LGPS Stay In or Transfer

cb020808

Hi,
Would appreciate some guidance as to whether I should transfer my LGPS pension to my new private employer's pension scheme.  I joined in 2012 and have paid contributions since then.  Not sure whether its easier/better to have them all in one pot or keep my LGPS one going as the benefits might be financially better.
Thanks in advance.

JoeCrystal

Is your new employer's pension scheme a DB pension? If not then no go.

LGPS is not a pot but a promise to pay you an index linked pension when you reach the SPA or reduced if earlier.

Might be worth reading up on how the LGPS work!

Aylesbury_Duck

Do some reading so you understand the pros and cons.  Generally, I'd like the security of a defined benefit scheme such as the LGPS, that you know will give you a certain amount per annum from retirement until death and will be linked to inflation. A private pension scheme will offer less certainty but will give some options as to when and how you take the money in retirement.  It's impossible to say which will be financially better unless you know how long you're likely to live and at what point you might want to retire.  I strongly suspect your best option is to keep your LGPS and start the new scheme with your employer.

Knowing your age and some idea of your retirement plans would be helpful.

AlanP_2

cb020808 said:

Hi,
Would appreciate some guidance as to whether I should transfer my LGPS pension to my new private employer's pension scheme.  I joined in 2012 and have paid contributions since then.  Not sure whether its easier/better to have them all in one pot or keep my LGPS one going as the benefits might be financially better.
Thanks in advance.

Given that in round numbers you have already accrued around 20 to 25% (12 years at 1/49th per year)** of your annual salary, index linked between now and age 66/67 when you can take it unreduced PER YEAR and it will remain index linked until you die and your OH (if applicable) can inherit a proportion of it that would also be index linked until they die I seriously doubt that your new employer's scheme is anywhere near as good. 

This is all at no additional cost to you and your pension is not dependent on how well investments do over the rest of your life (and possibly your OHs).

What does your most recent annual pension statement say that your pension is worth now?

Multiply that figure by approx 25 or even 30 to calculate what you would need to save up in a typical DC pot to safely withdraw the same inflation linked salary each year.

** I know 1/49ths CARE didn't come in until 2014 but close enough to illustrate the point hopefully.

LHW99

Also, if you go back to work with local government in the future, you may be able to continue adding to what you already have in the scheme.

Silvertabby

LHW99 said:

Also, if you go back to work with local government in the future, you may be able to continue adding to what you already have in the scheme.

Or any other public sector employer, at which point you could consider transferring your LGPS benefits to your new scheme under the highly beneficial club transfer arrangements (and no expensive financial advice needed).

cb020808

Aylesbury_Duck said:

Do some reading so you understand the pros and cons.  Generally, I'd like the security of a defined benefit scheme such as the LGPS, that you know will give you a certain amount per annum from retirement until death and will be linked to inflation. A private pension scheme will offer less certainty but will give some options as to when and how you take the money in retirement.  It's impossible to say which will be financially better unless you know how long you're likely to live and at what point you might want to retire.  I strongly suspect your best option is to keep your LGPS and start the new scheme with your employer.

Knowing your age and some idea of your retirement plans would be helpful.

Thank you.  I am 43 - had my LGPS since 2012 and I think my predicted retirement age is something like 2049. Haven't really made any retirement plans as yet!

AlanP_2

There isn't a predicted retirement age, some go in their 40s and some work until their 90s.

When you retire is up to you, it is yours to plan and prepare for.