The transfer process
The Government has introduced new rules on pension transfers in recent years. These rules are there to protect scheme members when they are thinking about transferring their pension.
You may have to take independent financial advice before you can transfer out of the LGPS. If you transfer to a defined contribution scheme, you would lose the guarantees that you have in the LGPS. Taking advice from a qualified financial adviser will make sure you understand the effect that transferring out of the LGPS could have on your income in later life.
Your pension fund must take reasonable steps to stop you losing your pension savings to a scam. They may need to ask you for information about the transfer to check whether there is any sign of a scam. You can also reduce the risk of becoming a victim of a pension scam by finding out more about pension scams and how to spot them.
The basic transfer out process is set out below. We have provided this as a general guide only. Some steps will not be necessary if you are transferring to a ‘safe’ scheme such as another public service pension scheme. Your pension fund may need to take extra steps to find out more about the scheme receiving the transfer to assess whether you are at risk of a pension scam.
- If you are interested in transferring your LGPS pension to another pension scheme, you should inform your new pension provider. Give them the Contact details of your LGPS pension fund.
- Your LGPS pension fund will provide a quotation of the value of your deferred benefits. The date they calculate this is known as the guarantee date. The quotation is generally guaranteed for three months from the guarantee date. It may be guaranteed for a shorter period if you are approaching a year before your Normal Pension Age. If your pension fund sends the quotation to you, you should share it with your new pension provider as soon as possible.
- Your new pension provider lets you know what benefits the transfer would buy in their scheme.
- If you are thinking about transferring to a defined contribution scheme and the value of your LGPS deferred benefits is more than £30,000, you will have to take appropriate financial advice. You must pay for the advice yourself. It must be from an authorised independent adviser who is registered with the Financial Conduct Authority (FCA). See the section on Freedom and Choice for further information. It’s a good idea to speak to a regulated financial adviser before you start the transfer process. This will help make sure that you get financial advice in a timely manner and give you enough time to make your decision without being rushed.
- If you wish to transfer your LGPS pension to the new scheme, you must complete a written option form within the guarantee period.
- Your LGPS pension fund must check whether there are signs that the scheme you want to transfer to is a scam. They may contact you to find out more information about the scheme, how you were contacted and who advised you about the transfer. It is important that you answer their questions fully as soon as you can. Your pension fund will stop the transfer if you do not provide the information they need, or if that information indicates that you are likely to be at risk of a scam. You may be required to attend a Pension Safeguarding Guidance appointment given by MoneyHelper.
- Once your pension fund has taken reasonable steps to check that the pension scheme you are transferring to is a legitimate arrangement, they will make the transfer payment. They will generally do this within six months of the guarantee date.