Stick or twist

MTB1986

Hi, I’ve recently joined the LGPS and can’t transfer my old work pension into it. 

The old work pension is a hybrid scheme with a credit account and an investment account called Afterwork. I’ve been offered £120k if I transfer both parts of the pension to another provider, £93k for the credit account and £26k for the investment. The investment account is a standard DC pot invested in equities and the credit account just received credits from my employer (20% of salary monthly) and now just gets discretionary top ups every year since I’m no longer an active member. The credit account money isn’t invested in anything, it’s just a secure foundation. 

Trying to decide whether I should transfer either or both parts to a SIPP or whether to leave it there - I think the potential gain from investing the whole lot rather than leaving the credit account amount to just receive top ups might be worth it. Does anybody have any thoughts to offer to help me decide whether to leave it or transfer it please?

draiggoch

Have you checked to see if there are any guarantees on the pension? As this may have ramifications if you decide to try and move it.
If you are certain the credit account does not grow unless discretionary then you are going to lose out via inflation. Personally I would move it somewhere it can be invested and use it as a bridge for your new LGPS.
This does depend on age as well, how close are you to retirement?

MTB1986

This is what it says about the credit account, but I’m not completely sure what it means…

“Your Credit Account also receives inflation-linked increases (currently in line with the Retail Prices Index) of up to 5% a year and the employer may make discretionary investment-related increases of up to 2% a year.”

I’m 35 so at least 25 years of work left yet I think. 

draiggoch

Is the pension the Barclays one? As that one still has inflationary increases after you leave and you will lose a portion of it for early withdrawal if moved.

MTB1986

Yes that’s the one. So sounds like I may be best off leaving it where it is as there’s no risk of it going down in value. If I’m going to leave the credit account there I may as well leave the investment account there too. Thank you for your help!

draiggoch

This is the link I was looking at, page 25.
https://www.yourpensionjourney.com/uploads/Pension_Afterwork_Booklet_(My_Rewards).pdf