LGPS - Transfer or not?

MrsCluckyHen

HI All,

I am 44 years old. I worked for some time in a Local Authority and accrued £5000 in a LGPS as a result.

I have now left the Local Government and work for a private company, which has its own pension scheme. 

I got a letter from the LGPS about giving a me refund or transferring my pension. Refund value is £1000, transfer is £5000. 

I obviously don't want the refund as the loss is too much, however my new pension provider is one of those private providers.

Would I be better off consolidating my pensions with a my new pension provider or should I leave my LGPS pension as is and withdraw from it when I'm of retiring age?

I'm not overly confident with pensions so I beg to explain with apples. 

Many thanks for any help.
 

theoretica

First thing is to confirm if you do have the option of leaving your pension in LGPS - and how much pension would it give you?

Silvertabby

If you've only been offered the choice of a transfer or a refund then you didn't accrue enough service/membership to have actual pension rights in the LGPS.

As you can see, a transfer out is a much better option than a refund.

MrsCluckyHen

Silvertabby said:

If you've only been offered the choice of a transfer or a refund then you didn't accrue enough service/membership to have actual pension rights in the LGPS.

As you can see, a transfer out is a much better option than a refund.

I was also offered to keep it with them, but since I won't be adding to it, is this the best course of action?
I've left it with them for now, as I didn't know what to do. 

MX5huggy

@MrsCluckyHen how much annual pension are they offering?

But I would leave it with them, it’s a guaranteed index linked pension, albeit small because of your short service. 

What you do is not really going to make a material difference to your retirement. 

Silvertabby

Still not clear if OP has actual pension rights or not.  If she left some time ago, then the offer to leave it with them could be based on the possibility that she may rejoin the LGPS in the future.

OP - when exactly did you join and leave the LGPS?

pjread

You need to find out what the status is if you leave it be - I suspect you'll be a 'deferred member' and have some small pension forecast to be paid to you from whatever that scheme's normal pension age is, but you need to check.  If not, your only sane option is to transfer but if you have a chance to keep a small DB pension it might be a good idea. 

woolly_wombat

How long were you a member of LGPS?

When did you leave?

Your best course of action is almost certainly to leave your deferred LGPS pension where it is because it will increase in line with inflation until you claim it, and it will continue to increase in line with inflation once you are claiming it, BUT you have to have been a member of the LGPS for at least 2 years (used to be a minimum of 3 months prior, I think, to 1 April 2014).

MrsCluckyHen

Silvertabby said:

Still not clear if OP has actual pension rights or not.  If she left some time ago, then the offer to leave it with them could be based on the possibility that she may rejoin the LGPS in the future.

OP - when exactly did you join and leave the LGPS?

woolly_wombat said:

How long were you a member of LGPS?

When did you leave?

Your best course of action is almost certainly to leave your deferred LGPS pension where it is because it will increase in line with inflation until you claim it, and it will continue to increase in line with inflation once you are claiming it, BUT you have to have been a member of the LGPS for at least 2 years (used to be a minimum of 3 months prior, I think, to 1 April 2014).

I started in March 2019 and finished in September 2021. 

Does this mean I have pension rights?

I can't quite understand the letter but to me the gist of it was... " you need to do something about this or we'll refund you".

It would be a very small pension, barely enough to pay council tax I guess, but my worry is that my new pension provider may be more risk happy and that money may disappear in bad investments, or underperform as they say... This is not a portrayal of the pension per se, it's just that I'm slightly biased against non LGPS pensions. 

Now, you may ask why I changed jobs then... the salary was much much better in my current job compared to LG job, so I'm also looking at paying into another private pension. 

Silvertabby

MrsCluckyHen said:

Silvertabby said:

Still not clear if OP has actual pension rights or not.  If she left some time ago, then the offer to leave it with them could be based on the possibility that she may rejoin the LGPS in the future.

OP - when exactly did you join and leave the LGPS?

woolly_wombat said:

How long were you a member of LGPS?

When did you leave?

Your best course of action is almost certainly to leave your deferred LGPS pension where it is because it will increase in line with inflation until you claim it, and it will continue to increase in line with inflation once you are claiming it, BUT you have to have been a member of the LGPS for at least 2 years (used to be a minimum of 3 months prior, I think, to 1 April 2014).

I started in March 2019 and finished in September 2021. 

Does this mean I have pension rights?

I can't quite understand the letter but to me the gist of it was... " you need to do something about this or we'll refund you".

It would be a very small pension, barely enough to pay council tax I guess, but my worry is that my new pension provider may be more risk happy and that money may disappear in bad investments, or underperform as they say... This is not a portrayal of the pension per se, it's just that I'm slightly biased against non LGPS pensions. 

Now, you may ask why I changed jobs then... the salary was much much better in my current job compared to LG job, so I'm also looking at paying into another private pension. 

Are you sure about those dates?  Post April 2014 the LGPS vesting period ( the length of scheme membership you need to qualify for actual pension benefits) is two years, which you appear to meet.

This would rule out the refund you have offered.  Did you opt out of the pension scheme when you first joined/before you left?  Did you have 2 jobs, with a gap in between? 

MrsCluckyHen

Silvertabby said:

Are you sure about those dates?  Post April 2014 the LGPS vesting period ( the length of scheme membership you need to qualify for actual pension benefits) is two years, which you appear to meet.

This would rule out the refund you have offered.  Did you opt out of the pension scheme when you first joined/before you left?  Did you have 2 jobs, with a gap in between? 

I'm sure... I had just started when the first lockdown came along and I just finished last september. 
I didn't opt out of the pension scheme, nor did I have 2 jobs.

The letter gave me 3 options, refund, transfer or, and here is where I got confused, but as I understood it it was to join with a new LGPS pension.

I rang them and spoke to the case manager... she explained that I could just keep the pension with them, that I didn't need to take the refund, nor did I need to transfer it. 

However my new pension is so small, and I'm so fearful of not having enough pension funds, that I was wondering if it would be worth transferring... but then as menitoned earlier, I trust the LGPS pension a little more than other non-LGPS providers.