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  • FIRST POST
    • snowqueen555
    • By snowqueen555 9th Sep 18, 1:28 PM
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    snowqueen555
    Is it always a good idea to transfer into a LGPS?
    • #1
    • 9th Sep 18, 1:28 PM
    Is it always a good idea to transfer into a LGPS? 9th Sep 18 at 1:28 PM
    I have started a fixed term position at a local council. I am hoping I can move into a permanent role when this finishes.

    I am wondering under what circumstances is it not advantageous to transfer in a normal employee pension from a previous job into a local government pension as it is defined benefit? To me it is a no brainer but maybe there is something I don't know? My previous pension was a standard defined contribution.

    Thanks
Page 1
    • dunstonh
    • By dunstonh 9th Sep 18, 1:46 PM
    • 94,519 Posts
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    dunstonh
    • #2
    • 9th Sep 18, 1:46 PM
    • #2
    • 9th Sep 18, 1:46 PM
    Is it always a good idea to transfer into a LGPS?
    No.

    I am wondering under what circumstances is it not advantageous to transfer in a normal employee pension from a previous job into a local government pension as it is defined benefit?
    It depends on the terms and the objectives. For example, if you have a money purchase scheme that you could use to fund the gap for early retirement allowing you not to take the LGPS pension and suffer a penalty.

    So, terms and objectives need to be considered.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • snowqueen555
    • By snowqueen555 9th Sep 18, 2:05 PM
    • 744 Posts
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    snowqueen555
    • #3
    • 9th Sep 18, 2:05 PM
    • #3
    • 9th Sep 18, 2:05 PM
    How bad are the penalties for choosing to take the LGPS pension early?
    • Silvertabby
    • By Silvertabby 9th Sep 18, 2:43 PM
    • 3,248 Posts
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    Silvertabby
    • #4
    • 9th Sep 18, 2:43 PM
    • #4
    • 9th Sep 18, 2:43 PM
    How bad are the penalties for choosing to take the LGPS pension early?
    Originally posted by snowqueen555

    Between 3.5% and 5.5% per year.
    • JoeCrystal
    • By JoeCrystal 9th Sep 18, 3:49 PM
    • 1,427 Posts
    • 887 Thanks
    JoeCrystal
    • #5
    • 9th Sep 18, 3:49 PM
    • #5
    • 9th Sep 18, 3:49 PM
    I have started a fixed term position at a local council. I am hoping I can move into a permanent role when this finishes.

    I am wondering under what circumstances is it not advantageous to transfer in a normal employee pension from a previous job into a local government pension as it is defined benefit? To me it is a no brainer but maybe there is something I don't know? My previous pension was a standard defined contribution.

    Thanks
    Originally posted by snowqueen555
    Depends But looking at the examples of DC transfer in into LGPS posts in the past, the benefits can be rather generous.
    • snowqueen555
    • By snowqueen555 11th Sep 18, 11:48 PM
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    snowqueen555
    • #6
    • 11th Sep 18, 11:48 PM
    • #6
    • 11th Sep 18, 11:48 PM
    Between 3.5% and 5.5% per year.
    Originally posted by Silvertabby
    So I am wondering if that is still better than leaving the pension where it is, it is very hard to figure out.
    • JoeCrystal
    • By JoeCrystal 12th Sep 18, 4:24 AM
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    JoeCrystal
    • #7
    • 12th Sep 18, 4:24 AM
    • #7
    • 12th Sep 18, 4:24 AM
    So I am wondering if that is still better than leaving the pension where it is, it is very hard to figure out.
    Originally posted by snowqueen555
    At very least you can ask what is the benefit from the transfer and tell us what the numbers compared to your DC pension are? We can always give you our opinion, not advice but just opinion..
    • snowqueen555
    • By snowqueen555 12th Sep 18, 11:25 PM
    • 744 Posts
    • 516 Thanks
    snowqueen555
    • #8
    • 12th Sep 18, 11:25 PM
    • #8
    • 12th Sep 18, 11:25 PM
    At very least you can ask what is the benefit from the transfer and tell us what the numbers compared to your DC pension are? We can always give you our opinion, not advice but just opinion..
    Originally posted by JoeCrystal
    Only 26k

    That will buy me around 4k a year on the LGPS, but of course that is to retire at 68.

    Based on a gross Lump sum cost of 646.85 per 100 of extra pension
    • JoeCrystal
    • By JoeCrystal 13th Sep 18, 10:08 AM
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    JoeCrystal
    • #9
    • 13th Sep 18, 10:08 AM
    • #9
    • 13th Sep 18, 10:08 AM
    Only 26k

    That will buy me around 4k a year on the LGPS, but of course that is to retire at 68.
    Originally posted by snowqueen555
    How many year away are you from 68? I could work out how much you would have to pay for that amount to time to get the same amount of income.

    That sound like a very good deal to me since it will be index-linked and so on. I mean.... 15%!
    • snowqueen555
    • By snowqueen555 13th Sep 18, 7:52 PM
    • 744 Posts
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    snowqueen555
    30 yrs old
    • JoeCrystal
    • By JoeCrystal 14th Sep 18, 5:23 PM
    • 1,427 Posts
    • 887 Thanks
    JoeCrystal
    30 yrs old
    Originally posted by snowqueen555
    Why so sad? You are not actually doing that badly for a 30 years old. I think it is expected that (as a very rough rule of thumb) 30 years old should have 30k in a pot.

    Let say you want to keep your pension pot of 26,000 and try to go for an index-linked annuity in 38 years, you would need to contribute about 180 per month for next 38 years to get the same projected income (that is IF you are lucky that markets favour you). Remember, you can always set up a new pension pot with leftover cash if you want to.

    So you got a real opportunity to make up your shortfall with the transfer into LGPS.
    • woolly_wombat
    • By woolly_wombat 17th Sep 18, 3:10 PM
    • 562 Posts
    • 360 Thanks
    woolly_wombat
    Transfer into LGPS sounds like a no-brainer to me.

    You could consider opening a separate personal pension if you think you might want to retire early, to fund the gap:
    https://www.gov.uk/personal-pensions-your-rights
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