Opting out lgps

QrizB

Matt_22 said:

Value of stocks roughly double every 10 years.

That's not exactly true. Here's a chart of the FTSE100 from 1984 to 2015. Today it's worth about 7700, only 10% up in the eght years since 2000.

Matt_22 said:

And I have 30 years till retirement. So could be worth 45k

Do you think today is like 1984, and the FTSE will rise six-fold in the next 15 years? Or is today like 2000, and we're going to see a 10% rise in the next 23 years?

Essentially, do you feel lucky?

Matt_22

Essentially do people think the lgps offer is better even if I don't stay in the job much longer? 

MTB1986

It’s definitely the better offer in my opinion. I wish I’d had the option to transfer my previous pension into the LGPS when I joined, I would have snapped their hand off. My scheme doesn’t accept transfers in from DC pots though, sadly. I’d take it if I were you. It means you have guaranteed benefits in the LGPS even if you don’t stay working in that role for the usual 2 year minimum period. 

Matt_22

Thanks then I could start a new peoples pension if I go back to the private sector?

QrizB

Matt_22 said:

Essentially do people think the lgps offer is better even if I don't stay in the job much longer? 

Not only will transferring in buy you a pension of £1580 a year, increasing with CPI for the next 30 years, it'll mean that whatever LGPS pension you accrue while a member won't be lost if/when you leave.

Matt_22 said:

Thanks then I could start a new peoples pension if I go back to the private sector?

Your private-sector employer will have an employee pension scheme. It might be with PP, it might be with a different company. It's likely that they'll only be prepared to make employer contributions into their scheme. So you'll end up a member of whichever one it is.

If/when you leave them, you can leave it where it is, transfer it into your next employer's scheme, or transfer out to a personal pension.

And you can start a new personal pension every year for the next 30 years, if you really want to.

Matt_22

Thanks so it seems like it's worth doing?

Universidad

Matt_22 said:

Thanks so it seems like it's worth doing?

Nobody wants to tell you that "you should do it" because there's a difference between offering people advice ABOUT their pensions and offering advice on WHAT TO DO with their pensions, and the second one is not a line most of us will cross.

But everybody IS saying "Well, I would do it" and "That looks like a really good deal". Read the room a little, my dude. You're in a forum where people generally know more than the average punter about pensions, and they're telling you this looks good. There isn't going to be a level of enthusiam significantly above that.

It's totally your choice, and either way you'll be better off than if you didn't have any pension yet!

Here's my advice, as it goes: there are two ways of looking at a pension. One is about maximising wealth. The other is more like a form of insurance - not having to worry about whether there is enough money in old age.

The LGPS is very, very much better at providing clarity on the second one of those points. It's a bit more variable with the first, could go either way. 

What do you want your pension to do?

Matt_22

QrizB said:

Matt_22 said:

I am paying £40 a week in to the lgps. I am thinking of opting out. As is quiet alot of money
 Is it madness to opt out?

Yes it's madness.

You're paying £2080 a year, which (if my sums are right) mean you're earning £32k pa and accruing £653 pa pension, CPI linked. Which is worth something like £10k to you.

So does this mean the offer of the £1580 pa pension is worth something like 30k if had to buy? It's 14k I'd be transferring. Thanks

QrizB

Currently, if you were 65, an annuity paying £1500pa and increasing annually by RPI would cost about £35k.

A couple of years ago the same annuity would have cost about £50k.

Dazed_and_C0nfused

Matt_22 said:

QrizB said:

Matt_22 said:

I am paying £40 a week in to the lgps. I am thinking of opting out. As is quiet alot of money
 Is it madness to opt out?

Yes it's madness.

You're paying £2080 a year, which (if my sums are right) mean you're earning £32k pa and accruing £653 pa pension, CPI linked. Which is worth something like £10k to you.

So does this mean the offer of the £1580 pa pension is worth something like 30k if had to buy? It's 14k I'd be transferring. Thanks

Pretty much yes, you would undoubtedly have to pay more to buy an annuity compared to the LGPS offer for your £14k.