SIPP question

[wineandsunshine]

Hi,

I have an old LGPS pension (not paying into as now in Teacher Pension).

Can I transfer the LGPS into a SIPP and if yes, do I need to contribute to this monthly?

I use Plum for investing so thought I could add it to this app too.

Thanks!

Is it a defined benefit one, or a lump sum? If the former, you're probably better off keeping it as is.

A DB pension, unless very small, won't be transferrable without paying hefty fees for advice (which is extremely likely to be 'no'). Depending on the scheme it may not be transferrable at all.

As others have said, you probably can't move it without paying hefty fees, but I would leave it where it is anyway.

As you say it's an "old" one, it may start paying before state pension age e.g. at 65. Even whilst you're not paying into it, the annual amount you have accrued will increase every year by CPI (with no maximum). So last year, from memory, that was 10.1% or thereabouts. Once you start receiving it, it will increase every year by CPI too and (unlike a SIPP) the payments are guaranteed for the rest of your life.

That doesn't mean to say you shouldn't set up a SIPP if you want to save extra into a pension, but I wouldn't transfer the LGPS into it. Just have them as separate.

Agree with PPs who say you might be better off keeping your old pension where it is.

You can still open a SIPP and to answer your question, you don’t have to contribute to it monthly. You can add money as and when you want (within limits), or leave it with only the sum you added on opening.

I've just had a look and it is a deferred benefit - I left the council scheme in Aug 2020.

Should I contact the council and ask about potential fees?

There is an annual statement with a valuation for payable lump sum in 2050....!

Deferred benefit is not the same as defined benefit (although I'm betting it's also the latter).

Deferred means you have left the scheme, so are not an active member.

Defined benefit is a type of pension.

The fees aren't payable to the scheme - you have to pay a financial adviser to give you advice on transferring a DB pension over a certain value. The advice costs aroind £6,000 and is almost always no, because DB pensions give much better benefits than most alternatives.

There's no point asking the scheme about fees. The question you need to ask them is whether transfers are allowed at all.

How old are you OP?

The FCA guideline and the law are very strict in this area.

If you are under 55 no regulated adviser would do it.

Unless you are independently wealthy no adviser will touch you. If the CETV is over £30k you need them to sign it - that’s the law.

Do you understand the benefits you will get? Sounds to me that you’re not really clear on the reality of what you have, the value, and the revaluations in deferment.

I am 41 and it's way under £30k.

The LGPS have replied and said I can transfer out without paying a fee.

I'm just unsure if I should leave it there or pop it into a SIPP?

I think I’d leave it there. Let them inflate it until retirement and take the risk, but less than £30 does make a transfer more tempting, I agree.

I have one with ERPF, I only paid for 2 years before I qualified as a teacher but my latest statement says I will get £1200 a year so an extra £100 a month on top of teachers pension. What are the benefits of transfering it out?

Mainly that it’s flexible, and you can hand the pot down to kids/husband/ anyone

There are disadvantages too though.