To transfer private pension into NHS Scotland pension?

dizzyscot

I have a Legal and General Worksave Pension which my pension payments were put into by my previous employer. It is currently worth around £35k. While I admit to not being too savvy when it comes to pensions, it doesn’t seem great to me. When I received my last statement it said the pension was basically going to be worth about the same at retirement once inflation was accounted for, indicating that it’s not actually expected to grow in the next 25 years. I’m not sure if I’m misunderstanding. 

Anyway, I have since started working for NHS Scotland and received a letter saying that I can transfer my private pension into the NHS scheme. Generally, I would think this might be a good option, but I was wondering if anyone more knowledgeable could advise in case there are factors to consider that I am unaware of. The one thing that did occur to me is that a private pension can be accessed early, whereas my NHS pension will be linked to government retirement age. Or alternatively, would it be better to keep the private pension separate but move it to a better scheme if that’s possible. 

For full info, I also have a small defined benefit pension (PACE) from my first employer. 

I would appreciate any insight anyone can offer

Dazed_and_C0nfused

There are pros and cons and probably the best starting point is to get a quote from NHS Scotland to see what your £35k would get you in the NHS scheme.

Pros are guaranteed inflation linked pension for life.  Possibly also survivor/dependent pension although you should check if that applies to additional pension purchased in this manner.

Cons are limitation on taking it early.  You can still take it early but it would be reduced to factor in the fact that you would be asking for it to be paid for longer.

Maybe the biggest downside is loss of flexibility.  A mix of defined benefit and defined contribution schemes can offer the best if both worlds with plenty of people now using DC pots to bridge a gap from early retirement to when their DB and State Pension start to be paid.

ewaste

The obvious thing to do is ask SPPA for a quote, it'll inform your decision. While you're an active member of the NHS scheme any accrued benefits or benefits from transfers are revalued annually by CPI+1.5%. The one time option to transfer the risk and gain a guaranteed return is well worth consideration. 

I'd probably transfer as DC benefits are easy to replace / replciate especially £35k if you are decades from retirement.

xylophone

Have you obtained a state pension forecast?

https://www.gov.uk/check-state-pension

Remember the restrictions on transfer out of an NHS pension.

https://www.wesleyan.co.uk/pensions-and-retirement/nhs-pension/leaving

Malthusian

dizzyscot said:

I have a Legal and General Worksave Pension which my pension payments were put into by my previous employer. It is currently worth around £35k. While I admit to not being too savvy when it comes to pensions, it doesn’t seem great to me. When I received my last statement it said the pension was basically going to be worth about the same at retirement once inflation was accounted for, indicating that it’s not actually expected to grow in the next 25 years. I’m not sure if I’m misunderstanding.

Nobody knows what it will be worth in 25 years time. The illustration is based on an assumption of future growth. How it actually grows depends on what the pension is invested in and the performance of the investments.
What is the pension invested in? The "standard" "medium rate" assumption is 2.5% above inflation. The lower-risk / lower-growth the funds invested in, the lower the assumed growth rate that L&G would generally assume.

dizzyscot

Thanks for all the info/advice. I’ll contact SPPA to request a quote and will go from there. Thanks again!

draiggoch

I would also ask for a transfer in value for the PACE pension as these can be quite favourable as well.