Getting pensions organised after VR

Monkeytrousers123

Hi all, I am looking for advice handling pensions and voluntary redundancy at age 55… trying to take the right steps and not pay unnecessary tax.

After the VR payment I will have the following…

Deferred DB pension accessible at 55 

+ DC pension 1 (from current employer) = £220k (after putting in £100k from VR payment)

+ DC pension 2 = Local Govt Pension Scheme = £2.5k + £7k lump sum from payment (or this can be flexed up/down).  (The transfer value is £61k)

I want to simplify the LGPS arrangement so was planning  on asking to transfer it (£61k) into the DC Pension above or a SIPP.

My questions….

1) I have to receive advice from an IFA about the LGPS transfer so will the cost be significant so as to make it not worthwhile?
2) If I transfer into a SIPP, can I then access this within the next 6 months if I can’t find a new job?  (I don’t want to start taking the other DC pensions)

thanks

AlanP_2

Monkeytrousers123 said:

Hi all, I am looking for advice handling pensions and voluntary redundancy at age 55… trying to take the right steps and not pay unnecessary tax.

After the VR payment I will have the following…

Deferred DB pension accessible at 55 

+ DC pension 1 (from current employer) = £220k (after putting in £100k from VR payment)

+ DC pension 2 = Local Govt Pension Scheme = £2.5k + £7k lump sum from payment (or this can be flexed up/down).  (The transfer value is £61k)

I want to simplify the LGPS arrangement so was planning  on asking to transfer it (£61k) into the DC Pension above or a SIPP.

My questions….

1) I have to receive advice from an IFA about the LGPS transfer so will the cost be significant so as to make it not worthwhile?
2) If I transfer into a SIPP, can I then access this within the next 6 months if I can’t find a new job?  (I don’t want to start taking the other DC pensions)

thanks

Is the highlighted one the deferred DB pension you refer to or is there another one as you have labelled it DC here?

You can't get any simpler than a CPI linked DB pension (backed by the UK taxpayer at the end of the day) that gives you a monthly income for the rest of your life and has spousal benefits as well if they are relevant.

Taking it at 55 will incur an actuarial reduction and it isn't clear whether your quoted figures are before or after any such reduction.

As for transferring it to your DC scheme well your local council tax payers will thank you for reducing the amount that they are on the hook for over the next say 35 years.

As to whether it is a sensible idea I would say no but I'm very grateful for my monthly LGPS pension that arrives with absolutely no effort on my part and continues to arrive no matter how my DC and ISA investments perform. Oh, and yes it would cost you a lot of money for the advice and the answer is virtually guaranteed to be "don't transfer it".


On another practical note have you checked your SP record as if you don't get another job you might want to buy additional NI years?

Monkeytrousers123

thank you for the quick reply... apologies... that was a typo.... the LGPS is is actually "DB Pension 2", as you say. (i was thinking about changing into the DC)  these numbers are the reduced value but tbh we are only talking a few £hundred difference.

My thinking was simply to ensure that I have access to the value as a potential backup plan to help me balance the next couple of years and see me through to retirement.

Marcon

Monkeytrousers123 said:

Hi all, I am looking for advice handling pensions and voluntary redundancy at age 55… trying to take the right steps and not pay unnecessary tax.

After the VR payment I will have the following…

Deferred DB pension accessible at 55 

+ DC pension 1 (from current employer) = £220k (after putting in £100k from VR payment)

+ DC pension 2 = Local Govt Pension Scheme = £2.5k + £7k lump sum from payment (or this can be flexed up/down).  (The transfer value is £61k)

I want to simplify the LGPS arrangement so was planning  on asking to transfer it (£61k) into the DC Pension above or a SIPP.

My questions….

1) I have to receive advice from an IFA about the LGPS transfer so will the cost be significant so as to make it not worthwhile?
2) If I transfer into a SIPP, can I then access this within the next 6 months if I can’t find a new job?  (I don’t want to start taking the other DC pensions)

thanks

Presumably you are able to use carry forward if you are planning to have £100K put into your DC pension in one go? It sounds as if this is going to be a personal contribution, so do you have sufficient taxable earnings in the tax year?

Why do you want to look at giving up a fantastic pension from the LGPS (advice cost at least £5K) rather than taking cash from your 'other' DC pensions? That really could cost you far more than the advice!

Marcon

Monkeytrousers123 said:

thank you for the quick reply... apologies... that was a typo.... the LGPS is is actually "DB Pension 2", as you say. (i was thinking about changing into the DC)  these numbers are the reduced value but tbh we are only talking a few £hundred difference.

My thinking was simply to ensure that I have access to the value as a potential backup plan to help me balance the next couple of years and see me through to retirement.

But you'll need funds on which to live in retirement...and a solid bit of DB pension is a great foundation.

squirrelpie

Why put £100k into the DC pension if you think you might need some outside it? Or better yet,put it in the DC pension and withdraw it if you need to. Leave your LGPS alone as excellent base-level funding for when you do retire.

Mostly, do try hard to find another job! Depending on what other savings you have, and what outgoings, you may be able to retrain for something else you find interesting.

Monkeytrousers123

yes, my other DB pension is going to give me £24k a year from age 60.

For putting in the £100k, i am planning on using the carry forward.  I've only put in £80k in the last few years, whereas the full allowance is £200k.   My employer has asked me how much of my VR payment i want to put straight in to the pension.

Monkeytrousers123

thanks Squirrelpie, i will be looking for another job.... just something a little less stressful than my current role.

When leaving my currently role, I will also have the £30k tax free VR amount plus some share schemes ending that will provide another £25k tax free.... so i have £55k for immediate priorities while my future gets figured out.

cheers

SarahB16

AlanP_2 said:

Monkeytrousers123 said:

Hi all, I am looking for advice handling pensions and voluntary redundancy at age 55… trying to take the right steps and not pay unnecessary tax.

After the VR payment I will have the following…

Deferred DB pension accessible at 55 

+ DC pension 1 (from current employer) = £220k (after putting in £100k from VR payment)

+ DC pension 2 = Local Govt Pension Scheme = £2.5k + £7k lump sum from payment (or this can be flexed up/down).  (The transfer value is £61k)

I want to simplify the LGPS arrangement so was planning  on asking to transfer it (£61k) into the DC Pension above or a SIPP.

My questions….

1) I have to receive advice from an IFA about the LGPS transfer so will the cost be significant so as to make it not worthwhile?
2) If I transfer into a SIPP, can I then access this within the next 6 months if I can’t find a new job?  (I don’t want to start taking the other DC pensions)

thanks

Is the highlighted one the deferred DB pension you refer to or is there another one as you have labelled it DC here?

You can't get any simpler than a CPI linked DB pension (backed by the UK taxpayer at the end of the day) that gives you a monthly income for the rest of your life and has spousal benefits as well if they are relevant.

Taking it at 55 will incur an actuarial reduction and it isn't clear whether your quoted figures are before or after any such reduction.

As for transferring it to your DC scheme well your local council tax payers will thank you for reducing the amount that they are on the hook for over the next say 35 years.

As to whether it is a sensible idea I would say no but I'm very grateful for my monthly LGPS pension that arrives with absolutely no effort on my part and continues to arrive no matter how my DC and ISA investments perform. Oh, and yes it would cost you a lot of money for the advice and the answer is virtually guaranteed to be "don't transfer it".


On another practical note have you checked your SP record as if you don't get another job you might want to buy additional NI years?

Genuine question I have re the LGPS pension.  Will it incur an actuarial reduction if taken at 55 due to the OP taking redundancy? 

The link below doesn't distinguish between voluntary or compulsory redundancy.  

Redundancy • Local Pensions Partnership Administration  

Monkeytrousers123

in my case i am not actually working for the local government employer... it was a pension from the 1990s.  the value i've mentioned has a reduction due to early access... the reduction is about £533 per annum.

Marcon

SarahB16 said:

AlanP_2 said:

Monkeytrousers123 said:

Hi all, I am looking for advice handling pensions and voluntary redundancy at age 55… trying to take the right steps and not pay unnecessary tax.

After the VR payment I will have the following…

Deferred DB pension accessible at 55 

+ DC pension 1 (from current employer) = £220k (after putting in £100k from VR payment)

+ DC pension 2 = Local Govt Pension Scheme = £2.5k + £7k lump sum from payment (or this can be flexed up/down).  (The transfer value is £61k)

I want to simplify the LGPS arrangement so was planning  on asking to transfer it (£61k) into the DC Pension above or a SIPP.

My questions….

1) I have to receive advice from an IFA about the LGPS transfer so will the cost be significant so as to make it not worthwhile?
2) If I transfer into a SIPP, can I then access this within the next 6 months if I can’t find a new job?  (I don’t want to start taking the other DC pensions)

thanks

Is the highlighted one the deferred DB pension you refer to or is there another one as you have labelled it DC here?

You can't get any simpler than a CPI linked DB pension (backed by the UK taxpayer at the end of the day) that gives you a monthly income for the rest of your life and has spousal benefits as well if they are relevant.

Taking it at 55 will incur an actuarial reduction and it isn't clear whether your quoted figures are before or after any such reduction.

As for transferring it to your DC scheme well your local council tax payers will thank you for reducing the amount that they are on the hook for over the next say 35 years.

As to whether it is a sensible idea I would say no but I'm very grateful for my monthly LGPS pension that arrives with absolutely no effort on my part and continues to arrive no matter how my DC and ISA investments perform. Oh, and yes it would cost you a lot of money for the advice and the answer is virtually guaranteed to be "don't transfer it".


On another practical note have you checked your SP record as if you don't get another job you might want to buy additional NI years?

Genuine question I have re the LGPS pension.  Will it incur an actuarial reduction if taken at 55 due to the OP taking redundancy? 

The link below doesn't distinguish between voluntary or compulsory redundancy.  

Redundancy • Local Pensions Partnership Administration  

The OP isn't taking redundancy while an active member of the LGPS.