Transferring your LGPS pension

Overview

If you leave the LGPS and you join another scheme, you may be able to transfer your LGPS pension to the new scheme. Transferring your pension isn’t an easy decision to make. You’ll need to compare the two schemes carefully to be certain you make the right choice. You may want to get help from a specialist adviser. In some cases you’ll have to get independent financial advice before you can transfer.

Criminals may try and convince you to hand over your pension by transferring it to a scam pension scheme. You can protect yourself by finding out about how to spot a pension scam.

Transferring your pension video 03:03

The basic rules

You can’t transfer your pension if you:

• leave the LGPS less than one year before your normal pension age
• have already taken a pension from the LGPS
• have more than one deferred pension and want to keep one of them in the LGPS. You must transfer all your deferred pensions or none.

If you transfer your pension in full, your dependants won’t get a death grant or pension from the LGPS when you die.

Extra pension

If you’ve bought extra LGPS pension and service, the value will be included in any transfer payment.

If you’ve paid AVCs, you don’t have to transfer these if you move your main LGPS pension to another scheme.

What to think about

You’ll need details of what your LGPS pension is worth and what it would be worth in the new scheme. When you compare the schemes, remember some of the main benefits of the LGPS:

• your LGPS pension is guaranteed to increase in line with cost-of-living increases
• you can currently take your LGPS pension from age 55
• your LGPS pension may be paid at any age of you’re too ill to work
• you can swap part of your pension for a tax-free lump sum when you take your LGPS pension
• when you die, a death grant and survivor pensions may be paid to your loved ones.

 Club transfer rules

Special rules may apply if you transfer your LGPS pension to another public service pension scheme. Club transfer rules, mean you’ll normally get a pension in the new scheme that’s broadly the same as the pension you had in the LGPS. The Club transfer rules will apply if you:

• join the new public service pension scheme five years or less after leaving the LGPS, and
• apply for the transfer within a year of joining the new pension scheme.

 Getting advice

Whether to transfer your pension isn’t an easy decision to make. You may want to get help from a financial adviser before making a final decision. This is important if you’re thinking about transferring your deferred pension to a:

• personal pension plan
• stakeholder pension scheme
• buy-out insurance policy or
• to an employer’s money purchase scheme.

In these schemes, you’d bear all the investment risk. This could significantly affect your income in later life.

Some members will have to get advice before they can transfer their LGPS pension. For example, the law says you must get independent financial advice if you’re:

• transferring to a defined contribution scheme and
• your cash equivalent transfer value (CETV) of your pension in the LGPS is more than £30,000 (not including the value of any in-house AVCs).

Freedom and Choice – Flexible benefits

The Government introduced flexible benefits in 2015. They give members of defined contribution pension schemes more freedom on how they take money from their pension after 55.

There are four main options for members who are over 55 in a defined contribution scheme which gives flexible benefits:

• to buy an annuity (yearly pension) or scheme pension
• to take a number of cash sums at different stages
• to take the entire pot as cash in one go, or
• flexi-access drawdown.

The LGPS is a defined benefit pension scheme, not a defined contribution scheme. The LGPS isn’t directly affected by the Freedom and Choice rules. However, if you leave the LGPS and don’t take your pension, you could choose to move your pension to such a scheme.

The transfer process

 To a new LGPS Fund in England or Wales

To make sure that your LGPS pension is dealt with in the right way you must either:

• contact your new LGPS Fund to let them know that you’ve a pension with us, and you’d like details of your options; or
• you can fill in and return the ‘Transferring membership between LGPS Funds’ form.

You should contact us and your new employer as soon as possible. This is because:

• some of your options are only available in the first 12 months of rejoining and
• while you’re still an active member of the LGPS with your new employer.

To another pension scheme or the LGPS in Scotland or Northern Ireland

If you’d like to move your pension to another scheme, you might find this Transferring your pension video (03:03) helpful. You’ll also need to:

• read the ‘Transferring your pension to another approved pension arrangement FAQs’
• read the ScamSmart leaflet
• fill in a ‘Request for a cash equivalent transfer value’ form

We won’t give any transfer forms or documents directly to third parties. This is to protect you and make sure you can see everything that’s going on with your transfer.

Please check with your new scheme if they have a time limit within which you need to complete your transfer.