DB final salary pension transfer

Silvertabby

Dansmam said:

Silvertabby said:

Thrugelmir said:

In the years ahead. There'll be threads on here aplenty of those who regretted their haste to exit a guaranteed secure DB scheme. 

"I'm sure I'll take you with pleasure!" the Queen said. "Two pence a week, and jam every other day."
Alice couldn't help laughing, as she said, "I don't want you to hire me – and I don't care for jam."
"It's very good jam," said the Queen.
"Well, I don't want any to-day, at any rate."
"You couldn't have it if you did want it," the Queen said. "The rule is, jam to-morrow and jam yesterday – but never jam to-day."
"It must come sometimes to 'jam to-day'," Alice objected.
"No, it can't," said the Queen. "It's jam every other day: to-day isn't any other day, you know."
"I don't understand you," said Alice. "It's dreadfully confusing!"

When the pension freedoms were announced, and the LGPS was flooded with demands to transfer to 'cash now' schemes, my colleagues and I gave it 10 years before the brown stuff hit the fan.  The clock is ticking....

When I was still working paying into lgps and the income was showing up every month I was thinking about avc, early retirement, moving abroad etc. Had a chat with a finance colleague, top of her tree so understood a lot. Until then I had no idea transfer out was an option. Got cetv, looked at what I could do with it, wise people here explained why I would  be daft to take it, realised I could risk the lot (I do like a gamble) or take different but smaller risks knowing the bills can be paid whatever. Turns out I only like calculated gambles. Thankfully and thank you, though I'll always live with what ifs 🤨

Unlike CETVs from private schemes, which have been as much as 40 X the annual pension given up, LGPS CETV factors are set by GAD.  I'd be surprised if the CETV you were offered was more than 20 X pension, so probably a very wise decision.

Many of those who were blinded by transfer amounts of a sum of money on a par with a small lottery win are those who, to put it bluntly, just won't have the nous to invest wisely and draw down sensibly.  We could see the whole lot running out after 10 years, leaving the ex LGPS member complaining - "hang on, where's all my money gone - why wasn't I warned that I could end up broke, when a LGPS pension should be for life?"

If you think I'm joking about misunderstandings....Pre freedoms,  when LGPS deferred pensions couldn't be accessed before 60, though private schemes paid out from 50, a chap left Local Government in his early 50s and transferred his benefits to a private scheme.

Some years later, his widow rang us to say that he had died, and that she wanted to claim her widow's pension from the LGPS.  This lead to a long and difficult conversation re the fact that he had transferred out, and so there were no benefits due to her.  Seems that her husband had bought a single life annuity with his transfer, but when he knew that he was terminal he asked the company how much his wife would get on his death.  Nothing.  Remembering the LGPS data, which promised an income for life plus widow's benefits on death, he drew the only possible conclusion.  That he had only transferred his own 'for life' benefits out of the LGPS, and that his wife's pension would be paid by us.

Very upsetting for all parties - and a classic example of how those with only a little understanding of pensions can get it so wrong.