Transfer a Small Deferred DB LGPS Pot into a Private Pension?

Flump55 · 14 March 2017 at 10:12AM

Silvertabby wrote: »

Most likely reasons for refusal are:

(1) OP has been in TPS for more than 12 months and so can't transfer deferred LGPS benefits into TPS (in house AVC would count as AVC fund could, under certain circumstances, be used to buy extra TPS pension benefits).

and/or:

(2) Transfers from LGPS to TPS are under club scheme regs - which couldn't be applied to an AVC.

Perhaps OP could ask his LGPS exactly why they won't/can't do the transfer?

Thanks for trying to unravel this for me. I left LGPS in 1994 and have been in TPS ever since, so can't transfer benefits due to the 12-month rule. I didn't have an AVC with LGPS.

The LGPS administrators have not been very helpful. They either don't want to allow transfers out, or they aren't completely aware of the regulations. I asked for clarification and they replied in writing (last week) with:

"I confirm that I have written to Prudential today regarding the transfer of your preserved pension benefits and have advised them that under the Local Government Pension Scheme Regulations (LGPS) that you are unable to transfer your preserved pension benefits held in the above named scheme to an In-house AVC facility.

You can however if you so wish transfer your preserved pension benefits to your Occupational pension scheme if they are willing to accept the transfer. Or alternatively you could transfer the preserved benefits to a personal pension arrangement."

I phoned asking for further explanation/clarification, and all they could say is that as the Pru TPS AVC is an "in-house" AVC, then I can't transfer. So, I guess it falls under SilverTabby's Reason (1) above?

Can anyone shed any further light on this specific regulation in LGPS? Is what they are saying correct?

Silvertabby · 14 March 2017 at 11:11AM

The LGPS regulations are many, varied and constantly changing. As I am now retired, I can't put my finger on the actual regulation that forbids main scheme LGPS benefits from being transferred to another club scheme's AVC arrangement - but as soon as you asked the question I knew that the answer would be 'no' from a similar case some time ago.

If it's any help, I suspect that even if the LGPS did allow such a transfer, the TPS wouldn't accept it due to the 12 month rule. As your AVC is linked to your TPS pension - and may be used to buy additional TPS pension - they could look at this as an attempt to swerve the late transfer in regulations and block it. TPS are very hot on the 12 month rule!

Flump55 · 14 March 2017 at 12:00PM

Silvertabby wrote: »

If it's any help, I suspect that even if the LGPS did allow such a transfer, the TPS wouldn't accept it due to the 12 month rule. As your AVC is linked to your TPS pension - and may be used to buy additional TPS pension - they could look at this as an attempt to swerve the late transfer in regulations and block it. TPS are very hot on the 12 month rule!

That is a really good explanation which makes a lot of sense. Thanks for taking the time to explain this to me.

In the meantime, I'll explore the various SIPP providers and options - which are amenable to accepting a LGPS transfer.

Thank You All.

xylophone · 14 March 2017 at 12:20PM

This is really very odd.

Prudential administer the TPS AVC - https://www.pru.co.uk/pdf/TAVK0789.pdf

It is quite clear from the above that transfers in from other schemes can be accepted

You can transfer funds from other pensions you may have into your
AVC as long as you are in pensionable service (currently working
and in the teachers main scheme) at the time of the transfer. You will
need to discuss this with your scheme administrator.

It would appear then that there is no problem about buying additional TPS
pension with transferred in cash?

The LGPS Scheme permits transfers out into a DC Scheme - the Pru AVC is a DC Scheme - what on earth is the problem?

In the OP's place I would be asking for chapter and verse from the LGPS regulations.

If it does indeed turn out that the regulations forbid the transfer, he can (presumably) transfer to a personal pension and then into the Pru AVC which seems absolutely nonsensical!

Silvertabby · 14 March 2017 at 1:17PM

You can transfer funds from other pensions you may have into your
AVC as long as you are in pensionable service (currently working
and in the teachers main scheme) at the time of the transfer. You will
need to discuss this with your scheme administrator.

And we're probably back to the TPS 12 month limit on transfers in. The requirement to 'discuss this with your scheme administrator (ie, TPS) indicates that TPS have the final say on if this can be transferred in or not.

xylophone · 14 March 2017 at 1:29PM

And we're probably back to the TPS 12 month limit on transfers in

But he doesn't want to transfer it in to the main scheme but into the AVC.

He could make a lump sum payment from other resources into the AVC as is clear from the Pru information and that could be used to "buy additional benefits".

And it is LGPS that is refusing to transfer to the AVC rather than TPS/the Pru not accepting it.

It simply doesn't make sense and I'd still ask for chapter and verse.

Silvertabby · 14 March 2017 at 2:01PM

If there is a LGPS rule that specifically says that LGPS main scheme benefits may not be transferred directly into another club scheme's in-house AVC funds I can't find it. It may be OP's LGPS providers' interpretation of the LGPS regulations that DO specify that transfers in - to main scheme and/or in-house AVC account - MUST be completed within 12 months of joining the LGPS.

Plus don't forget that whilst all LGPS's are covered by LGPS central regulations, individual funds (and employer's) can and do exercise their own discretions. If OP's LGPS have stated that they will not do this transfer, but he still wants to pursue this option, then he may need to put a case to the ombudsman.

OP - before taking that step, have to spoken to TPS to specifically say that you want to transfer your deferred LGPS main scheme benefits to your TPS in-house AVC and to ask if they will accept the transfer?

hyubh · 14 March 2017 at 10:19PM

Flump55 wrote: »

"I confirm that I have written to Prudential today regarding the transfer of your preserved pension benefits and have advised them that under the Local Government Pension Scheme Regulations (LGPS) that you are unable to transfer your preserved pension benefits held in the above named scheme to an In-house AVC facility."

Ask them specifically what scheme regulation they are referring to. Since the LGPS is a statutory scheme, all rules past and present going back to the scheme's creation in the early 1920s are on legislation.gov.uk, so they should be able to pinpoint exactly to publicly-available information.

That said, under current scheme rules (which won't apply given you left in 1994), regulations 96-97 concern transfers-out, and indicate no such restriction:

http://www.lgpsregs.org/index.php/regs-legislation/timeline-regulations-2014?showall=&start=15

However, the 1986 Regulations are rather more restrictive (the next major set of regs were in 1995, i.e. after you left):

http://www.legislation.gov.uk/uksi/1986/24/pdfs/uksi_19860024_en.pdf

See section J2. In particular, there is the (perhaps expected) additional requirements regarding securing the GMP (which would however rule out transferring to any money purchase arrangement nowadays - cf. the wording of the current regs linked to above, which are phrased to avoid that despite the trace of the old restrictions regarding transferring to another DB scheme). Also, beyond this, there is a requirement for beginning the process within 6 months of starting the new pensionable employment.

However, these rules were subject to Amendment Regulations in 1994, which loosened things up somewhat:

http://www.legislation.gov.uk/uksi/1994/3026/contents/made

To be honest though... I'd be surprised if the person responding to you had been looking at scheme rules from the 1980s, given what you have reported. More likely is that they've got a bit confused, as Silvertabby and xylophone have suggested. On the other hand, I wouldn't be terribly surprised if following the regulations as they stood when you left would actually rule out to a TPS AVC transfer and a whole lot more. I haven't traced through any retrospective changes for existing deferreds however...

Transfer a Small Deferred DB LGPS Pot into a Private Pension?

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