Legal and General now ReAssure pension - what to do?

joshiesaunt

Many years ago i paid very little into a Legal and General Pension now with ReAssure.  It's current value is £8,258 and the projection is that i could buy an income of £346 per year if it took it at age 60.  I am 53 and have paid into a defined LGPS pension since i was 25 so have a decent pension from that.  Is it possible that i could transfer the value to my LGPS?  If it is possible, how would i go about doing this please (please talk to me in simple language - i'm trying to be more clued up by reading this forum but have a long way to go!).  If it is not possible, can i just take this as a lump sum at age 60?  I know i can phone ReAssure but just wanted to see what the options might be.

NottinghamKnight

You can contact your LGPS scheme provider and ask them about a transfer in and what value you might get.
The main thing to remember is that the pension pot and buying an annuity or going into drawdown are totally different operations. You can take the pot at 60, 25% is tax free and the remainder is subject to tax as if it was added onto your other income. You can transfer your pot to another provider from reassure, and then draw it down over a period of time, maybe half in one tax year and half in the next. 

xylophone

You can contact your LGPS scheme provider and ask them about a transfer in and what value you might get.

As the OP has been an LGPS member for over 25 years she may have missed the boat.

https://www.lgpsmember.org/arm/already-member-tvin.php

Transferring in a previous pension

How do I transfer?

Your pension fund administrator can advise you of their process for transferring previous rights into the LGPS. You have only 12 months from joining the LGPS to opt to transfer your previous pension rights, unless your employer and your administering authority allows you longer. This is a discretion and you can ask your employer and administering authority what their policy is on this matter.

Albermarle

You could take the pension as a lump sum at age 55 onwards. 25% would be tax free and the rest taxable in the same way as earned income. However you would need to check with Reassure if the pension scheme allows it as some older ones do not.
In this case you would have to transfer it to a more modern scheme, which is easy . 

xylophone

If it is not possible, can i just take this as a lump sum at age 60?  

If this is just a standard DC pension you could access it from age 55.

If you took it as a lump sum, you would be able to take 25% tax free with the rest taxable as income in the year of receipt.

dunstonh

Do remember that the annuity example is using synthetic projection assumptions that do not reflect reality.  Typically, they use rates of returns that understate the likely outcome.  They use the most expensive type of annuity.  They deduct 2% a year for inflation to show the figures in today's spending power.  Not future money.   And buying an annuity at 60 is usually extremely poor value for money. Given the amount, its unlikely you would buy an annuity with it.

If it is not possible, can i just take this as a lump sum at age 60?  

yes

joshiesaunt

Great, thank you, i appreciate the advice.

HUDengineer

Both my private pension policy and separate contracted-out policy were managed by Legal and General for many years, before being transferred to ReAssure this year.  I have just received the ReAssure pension forecasts, which are vastly more optimistic - merely depressing - than recent L&G forecasts, which were frankly dismal.  For a policy which could start paying out in just over 3 years time, the forecast has nearly doubled from the L&G figure in February, for the same pot of money.  Given this makes up the lion's share of my pension provision until I get the State Pension, I'd love to believe the new forecasts, but the figures are so wildly different, I don't see how anyone can have confidence in their pension planning using private pension forecasts, even so close to the retirement that I expect I will have to defer yet again.   Could anyone offer some words of wisdom?

dunstonh

 I have just received the ReAssure pension forecasts, which are vastly more optimistic 

That is unusual as current FCA projection rates and assumptions are pessimistic.   Also, they are not forecasts. They are projections.  Forecasts are something likely to happen.  Projections are synthetic calculations using a range of assumptions which often assume quite poor outcomes (i.e. err on the side of caution).

 I'd love to believe the new forecasts, but the figures are so wildly different, I don't see how anyone can have confidence in their pension planning using private pension forecasts, even so close to the retirement that I expect I will have to defer yet again. 

Synthetic projections are notorious for being unreliable.   We have gone from being over-optimistic 30-40 years ago to increasingly pessimistic today.  What assumptions are they using in the projections?

Or to make it easier, use a figure of 3.5% of the fund value and that is a good guide to the sort of income you could be looking at.

HUDengineer

Thanks for your prompt assistance.  For the two policies, ReAssure are projecting 5.05% and 5.06% of the fund value for retirement at 65.  It sounds like I shouldn't be getting my hopes up.

dunstonh

ReAssure are projecting 5.05% and 5.06% of the fund value for retirement at 65.  It sounds like I shouldn't be getting my hopes up.

They may be using those as the projection rates but they are before charges and a typical medium risk balanced managed fund gets around 5.5-6% p.a. avearge over the long term after charges.    They also deduct 2% from that to show you the figures into today's terms. Not future money terms.   And the annuity rate figure uses the worst one going and the least used type.

Figures can usually be explained and converted to be realistic for your circumstances.