Freedom of Choice
Freedom and Choice - Transfers from the LGPS to Defined Contribution Schemes
From 6 April 2015, the Government introduced greater flexibility (‘Freedom and Choice’) in the way individuals, aged 55 and over, can access any Defined Contribution (DC) pension savings they may have.
It's important that as a member of the Local Government Pension Scheme (LGPS) you understand that you are a member of a public sector Defined Benefit (DB) scheme and therefore the flexibilities introduced under 'Freedom and Choice' do not impact on how you can take your Defined Benefits from the LGPS. Please note, members can now take payment of their benefits at age 55 within the LGPS.
There are, however, some indirect changes that do impact upon any members of the LGPS who are considering transferring the value of their accrued LGPS Defined Benefit pension rights from the LGPS to a DC arrangement offering 'flexible benefits'.
The following questions and answers aim to help you understand the impact.
General Points to note about transferring from the LGPS:
· You cannot transfer your benefits, other than Additional Voluntary Contributions (AVCs), if you leave the scheme when you are less than one year away from your Normal Pension Age.
· An option to transfer must (other than in respect of AVCs) be made at least 12 months before your Normal Pension Age or, if you are a Pension Credit member, at least 12 months before your Normal Benefit Age.
· If you wish to investigate a transfer of your pension rights, your Pension Fund has to (other than in respect of AVCs) provide you with a transfer value quotation within three months of receiving your request and the quotation will be guaranteed for a period of three months from the date of calculation (known as the ‘Guarantee Date’).
· If you wish to proceed with the transfer, a written option to proceed must be received by the LGPS Pension Fund within three months of the ‘Guarantee Date’.
· If you opt to proceed, the normal time limit for payment of the guaranteed transfer value will be six months from the ‘Guarantee Date’.
· If payment is not made within this period your Pension Fund will need to recalculate the value as at the actual date of payment and pay the recalculated value or, if it is greater, the original value plus interest.
· If you are considering whether to transfer benefits, make sure you have full information about the two pension arrangements i.e. details of what your benefits are worth in the LGPS and details of what your benefits would be worth in the new pension scheme if transferred.