Transfer 3 Final Salary Deferred Pensions to new?

Lowtrawler

I have just changed job and have joined the Local Government Pension Scheme (an 80ths scheme). I am between 11 and 20 years away from retirement. There is a 50:50 chance that my salary will increase substantially with my current employer. I have 3 deferred final salary pensions (all 60ths schemes) from past employers and have requested transfer information from each.

When I receive this information, what should I consider in determining whether to proceed with the transfer?

Debt_Free_Chick

If LGPS accept the transfers (and they might not - see later) then they offer you extra years/days of reckonable service. The problem is that you won't know what this is worth until you retire, as it will be applied to your salary at that time. What you'll be offered now will be roughly the same as the value of your current deferred pensions, so there's no real advantage to transferring.

And leaving your deferred pensions where they are might be better, financially. They will increase in line with inflation - whereas your salary might not. 50/50 chance of substantial increases .....? In the Public Sector ....?

LGPS might not accept the transfers, unless the current scheme provides an undertaking that the deferred pension has been "equalised". Complicated, but there's an area of law that remains unclear so most schemes will not provide an equalisation undertaking - and most schemes won't accept a transfer without one.

Overall, however, you can't be sure that a transfer will be better for you unless you can accurately forecast what your future salary is going to be.

cells

Debt_Free_Chick wrote: »

If LGPS accept the transfers (and they might not - see later) then they offer you extra years/days of reckonable service. The problem is that you won't know what this is worth until you retire, as it will be applied to your salary at that time. What you'll be offered now will be roughly the same as the value of your current deferred pensions, so there's no real advantage to transferring.

And leaving your deferred pensions where they are might be better, financially. They will increase in line with inflation - whereas your salary might not. 50/50 chance of substantial increases .....? In the Public Sector ....?

LGPS might not accept the transfers, unless the current scheme provides an undertaking that the deferred pension has been "equalised". Complicated, but there's an area of law that remains unclear so most schemes will not provide an equalisation undertaking - and most schemes won't accept a transfer without one.

Overall, however, you can't be sure that a transfer will be better for you unless you can accurately forecast what your future salary is going to be.

my guess is that what ever his final pay was at the time is what he gets (1/60th per year)

but becuase of inflation that will mean he doesnt get very much.

ie if he worked there for 30 years and his pay when he left was 30k he would get 15k PA when retired.

but in 15 years time when he does retire that 15K wount be worth todays 15K but perhaps only 7K

my advice would be to see if it is inflation indexed and grows with inflation.

If not then i would remove it into a personal pot TBH

Lowtrawler

My previous 3 final salary schemes will all provide an annual increment voted on by the trustees. This is unlikely to be as much as wage or price inflation.

My thought process is that if the transfer values buy me roughly the same pension entitlement as I have currently deferred, then I should transfer. My thinking is that I expect my salary to increase faster than the annual increments appled to my deferred pensions. Therefore, the benefits will increase more by transferring than keeping them as they are.

My further thoughts are that a Government scheme is more secure than the previous private Schemes I have been in. Another reason to transfer.

On the opposite side. Having multiple pensions presumably allows me to start claiming individual pensions at different dates - or am I wrong? Also, I think it unlikely that the transfer values will give me exactly the same pension entitlement as I have currently deferred, I expect it will be marginally lower. At what point should I not consider transferring (20% lower; 40% lower, 10% lower)?

I am not familiar with the "equalised" rules. Can you direct me to somewhere for more information?