Transfer Value v Fund Value question

GillianD

I have 2 deferred pensions with Std Life where I worked for 9 years until 1998. One is a Retirement Account Plan (RAP) with a current fund value of £3500 and the other, a Defined Contribution Scheme with the same approx fund value of £3,500.
When I received a transfer value from Mercer, the Pension Administrator for both schemes, the combined transfer value is £131,196 which is made up of:
Value of GMP approx = £28, 500
Value of non-GMP. arising from pensionable service up to April 1997 = £79,136
Value of benefits arising from contracted-out service from 6 April 1997 (excluding RAP) = £21,094
Value of RAP = £2, 417

Can that be correct i.e. the huge difference between fund and value?
I am considering transferring to my Tyne and Wear Pension Fund as my latest statement illustrates a pension of £10,449 pa and lump sum of £3, 536 as at March 2022 and a pension of £18,552 and projected lump sum of £3,561 in November 2032 when I will be 67.

Any advice greatly appreciated.
Thanks in advance.

MX5huggy

My best guess is the  the Standard life policy is a final salary (DB) scheme which is going to pay £3500 per year at some point and is giving you the transfer value which approximately 37 times. Plus you have £3500 in the DC. Transferring the DB will be complicated. 

Is the T&W pension a Local Government Pension if so you can’t transfer it, except to another government DB scheme via a club transfer if you got a different job say with NHS or teacher etc. 

GillianD

Yes the T&W pension scheme is a govt pension - so I can't transfer either Std Life pension into it or only the RAP?

The significant 'pot' states scheme type as a trust based occup pension scheme which was final salary to 31 Dec 2007 then it was a Revalued Career Average Salary (RCAS) 1 Jan 2008 - 15 April 2016 and a Defined Cont scheme from 16 April 2016

xylophone

Is the T&W pension a Local Government Pension if so you can’t transfer it, except to another government DB scheme via a club transfer if you got a different job say with NHS or teacher etc. 

LGPS is a funded public service scheme therefore the restriction which relates to transfer out from non-funded PS schemes (only possible to a scheme not offering flexible benefits) does not apply.

 

This does not appear directly relevant to the OP's current query which relates to a transfer in of  her  SL pension (s) to LGPS. 

What is relevant is whether she has checked that a transfer in to the T&W LGPS scheme would be accepted.

https://www.twpf.info/article/13027/Transferring-Previous-Pension-Rights

xylophone

Can that be correct i.e. the huge difference between fund and value?

In a DB pension, you do not have a fund (pot) as such - you have the promise to pay certain benefits  (related to salary/length of service etc) when you take your benefits from the scheme.

This is different from a DC/Money Purchase scheme.

https://www.thepensionsregulator.gov.uk/en/document-library/scheme-management-detailed-guidance/administration-detailed-guidance/transfer-values

A CETV represents the expected cost of providing the member's benefits within the scheme. In the case of money purchase benefits, this is generally straightforward – it is the accumulated contributions made by and on behalf of the member together with investment returns.

 In the case of defined benefits, the CETV is a value determined on actuarial principles, which requires assumptions to be made about the future course of events affecting the scheme and the member's benefits.

GillianD

I understand they can be transferred into the LGPS as I started the process a couple of years ago then, not understanding how the guaranteed benefits work, halted the process. I do intend to get independent financial advice but sought some basic info on this forum to help me understand the schemes.

xylophone

I understand they can be transferred into the LGPS as I started the process a couple of years ago then, not understanding how the guaranteed benefits work, halted the process. 

Have you checked the link on transfers in to  your scheme in my post above? There may be time factors involved.

GillianD

Thank you, I will check that my current LGPS will accept the transfers in. Thanks for the explanation; I get it now

JoeCrystal

GillianD said:

Thank you, I will check that my current LGPS will accept the transfers in. Thanks for the explanation; I get it now

Generally speaking, you can only transfer in your pension into LGPS if you are within one year of starting your job. 

Marcon

GillianD said:

I understand they can be transferred into the LGPS as I started the process a couple of years ago then, not understanding how the guaranteed benefits work, halted the process. I do intend to get independent financial advice but sought some basic info on this forum to help me understand the schemes.

Check first if a transfer is still an option.

'Transfers must be made within the first 12 months of your LGPS membership in your current employment, unless your employer has a published policy to extend this period.' Does your employer have such a published policy?

GillianD

Thanks Marcon. I'm not sure but have contacted LGPS to ask that very question.