Frozen LGPS Pension - What can I do?

Debtaholic

Hi All,

I have a Local Government pension, which has been 'frozen' (please excuse me if I use the incorrect terms) since I resigned to become self employed 2 years ago.

I have had a transfer value of around £15k. I don't see the point in leaving this small amount 'frozen' until I retire (I'm 27), so wanted to either transfer it into a SIPP (so that even though I couldn't access it until 50+ I could at least speculate on the markets, which I've done to some success for a few years), or (preferably) some way get access to the cash now, which would really help with my new business.

I tried transferring into a Barclays SIPP, but was told I couldn't as the LGPS scheme has 'contracted out its liabilities'.

Apologies for the essay - Any help would be very much appreciated.

Many Thanks.

dunstonh

Two things here.

1 - It is not frozen. That is a term which is misunderstood. The pensionable salary it is based on goes up each year so it retains a real terms value. The income in retirement will be index linked.

2 - Why Barclays SIPP? Personally I can see nothing of merit in that product.

Apologies for the essay

Can tell this is your first post. If yours is an essay that makes some of our responses a book

which I've done to some success for a few years

Anyone could make money over the last 6 years. It hasnt been difficult. You measure your success in negative periods.

Debtaholic

Thanks for your reply Dunstonh,

I appreciate that there will be some index-linked gains, but this amount is of more use to me now than it will be in 30 years+. Sorry if I'm misunderstanding, but if I left things as they are until I retire This pension wouldn't be worth very much - Am I right?

To be honest, I couldn't see much difference between the main SIPP providers - Barclays StockBrokers, HL, Killik, James Hay etc. - What should I be looking out for?

Point taken re. the last few years' easy investing (but I did pretty well over the last 6 months, which took a bit more nounce! ). As I say though, I'd really rather, if at all possible, get my hands on the cash now - The SIPP idea, just seemed the best of a bad bunch!

thanks again

seven-day-weekend

My defered Local Governament Pension scheme has increased in value (both the lump sum and the pension) by 8.4% since 2004. And will continue to do so.

I personally would not want to entrust it to the vagaries of the market.

purch

What should I be looking out for?

Costs, choice, administration, ease of placing transactions...

e.g. Set-Up fee...........for the cheapest SIPP it is NIL, Fund Discounts...again the cheapest available is 100%, Dealing costs.....these can range from under a tenner to over 20 quid depending on provider, Annual Fees................again there are lots of different costs.


There are as many differences between SIPP's as there are different providers.

Debtaholic

seven-day-weekend wrote: »

My defered Local Governament Pension scheme has increased in value (both the lump sum and the pension) by 8.4% since 2004. And will continue to do so.

I personally would not want to entrust it to the vagaries of the market.

I appreciate your position, but:

a) My portfolio of investments has grown far more than this over the past 2 years (Ave. approx. 75%) and has maintained value during the recent correction (mostly by switching into natural resources & precious metals), so I'm confident I could achieve a higher return through a SIPP (not my preferred option) - admittedly by taking more risk, which I'm happy to do with such a relatively small amount.

b) Your LGPS is obviously more successful than mine, the gains from which being nearer 3% - 5% since 2004

This is why I want to get out of the scheme, but I'd much rather have the value available to me now, or at worse have some control over its investment.

EdInvestor

I appreciate that there will be some index-linked gains, but this amount is of more use to me now than it will be in 30 years+. Sorry if I'm misunderstanding, but if I left things as they are until I retire This pension wouldn't be worth very much - Am I right?

No. The LGPS scheme will be revalued up by inflation or 5% every year until you retire. You need to look at what income it will pay, how much that will grow to, the level of index-linking after rewtirement and the spouse benefits and then work out what size of pot you would need to accumulate to replicate that income.[For example, to purchase the equivalent of the basic state pension, you would need a pot of around 160k.]

The transfer value will probably require a high growth rate difficult to meet..

You can't transfer it to a SIPP now because it is a "contracted out" scheme with 'protected rights' in it, and these can't be put in a SIPP yet - after October they can.

However I think you'll find that any provider will require you to get "permission" from an IFA to move your scheme to a SIPP and that this will not be forthcoming.
The reason would be that that the move entails major risks and thus would be seen as misselling and not in compliance with regulatory rules. It's not sensible to consider moving a copper bottomed guaranteed zero risk/high benefit Government scheme into a SIPP and taking on the risk of matching its benefits yourself, even if you are an experienced long term investor.

Look at this way: when you get to retirement what you will want is a guaranteed index linked income to cover your basic costs. That will be made up of your state pension and this LGPS pension.Then you can get all your extra income from your investments safe in the knowledge you won't be in the gutter if it all goes pear shaped.

In any case if you're such a whizz at investing, acquiring a replacement 15k shouldn't take you too long.

exil

I don't often agree with ed but can;t see anything wrong with what he said.

The OP is trying to use his pension fund to speculate with, which is not at all wise. The wisest thing may well be to leave it where it is, where it is guaranteed to keep pace with inflation.

meester

Retired_I.F.A. wrote: »

JESUS WEPT MORE ABSOLUTE TOSH FROM ED INVESTER .!!!!!!!!!

Somebody gag the stupid cow please.

Don't be such a sexist rude pig.

meester

exil wrote: »

I don't often agree with ed but can;t see anything wrong with what he said.

She, not he...

Debtaholic

Hi All,

The topic seems to have gone off course somewhat!

Leaving aside whether I should, or should not do this. I really could do with some help from those of you in the know please.

My question is:

Is there any way to access the cash value locked into my LGPS pension, which I have not been contributing to since I resigned 2 years ago?

If not, is there any way I can transfer it into a SIPP or some other vehicle that would enable me to have control over its investment?

Thanks again for your help - I know it would usually be inadvisable to do the above, but I already have adequate provision for retirement and so am happy to speculate with this amount.