Transfer DC to LGPS? £34k buy £3.6k per year.

MaximusFatigue

Hi All

I am just looking for some general feelings on my situation.

I have been working for a local college for 6 months, and have the option to transfer in my old DC pensions .

Current age 39 on cicra 35k

	Current Transfer value	Annual pension
Aviva	£311.92	£33.18	10.60%
Nest	£1,482.82	£157.74
Legal & General	£27,448.67	£2,920.01
Altas	£4,683.88	£498.28
	£33,927.29	£3,609.21

My biggest pension with L&G hasn't changed in value in the last 5 years looking at some 2017 statements. 


I don't know if I intend to keep working at the college long term as I may return to industry.

Universidad

This is a personal decision, but I would say yes 100 times out of 100.

Here's why:

a) That 3.6K per year is guaranteed every year for the rest of your life from your retirement, and will be uprated over time. The DC money is just an invested pot.

b) If you draw the pension for about 16 years after retirement, you'll pull out the equivalent of 57K, so this is like doubling that investment on the spot

c) When you do retire, if you keep the DC pot and decide to purchase an annuity with it, that will be comparatively very expensive, so the true valube of defined benefits is significantly higher than what you would expect to take out of it

d) Anything you're putting in to your new LGPS pension scheme isn't vested for two years, unless you complete a transfer in within that time, so doing this transfer locks in all the pension you've earned in the last 6 months even if you don't stay.

Of course 3.6K is not enough to live on in retirement, but neither is 35K. The good news is that you have a job with a good pension now.

Albermarle

You could make a very rough calculation as follows ( all in today money)
You total DC pension pots =£34K.
Growth of 2% for the next 25 years = approx £65K. Rule of thumb you can draw down 4% pa max= £2.5K pa but not guaranteed
If investment growth was 4% pa, then you might get up to £4K pa but again not guaranteed.
With LGPS you will get a guaranteed £3.6K pa 

draiggoch

If you accept the transfer then by April next year you will have a minimum annual pension  of £4000 built up. 

As already mentioned it will be vested and rise with CPI. 

Even if you leave always handy to have some DB pension in place as a basis for retirement. 

It can be paid earlier if an occupational Dr says you cannot work anymore even if you have left the job.
I believe if you die before retirement your family can get a death grant of 5x the value if you are not still in the job.

MaximusFatigue

Hi all, thank you for all the information.

I have decided to get the forms signed and sent back. 

Thanks again.