DB pension transfer cost

[Amboseli]

I've got a very small local government DB pension worth just over £1kpa with a lump sum of £6k.

The transfer value is just over £30k. I'd like to transfer it to my DC pot.

It seems you have to have expensive regulated financial advice in order to transfer a DB pot over £30k. Mine is £30,800. Could I opt out of advice and transfer either to my workplace L&G scheme or vanguard SIPP?

@mauveiscurious that’s not completely correct. The Local Government Pension Scheme, which the OP is in, is funded and you can transfer out after getting appropriate advice. Other public sector schemes, such as Teachers, NHS and Civil Service, aren’t funded and do have transfer restrictions.

Sorry, don’t know why that posted twice!

@wellhelloagain2 I wouldn't invest the whole amount in one go. It would initially be paid into cash within DC pot and I'd gradually switch out of cash and into global equities over a number of months.

If there was a drawdown a month after moving the funds into the DC pension I'd accelerate the switch into equities thereby buying them at a 50% discount. They'll recover over time and I'll make a decent profit.

A drawdown can be reframed as a buying opportunity.

Drawdown = taking an income/benefits from your pension

@messybutfun drawdown in relation to equities means a fall in values. I'd have thought it was obvious from my post that it had a different meaning in this context.

I work in investing so comfortable managing my own ISA (which backs my interest-only mortgage) and pension investments.

However I'd be extremely reticent to transfer out a DB scheme. There are merits, including for inheritance tax purposes. But stock markets are extremely volatile at the moment and the macroeconomic outlook is pretty gloomy.

The other thing worth mentioning is that I think transfer values fluctuate so I'd monitor for a while to see the parameters.

@sep135 I do get that DB are good for guaranteed income. The issue I have is that I'll have sufficient other income such that I don't really need the DB. So I'll just pay tax on income I don't need. If I could put it into my DC pot I could just leave it in there to grow without taking anything out apart from the tax free lump sum. And then it could be passed onto DC IHT free provided the rules don't change which is probably unlikely.

I also wouldn't invest it in UK equities, I'd put it into a global index tracker. I agree that the UK economic prospects are dire.

The challenge with global trackers is that, if they're based on a market cap weighted index, they're highly dependent on the big US mega caps (which they've started calling the magnificent seven...).

It's easy to think you're buying a diversified global portfolio but it may be more of a U.S. tech tracker. The big tech stocks had a dire 2022 and a great 2023 but volatility is likely to persist while there's uncertainty over inflation and interest rates.

Just my thoughts. I'm fortunate in getting to interview fund managers for my job so it's interesting to hear their insights first hand. (Still appetite for the U.K. and Europe as being lowly valued relative to the US).

Minor hijack as I am also trying to jump through loops and hoops of DB pension transfer 👿

Anyone has been lucky recently?

@Express0, could you please clarify, if my birthday is in March and scheme's year end on 5 April (less than 1 month apart) how will my DB pension be revalued?