Transfer value for a deferred scheme member
The LGPS is a defined benefit pension scheme. The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have stated that they "believe that it will be in most people's best interests to keep their defined benefit pension. If you transfer out of a defined benefit pension, you cannot reverse it. Make sure that you understand the risks to help you make an informed decision".
However, you may wish to transfer your pension to another defined benefit scheme or a "club" scheme (mainly public sector schemes such as Teachers' Pensions, NHS Pensions, Police Pensions).
There may be some circumstances in which you wish to transfer your pension to a defined contribution scheme (where your money is invested in the financial markets). You cannot transfer out of the LGPS if you are currently contributing to or receiving any LGPS pension in England or Wales (excluding a dependant's pension or a pension credit from divorce).
- What to do:
1. Check that you are at least a year from normal pension age (NPA). The scheme regulations and the Pensions Schemes Act 1993 state that a member is entitled to a cash equivalent transfer value (CETV) for the purposes of transferring benefits provided that the member elects to transfer at least one year before their NPA. Contact us if you are unsure of the NPA. Note that you cannot transfer your deferred pension if you are already in receipt of a LGPS pension.
2. Read the information on Pension Scams and Liberation, especially if you wish to transfer to a defined contribution scheme (e.g. a personal pension or an overseas scheme).
3. Be very cautious - criminals are targeting pension transfers.
4. Identify your new pension scheme and carry out your own internet research into this scheme. Check if there are any problems reported with the scheme. (Research is not necessary if you are transferring to a "Club" scheme.)
5. Contact your new pension provider to find out:
- if they can accept a transfer from a deferred benefit pension scheme (the LGPS is a deferred benefit pension scheme). Some schemes such as NEST do not accept this type of transfer,
- their procedure for transferring.
You will probably be asked for a CETV which you can obtain using:
- What to expect:
1. We will provide transfer information (where applicable) within 3 weeks of receiving the cash equivalent transfer form. This will include:
- a CETV,
- a statement of your current pension benefits,
- several forms (known as 'discharge forms') which need to be completed by you or your new scheme or, in some cases, your financial adviser and then returned to Pension Services.
2. If you wish to transfer to a defined contribution pension scheme and your transfer value is more than £30,000, then you will be legally required to obtain financial advice from an adviser approved by the FCA. The approved adviser will charge for this advice and you will need to pay the adviser directly.
3. You can only request one free CETV per pension account in a 12 month period. There will be a charge for additional CETVs.
4. If you decide to proceed with a transfer then we will make payment within 3 weeks of receiving all the fully completed discharge forms. However, in some cases we may need to contact you for further information about your transfer and your reasons for transferring. This may delay your transfer.
- Overseas transfers only
Warning: if you transfer your pension to an overseas pension scheme, then it will no longer be protected by UK law.
The overseas pension scheme must appear on the list of Qualifying Recognised Overseas Pension Schemes (QROPS) issued by HM Revenue and Customs (HMRC), see HMRC QROPS.
Some overseas transfers will be subject to a 25% tax charge, see HMRC overseas transfer tax charge.