Can I transfer my pension rights to another pension scheme? A transfer can be paid to either: a UK HM Revenue & Customs registered pension scheme, or a Qualifying Recognised Overseas Pension Scheme (QROPS) You can ask your new pension scheme/provider to request transfer details from us. Or you can contact us directly. But – to be entitled to a transfer – you must: Have at least 3 months membership (unless you left the scheme between 1 April 2008 and 31 March 2014) Not be retiring from the scheme on grounds of redundancy, business efficiency or ill-health For a transfer to a ‘Club Scheme’* Leave the scheme and elect for a transfer before your normal pension age (NPA) For a transfer to any other scheme: Leave the scheme and elect for a transfer at least 1 year before your NPA Not already be in receipt of a LGPS pension (England & Wales only) or have previously retired on Tier 3 ill health grounds Not be an active member of the LGPS in any job (England & Wales only) *Schemes that operate the Public Sector Transfer Arrangements You should think carefully before deciding to go ahead with a transfer Your deferred benefits are valuable benefits that keep pace with the cost of living both before and after you start drawing your pension. And they include generous death benefits for your dependants. You should compare these benefits to the benefits a transfer would provide for you before making any decision to transfer. The Money Advice Service gives clear unbiased advice and information about all sorts of financial matters. You may find some useful information about transferring pension rights at www.moneyadviceservice.org.uk (external link) Before a transfer can be paid, you may be required to take appropriate independent advice (at your own cost) from an adviser authorised by the Financial Conduct Authority (FCA) – see ‘Freedom & Choice’ below for details. You should consider taking this advice, even if you are not required to do so. Freedom & choice Changes to Defined Contribution Schemes In the 2014 budget the Government announced reforms to defined contribution schemes, like personal pensions. These reforms are effective from 6 April 2015 and give members of such schemes, aged 55 or over, greater flexibility over how they can access their pension savings. However, even under the new flexibilities, HMRC rules require that anything above 25% of pension savings will be taxable as pension income at a member’s marginal rate. To help people understand their retirement choices from schemes offering the new flexibilities, the government has introduced a free and impartial service called Pension Wise Transfers from the LGPS to Defined Contribution Schemes The LGPS isn’t a Defined Contribution Scheme so the new flexibilities don’t apply to it. But there are indirect changes for LGPS members considering transferring to such a scheme. For details – refer to this Q & A for LGPS members. Additional Voluntary Contributions (AVCs) The Department for Communities and Local Government (DCLG) are currently considering how the changes will impact on LGPS in-house AVC plans. Don’t be a victim of a ‘pension scam’ (also known as ‘pension liberation fraud’) The Pensions Regulator (TPR) is working with a multi-agency taskforce of Government, regulators, financial services bodies and criminal justice agencies (Project Bloom) to disrupt and prevent scams. The Pensions Advisory Service (TPAS) also launched a campaign to highlight the dangers of pension scams. This campaign is being run in association with Project Bloom. The tactics used by pension scammers are constantly changing. Many scammers are now directing members to transfer into single member occupational schemes in an attempt to escape scrutiny from regulators. They may attempt to target members interested in transferring to a scheme offering the ‘freedom & Choice’ pension flexibilities, introduced in April 2015. Pension scammers offer free pension reviews and use ‘one-off investment opportunities’, ‘pension loans’ or upfront cash incentives to entice members to transfer their pension savings. ‘Investment opportunities’ are often overseas. For many people the offers will be bogus. They claim they can help members access their pension before the legal minimum age of 55. It’s normally only in rare circumstances, such as serious ill health, that you are able to take retirement benefits before age 55. They also claim they can help members take more than 25% of their pension savings as ‘tax free’ cash, after age 55. HMRC rules require that all pension savings above 25% are taxable as pension income at a member’s marginal rate, even if they are taken as a lump sum. If you are taken in by a pension scam and agree to transfer, you will probably lose most, if not all, of your pension savings. You could also receive tax charges of up to 55% of the value of your pension for taking what is classed as an ‘unauthorised payment’ for tax purposes. If you do receive an ‘unauthorised payment’, you must declare it to HM Revenue & Customs (HMRC). If you fail to declare an unauthorised payment to HMRC, you may be charged penalties in addition to the tax. The Pensions Regulator(TPR) has produced the following information about Pension Scams, for members. A video showing how easily a member could lose all their pension savings (this is based on a true story). You can watch the video here or on YouTube here. An infographic poster can be viewed here. A pension scams booklet can be viewed here (pdf 389KB). This booklet lists ‘Ten steps to protect your pension’ and includes ‘typical hallmarks’ of a scam based on real life experiences of scam victims. You can view the pension scams campaign page of TPR’s website at www.thepensionsregulator.gov.uk/pension-scams.aspx The pension scams section of The Pensions Advisory Service (TPAS) website can be viewed here and includes information about: How to spot a scam What happens when you transfer into a scam How to protect your pension from scams What to do if you think you’ve been or are being scammed HMRC also produced a factsheet (pdf 218KB) about ‘Pension liberation and tax’. This can be viewed here.