Transferring LGPS DB pension into personal pension

mrs_slapshot

I am 57, and currently have a personal pension portfolio valued at £315k (Hubwise personal pension - Tatton Core Active portfolio). I am currently earning £48k and paying into the USS scheme at work (been in this scheme for just over three years). I previously worked in schools for almost 4 years and have a deferred LGPS pension with a CETV of £55k. The estimated pension for this at 66 is £3946 (or £2536 with max cash of £16911). I have an outstanding mortgage of £65.5k with a 7 year term.

What I'd like to do is transfer my LGPS pension into my personal pension, and then take out a tax free lump sum to pay off my mortgage plus £10k for some work on the house. I have asked my current financial advisor (who administers my personal pension) about this and he has said he is not permitted to authorise this, and I would struggle, or have to pay bucketloads, to get an advisor - who would then advise against it anyway.

I realise that by giving up my LGPS pension I am losing on the deferred benefits, but for me it is worth it to have the security of paying off my mortgage now - and enjoying my money now rather than in about 10 years time.

Question is - can anyone suggest a company that might be able to advise on this - and if as expected they advise against it, can I make the decision to do it anyway?

I do plan to keep on working for a few years, just not at the same level I am working now, so I will have enough monthly income to cover my expenses. (I have a separate question about moving my personal pension to a fund with lower charges than I am currently paying but that's a question for another time).   

Albermarle

Transferring out of a DB pension is fraught with difficulty. Suggest you type 'DB Transfers' in the search box at the top of the page as there are many threads about it, although less recently as the CETV values have dropped a lot in 2022.
Question is - can anyone suggest a company that might be able to advise on this - and if as expected they advise against it, can I make the decision to do it anyway?
The cost will probably be up to 10% of the CETV value. If you get a negative recommendation ( which is likely), you can still transfer, but finding a provider that will accept you as a so called 'insistent client' will be very difficult. Probably worth checking in advance the policy of your current personal pension provider 

westv

I thought public sector pensions couldn't be transferred.

Marcon

westv said:

I thought public sector pensions couldn't be transferred.

Unfunded public sector pension can only be transferred if the transfer is to a scheme which does not offer 'flexible access'. 

Funded public sector pensions (the LGPS is the only one of the main public sector schemes which is funded) can be transferred, subject to the usual requirement to seek advice/finding a receiving scheme which will accept the transfer.

mrs_slapshot

Thanks all - have done a forum search as suggested so will have a look through there!

woolly_wombat

A CETV of £55k is an absolute pittance for an index-linked pension of £3946.

I can’t see any company giving a positive recommendation to transfer, or any scheme accepting the transfer.

NedS

woolly_wombat said:

A CETV of £55k is an absolute pittance for an index-linked pension of £3946.

I can’t see any company giving a positive recommendation to transfer, or any scheme accepting the transfer.

Agreed. A 4% return on that £55k would give you £2,200 per year income, which would not be guaranteed nor inflation-linked unlike the guaranteed £3946 inflation-linked income from the DB pension. Luckily the restrictions in place will likely prevent you (OP) from making a very costly mistake.

sevenhills

mrs_slapshot said:

I am 57



enjoying my money now rather than in about 10 years time.

Do you really need to wait until your state pension age to draw the pension?

Brie

As an alternative to transferring - what if you took your DB pension early?  Yes it would be discounted but it may be that you could get a decent 25% tax free to clear a good chunk of your mortgage and make it easier for you to nuke the rest.  Maybe put the monthly income from your DB directly to it.

Albermarle

woolly_wombat said:

A CETV of £55k is an absolute pittance for an index-linked pension of £3946.

I can’t see any company giving a positive recommendation to transfer, or any scheme accepting the transfer.

You can argue that if that pension were to be paid today,( 8 years before it is due )  it would probably only be about £2,600 pa, but even  that still makes £55K a poor offer.

Albermarle

mrs_slapshot said:

Thanks all - have done a forum search as suggested so will have a look through there!

Similar thread.
Insistent client pension transfer — MoneySavingExpert Forum