Buy £10 grand of lgp pension or same of sipp?

[Pensionscmension]

I have 4 years of lgps, low wage, it's my only pension. I'm 46.

Should I buy 10 grand of this, to add to it or put 10 grand into personal sipp?

You should really get advice from an independent financial advisors as there are so many factors to consider.

Would buy the LG scheme before sipp. Assuming it’s DB. But get advice.

This website will tell you what you can do with 10k if you are in the LGPS. You could either buy a AVC or an APC with it.

www.lgpsmember.org/paying-pension.php

impossible to say without more info:

how many years will the lgps credit you for £10k?

you are low waged now - realistically is it likely to stay that way throughout the next 20 years? buying X years of membership now in a scheme that pays out based on final salary and then getting a promotion to a higher salary instantly multiplies the value of that investment. could you see yourself in a senior management role within LG earning £50k + in 10 years time? that would make the lgps even more valuable.

how active would you intend to be with the sipp? the lgps is guaranteed to simply increase with inflation - it is low risk. the payout is a fixed proportion of your final salary when you leave LG employment, whatever happens to life expectancy between now and when you retire and will be reliable throughout retirement. with a sipp, assuming you choose your investments wisely the rate of growth could beat inflation significantly - but equally if the economy collapses in 10 years time you could lose it all. much higher risk, but higher potential rewards IF you are lucky. when you retire you'll have the choice between using the whole pot to buy an annuity (which could yield a much lower income than the lgps would because the annuity companies will want to protect themselves from committing to paying out more than they want to if you live to the age of 100) or take the money to use in another way (which could lead to you running out of money before you die as you can't predict how long you will live)

Get independent financial advice.

most independent financial advisors won't work for such a piddling smallfry investment as £10k. their fees are based on a percentage of the investment and they normally only work for a minimum investment such that they can make at least £1000 in fees otherwise it isn't worth their time. most ordinary folks do not have the luxury of access to independent financial advice.

Are you in a union? If so, they often give a free half hour with an IFA. You won't get detailed tailored advice, but they might be able to give a general informed opinion which might help you make a decision.

Agree that it's not worth paying an IFA for advice on that amount of money.

I am in a similar position, and am struggling as most financial bodies see £10k as a piddling amount! How nice for them...
I am looking into stocks and shares based ISA instead, and starting with a lump sum and then some each month. As it's long term investment, any immediate hit on the share prices will be ironed out.
I am just not sure pension investments wi perform as well for our generation as they did for those retiring over past twenty years.
I am v risk averse though, so finding it all quite daunting.

I have a slightly similar issue so I'm interested in the answer. I'm working very part-time at the moment but want to double my small contributions but not sure whether to put the £25 a month in my LGPS or put it in my Lifetime ISA and get a 25% top up.

Adachi thank you so for the that detailed advice.
I'm not sure re getting better paid job.

I suppose I'm thinking which is the better more sure way of getting an income on the retirement. No where on lgps does it tell me what I can expect to get to live on.

I've had my sipp roughly a year and in a year 10 grand has increased by 700, (currently 500) wavering between

apologies there is an error in the above - the LGPS is an average salary not final salary scheme which I hadn't realised. that means the thing about buying membership now and then getting a massive pay rise to magnify your investment does not apply.

each year of membership in the LGPS gives you a pension of 1/49th of your salary for that year. if you are earning £9,800 per year then each year of membership means you get £200 per year of pension income. you are 46 now and already have 4 years of membership. if you stay at this income level until you retire (with only adjustments for inflation) then by age 67 you will have 25 years of membership so that will mean a pension of £5000 per year in today's money (it would be more than that due to inflation adjustments but the buying power of the amount you get would be equivalent to what £5000 would buy you today)

I went to the lgps website where there is a calculator tool for how much you can get via APCs and plugged in guesses about eg your date of birth. that says you can increase your pension by £877 per year with a contribution of £10k so instead of £5000 per year in the above scenario it would be £5877 - so £133 per week vs £96 per week.

if you live to the age of 100 you will receive that for 33 years and so get back a total of £28,941 in today's money value. if you only live to the age of 78 you will get back £9,647 in today's money value, so less than if you just invested the £10k in savings that keep pace with inflation and just withdraw £17 a week to boost your income.

if you put the money into the LGPS then die at the age of 70 you will have thrown the money away.

you will not know which option was actually better until the day you die.

Thanks again adachi.

What's thrown me is I pay 5.5% of by salary which is about say 56 per month and employer pays a whopping 23%.

But compared to my dh private work pension its different.
I really enjoy my work but I wouldn't know how long I'd last there... So I was thinking whilst I'm part of this so called amazing scheme (previous posts, threads on lgps) should I maximise my exposure to it by buying some more.

The yield from it still seems more steady than what I might get from a sipp income however from the what you've said I think it would be better to put it in the sipp.