Fund Administrator but haven’t received a reply as yet.
The numbers, of course, are key - the actuarial reduction for leaving at 55 look pretty devastating to the pension, but even after this reduction has been applied, I might potentially get more money than whatever a DC pension could give me if the transfer and service credit calculation had given me a significant uplift in value when I join. Any further thoughts?

Silvertabby

You really need the figures to compare.  Asking for an estimate doesn't commit you to going ahead with the transfer if you decide not to. The transfer would buy you £X amount of CARE pension - not LGPS service - so it should be easier to run comparisons.

Are you sure that you will retire at 55?  If yes, then another option would be to keep your DC pension separate and live on that between 55 and 60, when the LGPS reductions will be much less.

BikerFit

Thanks Silvertabby, you’ve been so helpful.