Benefits of Local Gov Pension Scheme vs Private Pensions

niallmckenna

Hi everyone,
I've recently started a new job in Local Government and have been added to the LGPS. My knowledge of what being on the LGPS means for me is limited to obviously knowing that the LGPS is a fantastic pension scheme and one of the main perks about working in Local Government. That a side I've found a few threads on here from quite a few years ago, 2014 I think. 

I have 2 other private pensions from previous employment, and only recently moved these to Pensionbee, as I'd read a lot about them and felt it would be a sound way to manage them all, rather than having to manage them all individually. So far, this is all good.

It's now come the time, where the LGPS have asked if I want to transfer any other pensions in to the scheme. If I want to, it has to be done in the first 12 months. 

I'm wondering if this is something I should consider. From what I understand about the LGPS, each year 1/49th of your pensionable pay is put into your pension account and the balance is adjusted for inflation. From what I understand this is a big plus over other private pensions, is that correct? I also understand my family enjoys financial security, with immediate life cover and a pension for my wife & kids providing I'm in the job at least 2 years and have met the qualifying period. Again, I'm not sure private pensions offer this kind of thing, do they?

Other than this, I don't fully understand the other benefits or what the implications are upon leaving my job in local government at some point in the future, I think it's probably worth doing 2 years at least just to qualify for the pensionable benefits. 

Can anyone explain some of the LGPS benefits in lay man's terms for me and whether I would be wise to keep my private pensions separate or consider transferring them? Everything I've already read regarding this is from 2014 or further back, and doesn't really take in to account the new providers like Pensionbee.

I previously transferred £27,000 to Pensionbee and they now have a balance of £35,000 with them.

Thanks

Silvertabby

Ask for a transfer in quote and then decide.  On the plus side, the transfer in factors are extremely generous.  On the minus side, the figure quoted will assume that you will take your LGPS pension from SPA - yes, you can take it early but the whole pension would be reduced for early payment.

Marcon

niallmckenna said:

Other than this, I don't fully understand the other benefits or what the implications are upon leaving my job in local government at some point in the future, I think it's probably worth doing 2 years at least just to qualify for the pensionable benefits. 

If you transfer in from a personal pension (which is what your pension will be with PensionBee), you get something known as 'immediate vesting' - in layman's terms, that means you don't have to complete a minimum of 2 years as a member of the LGPS to qualify for an LGPS deferred pension if you leave your job.

Albermarle

It is often underestimated how much money is needed in a DC pension ( like the one you have with Pension Bee) to generate a decent income .
Just as an indication £35K could reasonably safely ( but not guaranteed ) generate an income of £1.4K pa rising with inflation and not run out for say 30 or 40 years , if at all. Alternatively you could buy a guaranteed income with the £35K ( an annuity ) and it would get you around £700 to a £1000 pa depending on exact conditions .
So when you get your transfer in quote, you can compare what guaranteed inflation linked income you would get, in return for transferring the £35K in to the LGPS scheme.

Everything I've already read regarding this is from 2014 or further back, and doesn't really take in to account the new providers like Pensionbee.

There is nothing special about Pension Bee , they just offer a bog standard DC pension with a limited choice of investments .
They just have good marketing and a good saleswoman as CEO .

MX5huggy

I wouldn’t read too much from 2014 LGPS changed in 2015. 

You’ve got the gist of it, it’s a good generous scheme. To build up decent annual pension you do need to be working for a good number of years. (Not a reason to not to join, just don’t think everything will be fine from being in LGPS for 5 years).

When I joined I did transfer in a small pension (all the pension I had) the numbers just created certainty of out come.  

If you want to boost your pension look at the additional options available from your employer especially if they offer Salary Sacrifice AVC’s. 

niallmckenna

Thanks for the answers so far.

I should have stated I'm only 37 so have a long way to retirement, and would plan to be paying in to a pension of some kind as long as I'm working. 

I appreciate what I have with Pensionbee at the moment would give me a paltry income in retirement, but again, by retirement I would have planned to have either moved my other future private pensions there or pay in directly if I'm not in a private pension scheme through my future employers. 

In which case would, it be wise to keep the LGPS separate for as long as I'm there or move my others there? Can I still pay in to the LGPS after I've left LG? 

dunstonh

Benefits of Local Gov Pension Scheme vs Private Pensions

Depends on what you mean by private pension.  Some people consider private pension to be anything other than state pension (so LGPS would be a private pension for them).  Some people consider private pension to be anything that is not state or occupational.

I have 2 other private pensions from previous employment, 

see.  You are classing previous occupational pensions as private pensions.

I have 2 other private pensions from previous employment, and only recently moved these to Pensionbee, as I'd read a lot about them and felt it would be a sound way to manage them all, rather than having to manage them all individually. So far, this is all good.

You are not actually managing them at all.  Pensionbee are.   

Everything I've already read regarding this is from 2014 or further back, and doesn't really take in to account the new providers like Pensionbee.

I am not sure why the age of a pension provider has anything to do with it. All retail individual pensions have the same rules except stakeholder pensions (which have a few more rules).  The logo in the corner doesn't matter.      The recent influx of some robo-providers hasn't changed a thing.  They are not the cheapest providers out there.  They are not best providers out there (in terms of product offering).    Some don't have full functionality of pre and post-retirement options/administration (i.e. some dont do employer contributions, some don't do all methods of drawdown, most are not whole of market with investments).   They are very similar to your providers of old but with a mobile phone app available.

MX5huggy

niallmckenna said:

Thanks for the answers so far.

I should have stated I'm only 37 so have a long way to retirement, and would plan to be paying in to a pension of some kind as long as I'm working. 

I appreciate what I have with Pensionbee at the moment would give me a paltry income in retirement, but again, by retirement I would have planned to have either moved my other future private pensions there or pay in directly if I'm not in a private pension scheme through my future employers. 

In which case would, it be wise to keep the LGPS separate for as long as I'm there or move my others there? Can I still pay in to the LGPS after I've left LG? 

No you can’t pay into LGPS once you leave employment of LG.

The wise thing to do is get the transfer value from LGPS for the Pension Bee 🐝 scheme. I think you’ll then see it’s worth transferring. 

It’s a nice balance to have some DB pension and DC pension on top (plus state pension). But that doesn’t mean you should hold on to the Pension Bee pension if you get a good offer to convert it to DB pension. 

niallmckenna

@MX5huggy That was really useful, and explained everything. Thanks for the clarification!

sammyjammy

Worth getting a transfer quote but given your age if you're planning on staying in LGPS (if you can!) then i would consider keeping it as is to give you some flexibility in the years to retirement

arnoldy

LGPS = Utter gravy train and transfer all that you can in. Start a SIPP to bridge the years to SPA if you want to retire earlier. You are one of the luckiest people in the UK World to have this pension.