I threw away a final salary pension and feel sick.

[CommanderTaggart]

I was a teacher for 5 years at the start of my career and I had a final salary pension. I then moved to a local government role. I left my teachers pension in its pot, as all I really knew about pensions at the time was that a final salary teachers pension is an amazing thing that I was lucky to have and should hang onto. So I did.
Anyway I am now older, earning a lot more and researching and learning about pensions. I realise to my dismay that if I had transferred my teacher’s pension into my LGPS pot within 12 months of leaving teaching I could have retained the final salary link for those 5 years. Safe to say my final salary is going to be very considerably more than the 30k ish I was on when I left teaching.
I am absolutely kicking myself. I had no idea. It was a huge financial blunder that will cost me dearly in retirement and I just feel that I was in no way prepared for or helped to make this decision. “Seek financial advice” is all people ever say, but realistically when you are young and have no investments and very little in the way of spare cash, seeing a financial advisor is not something that you do.
I’m not sure why I’m posting here really, I just had to vent my huge disappointment and frustration and am seeking commiseration I suppose.

ChatGPT told me. I know it’s probably not accurate, I just don’t know how to do the sums myself.

Please don’t worry too much. When they were both final salary schemes they were very similar similar schemes - both known as ‘Club Schemes’.

If you had transferred at the time you would have been given a transfer amount from Teachers Pensions and that amount would have been used to purchase years and days in the LGPS. As they were so similar you would have purchased a very similar amount of years/days to the time you were in the Teachers Pensions.

As you didn’t transfer your benefits, they will have remained with the Teachers and would have been increased in line with inflation (RPI or CPI) and so you absolutely won’t have lost out on thousands of pounds. What you eventually receive will have been a similar amount in both schemes.

Also to add… Chat GP will have no idea about the regulations in place at the time. Transfer Calculations are very complex.

You do have 5 years of final salary though, on your index linked teacher salary.

I think you've misunderstood in any case.

I have a LGPS with a few years of final salary. The "final salary" is the one I had when the scheme changed, not my salary now.

So spend a little money get the clarity

I get what you are saying, I made a massive blunder in that I only paid the reduced married woman’s contributions so don’t qualify for full state pension. Luckily I do have a decent company pension but absolutely kicking myself.

I don't that it's anywhere near £10K. I assume that your old pension is calculated on 80ths. So 5 80ths for a £30K salary would be £1875 per year.

You say you might end on a salary of £90K, that would be £5625 so you might have missed out on £3750. But you're not on a final salary scheme, so none of your final salary pension will be calculated on that figure. If it's like the scheme I was in the 'final' salary was what I earned at the date of the old pension scheme ending. Plus a calculation for inflation.

You are not allowed to transfer funds out of a DB Pension, unless you use a Financial Advisor to get it over the line. This costs thousands and is usually unsuccessful, because it is never in a persons interests to exit a DB Pension. I think also, that if you did transfer it out, that when it transferred into a DC pension the final salary element would be null and void.

I haven’t said I’m not willing to get advice, only that I didn’t get advice at the time when I needed it.
The mistake is made now, I only just realised it today and have come on here to vent / talk about it because I don’t want to admit it to anyone in real life!

You didn't throw it away. You still have a teachers' pension, equivalent to five years' service and inflation proofed vis your leavijg salary.

You would have had to transfer it into the LGPS before 2014 to link it yo your final salary. Did you jpin the LGPS before or after 2014?

Really? That makes me feel better. Thank you. Do you work in pensions?

I feel really stupid about this. I am admittedly not great with numbers but I am not stupid. I was a teacher after all, and I still work in education. I just wish it was all made easier for people to understand.

You said “unfortunately” the free pension advice is not available to you at this time

So…. Pay for it

Transferring a defined benefit (DB) pension to a defined contribution (DC) pension means you give up a guaranteed, lifetime income for a flexible pot that is subject to investment risk and market fluctuations. While this can offer more control over your retirement income and potential for growth, it also means you take on the responsibility for investment decisions, have to pay management costs, and risk the value of your pension falling. A transfer is an irreversible decision, and professional financial advice is required if your DB pension is worth over £30,000.
What you gain

• Flexibility: DC pensions can offer more flexibility in how and when you withdraw your money, often allowing access from age 55 (rising to 57 in 2028).
• Potential for growth: You can invest the funds differently in a DC scheme, which could potentially boost your income in retirement.
• Inheritance: Some of the remaining money in a DC pension pot can be passed on to your beneficiaries, unlike most DB pensions where payments stop upon the death of the member and any dependants.

What you lose

• Guaranteed income: You will lose the guaranteed, inflation-linked income for life that a DB pension provides.
• Employer cost coverage: The employer pays for all costs with a DB pension, but in a DC scheme, you are responsible for all running costs and investment charges, which can reduce the value of your pot.
• Employer-sponsored protection: Most DB schemes are protected by the Pension Protection Fund (PPF) in case of employer bankruptcy, a protection you lose with a DC transfer.

Risks to consider

• Market risk: The value of your DC pension is tied to financial markets. Poor performance could lead to a smaller pension pot and lower income than anticipated.
• Investment risk: You are responsible for managing your investments or paying for a manager to do so. Poor investment choices can negatively impact your retirement income.
• Pot depletion: Your pension could run out of money during your lifetime if you don't manage your withdrawals and investments correctly, especially if you start taking benefits early.

Important steps

• Get professional advice: If your DB pension is worth over £30,000, you are legally required to get financial advice before transferring. A financial adviser can help you assess the long-term impact of the transfer.
• Understand your scheme rules: Carefully check the rules of both your current and the potential new scheme, as they differ significantly.
• Understand the irreversibility: Transferring your DB pension to a DC scheme is a final and irreversible decision.

I think you did the right thing leaving it where it was, tbh.

Yes, this. The OP will not be entitled to a final salary pension based on her actual final retirement salary. It will be the salary when she left the scheme or when it became a career average defined benefit scheme. TPS stopped being final salary in 2015 I think. LGPS stopped in 2014 so if this was a while ago, she probably had a final salary scheme with LGPS anyway until it became career average. I really would not sweat over this whatsoever - you're talking a very small amount of money. Nor would I get expert advice on it as nothing can be done about it now anyway.

The only reason I’m suggesting paying for advice is that the op does not seem too keen on accepting that her understanding of the implications of this is WAY overblown!

I left teaching in 2016, had a year at home with the kids and joined lgps in 2018.

It’s swings and roundabouts surely.

You could have done better. You could have done worse.

You could have chosen to stay in teaching. You could have transferred it out totally. By keeping it separate you’ve maintained the option to take it at a different point in time. That flexibility has some value.

Then your TP wouldn't link to the LGPS final salary scheme. The years would be calculated as part of your career average.

By that point, TPS had stopped being final salary. LGPS had also stopped. You would have gained no advantage to transferring your TPS to LGPS and the final salary in question would have been your 2015 salary when TPS stopped being final salary.

Oh really? I have misunderstood (again!) then. I thought that if I transferred the final salary benefit to the LGPS, then it would link to my LGPS final salary?

No, that really would be too good to be true! Could you imagine? Seriously, if that's what you thought, I can guarantee that is not the case. So you can relax.

Well this thread has made me feel shit given I have only the absolute minimum workers pension which is a 3% contribution compared to your 28%, and about half your current actual earnings to save anything from OP.

Have the world's smallest violin

I believe LGPS became career average before you joined.

Anyway, ignore the people who are talking about DC schemes, completely besides the point.

You wouldn’t have known you needed advice at the time and you couldn’t have known your salary was going to increase so drastically. No adviser would have given a recommendation based on things that could happen in the future!

You certainly don’t need to pay for advice now as you can’t change it.

If your final salary is going to be 90-100k you're not even going to need to think about that money by then.
You'll presumably have a mortgage paid off well before retirement, and have managed to save plenty for a luxurious retirement on top of your existing pension.

I’m sorry, it’s horrible when you realise you’ve made a mistake isn’t it. I really think that public information & education about pensions should be improved.