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  • FIRST POST
    • Flump55
    • By Flump55 12th Mar 17, 8:14 PM
    • 6Posts
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    Flump55
    Transfer a Small Deferred DB LGPS Pot into a Private Pension?
    • #1
    • 12th Mar 17, 8:14 PM
    Transfer a Small Deferred DB LGPS Pot into a Private Pension? 12th Mar 17 at 8:14 PM
    Hi,
    Iím a 52 year old man, not in great health, so am hoping to retire in 3 or 4 years time. Iím looking at options to fund my early retirement until my NPA of 60. My current DB scheme will pay an estimated £20K p.a. at age 60 plus a £50K lump sum, which Iím happy with. I also have an AVC pot currently worth £70K. (The Mrs will also retire at the same time, with a pension of £10K p.a. plus lump sum).

    My questions relate to my deferred LGPS pension which is currently estimated to pay £1,100 per year at age 60. I havenít got a cash equivalent transfer value (CETV) yet. I appreciate that this represents a secure guaranteed income post-60, but believe it could provide me with greater value by transferring it into a private pension or SIPP to help fund post-55 early retirement. (LGPS regulations mean I canít transfer it into my current DB or AVC schemes). Together with my AVC pot, I believe that I can take uncrystallised lump sum withdrawals (say £20K or £25K p.a.) to make early retirement a possibility.

    So, assuming the above makes sense and I havenít overlooked something,
    (1) Are there even more restrictions on where I can transfer my LGPS pot to? Or any recommendations for a Personal Pension or SIPP?
    (2) As I presume the CETV will be nowhere near the £30K threshold for IFA approval, do the LGPS insist on IFA sign-offs for smaller pots (e.g. say £15K)?
    (3) As LGPS wonít allow transfer into my AVC, is there anything to stop me transferring into a PP or SIPP, and then transferring it into my AVC pot at a later date?

    Many thanks in advance for any advice you can offer.
    Cheers, Flump55
Page 1
    • hyubh
    • By hyubh 12th Mar 17, 9:15 PM
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    hyubh
    • #2
    • 12th Mar 17, 9:15 PM
    • #2
    • 12th Mar 17, 9:15 PM
    (LGPS regulations mean I can’t transfer it into my current DB or AVC schemes).
    Originally posted by Flump55
    What 'LGPS regulations' say that? (Irrespective of whether it would be a good idea or not!)

    So, assuming the above makes sense and I haven’t overlooked something,
    (1) Are there even more restrictions on where I can transfer my LGPS pot to?
    There aren't any more restrictions than if it were a private sector DB pension.

    Or any recommendations for a Personal Pension or SIPP?
    Keep it where it is.

    As I presume the CETV will be nowhere near the £30K threshold for IFA approval
    Why do you presume that?

    do the LGPS insist on IFA sign-offs for smaller pots (e.g. say £15K)?
    No. Your problem will be at the other end, i.e. finding someone to accept it.
    • kidmugsy
    • By kidmugsy 12th Mar 17, 11:14 PM
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    kidmugsy
    • #3
    • 12th Mar 17, 11:14 PM
    • #3
    • 12th Mar 17, 11:14 PM
    Is your poor health likely to be life-shortening?

    I gather from other threads that LGPS don't pay high CETVs. So it might be worth considering the reverse option: take the LGPS pension at 60 and transfer your principal pension at 55. What's its CETV ratio?
    • Flump55
    • By Flump55 13th Mar 17, 7:58 AM
    • 6 Posts
    • 2 Thanks
    Flump55
    • #4
    • 13th Mar 17, 7:58 AM
    • #4
    • 13th Mar 17, 7:58 AM
    Hi, Thanks for the reply.

    "LGPS regulations mean I canít transfer it into my current DB or AVC schemes"
    What 'LGPS regulations' say that? (Irrespective of whether it would be a good idea or not!)
    Originally posted by hyubh
    My LGPS scheme regulators say that the benefits cannot be transferred to any "in-house" AVC, which mine is apparently. Also, as my benefits were accrued in the early 1990s, they are beyond the 12-month deadline for transfer into my current DB main scheme.

    There aren't any more restrictions than if it were a private sector DB pension.
    Originally posted by hyubh
    Based on the above LGPS restrictions (e.g. ban on transfer to an AVC), I just wondered if they had restrictions on transfers to certain types of other pensions.

    Keep it where it is.
    Originally posted by hyubh
    Why? £20 a week when I'm 60, isn't going to help me retire any earlier. Investing it somewhere else so that I can access it post-55 is the question I'm trying to ask. I'm hoping the CETV invested in a personal pension will help fund a year's early retirement.

    "As I presume the CETV will be nowhere near the £30K threshold for IFA approval"
    Why do you presume that?
    Originally posted by hyubh
    I don't think the LGPS are going to pay out anywhere near £30K for a pension currently worth £1,100 p.a.

    "do the LGPS insist on IFA sign-offs for smaller pots (e.g. say £15K)?"
    No. Your problem will be at the other end, i.e. finding someone to accept it.
    Originally posted by hyubh
    The Pru were happy to transfer it for me, until the LGPS said NO to transferring it into my Pru AVC.

    I would have thought that if I don't need IFA advice (if my £1,100 pension equates to a pot of £15K or £20K), then there is no comeback to anyone that takes my money?

    Any suggestions for a suitable PP or SIPP which will take this transfer?
    • Flump55
    • By Flump55 13th Mar 17, 8:22 AM
    • 6 Posts
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    Flump55
    • #5
    • 13th Mar 17, 8:22 AM
    • #5
    • 13th Mar 17, 8:22 AM
    Is your poor health likely to be life-shortening?
    Originally posted by kidmugsy
    Possibly. Two small heart attacks and osteoarthritis. That is why I like the prospect of (1) retiring early and (2) having more liquid (pension) assets for the wife and kids, rather than the LGPS £10 a week widow's pension if the worst does happen.

    I gather from other threads that LGPS don't pay high CETVs. So it might be worth considering the reverse option: take the LGPS pension at 60 and transfer your principal pension at 55. What's its CETV ratio?
    Originally posted by kidmugsy
    The reduction in a £20K pension at 60 to a smaller pension at 55 is not worth it to preserve a LGPS pension of £1,100 at 60. I also think that my current DB pension offers good protection against any future ill health or forced early retirement on health grounds.

    In essence, I'm of the opinion that cashing in my LGPS pot is the best option in my circumstances, i.e. a lump sum pot for the family if I peg out; funding for a year or two extra retirement if I don't; or a nice pot if I do fancy carrying on working.
    • Silvertabby
    • By Silvertabby 13th Mar 17, 8:44 AM
    • 1,125 Posts
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    Silvertabby
    • #6
    • 13th Mar 17, 8:44 AM
    • #6
    • 13th Mar 17, 8:44 AM
    “ No. Your problem will be at the other end, i.e. finding someone to accept it.
    Originally posted by hyubh
    The Pru were happy to transfer it for me, until the LGPS said NO to transferring it into my Pru AVC.
    Is your AVC an in-house deal linked to your LGPS pension? If so, that's the only reason you can't transfer your LGPS into it. If the Pru are happy to accept the transfer from your LGPS main scheme then you just need to set up another pension account with them.
    Last edited by Silvertabby; 13-03-2017 at 10:55 AM.
    • kidmugsy
    • By kidmugsy 13th Mar 17, 12:08 PM
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    kidmugsy
    • #7
    • 13th Mar 17, 12:08 PM
    • #7
    • 13th Mar 17, 12:08 PM
    Possibly. Two small heart attacks and osteoarthritis. That is why I like the prospect of (1) retiring early and (2) having more liquid (pension) assets for the wife and kids, rather than the LGPS £10 a week widow's pension if the worst does happen.


    The reduction in a £20K pension at 60 to a smaller pension at 55 is not worth it to preserve a LGPS pension of £1,100 at 60. I also think that my current DB pension offers good protection against any future ill health or forced early retirement on health grounds.

    In essence, I'm of the opinion that cashing in my LGPS pot is the best option in my circumstances, i.e. a lump sum pot for the family if I peg out; funding for a year or two extra retirement if I don't; or a nice pot if I do fancy carrying on working.
    Originally posted by Flump55
    You've obviously given this considerable thought. Good luck with your decision.
    • Flump55
    • By Flump55 13th Mar 17, 12:54 PM
    • 6 Posts
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    Flump55
    • #8
    • 13th Mar 17, 12:54 PM
    • #8
    • 13th Mar 17, 12:54 PM
    Is your AVC an in-house deal linked to your LGPS pension? If so, that's the only reason you can't transfer your LGPS into it. If the Pru are happy to accept the transfer from your LGPS main scheme then you just need to set up another pension account with them.
    Originally posted by Silvertabby
    My AVC is with the Teachers Pension Scheme (TPS). I thought (as did the Pru) that it would be a straightforward transfer, but the LGPS administrators are adamant I can't transfer benefits from their main scheme to the TPS AVC. They have put this in writing to me and the Prudential. It does beg the question though, that if I can transfer it to something like a SIPP, then what's to stop me then moving it into my AVC?
    • Silvertabby
    • By Silvertabby 13th Mar 17, 3:00 PM
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    Silvertabby
    • #9
    • 13th Mar 17, 3:00 PM
    • #9
    • 13th Mar 17, 3:00 PM
    “ Is your AVC an in-house deal linked to your LGPS pension? If so, that's the only reason you can't transfer your LGPS into it. If the Pru are happy to accept the transfer from your LGPS main scheme then you just need to set up another pension account with them.
    Originally posted by Silvertabby
    My AVC is with the Teachers Pension Scheme (TPS). I thought (as did the Pru) that it would be a straightforward transfer, but the LGPS administrators are adamant I can't transfer benefits from their main scheme to the TPS AVC. They have put this in writing to me and the Prudential. It does beg the question though, that if I can transfer it to something like a SIPP, then what's to stop me then moving it into my AVC?
    Right, that makes sense. You are basically asking to transfer your LGPS benefits into TPS - but your LGPS benefits can only be transferred to your actual TPS pension fund, not the attached in-house AVC. I'm assuming that you have been with TPS for more than 12 months, and so are outside the timeframe for a transfer in? Yes, you could transfer to a Pru personal pension plan (with the appropriate financial advice) - but could you then make an internal transfer to your Pru TPS AVC? Honest answer is that I don't know - have you asked the Pru if that is possible?
    Last edited by Silvertabby; 13-03-2017 at 6:11 PM.
    • hyubh
    • By hyubh 13th Mar 17, 7:54 PM
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    hyubh
    You are basically asking to transfer your LGPS benefits into TPS - but your LGPS benefits can only be transferred to your actual TPS pension fund, not the attached in-house AVC.
    Originally posted by Silvertabby
    Where in the regs does it say that...?
    • Silvertabby
    • By Silvertabby 13th Mar 17, 8:02 PM
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    Silvertabby
    “ You are basically asking to transfer your LGPS benefits into TPS - but your LGPS benefits can only be transferred to your actual TPS pension fund, not the attached in-house AVC.
    Originally posted by Silvertabby
    Where in the regs does it say that...?
    No idea - just SOP in the LGPS I worked for.

    If OP had LGPS benefits and a LGPS in-house AVC - and wanted to transfer to TPS then main scheme benefits would be transferred to TPS main scheme, and the AVC transferred to a TPS AVC.

    Most likely reasons for refusal are:

    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:

    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?
    Last edited by Silvertabby; 13-03-2017 at 8:58 PM.
    • Flump55
    • By Flump55 14th Mar 17, 9:12 AM
    • 6 Posts
    • 2 Thanks
    Flump55
    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?
    Originally posted by Silvertabby
    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
    • By Silvertabby 14th Mar 17, 10:11 AM
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    Silvertabby
    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!
    Last edited by Silvertabby; 14-03-2017 at 10:19 AM.
    • Flump55
    • By Flump55 14th Mar 17, 11:00 AM
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    Flump55
    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!
    Originally posted by Silvertabby
    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
    • By xylophone 14th Mar 17, 11:20 AM
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    xylophone
    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
    • By Silvertabby 14th Mar 17, 12:17 PM
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    Silvertabby
    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
    • By xylophone 14th Mar 17, 12:29 PM
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    xylophone
    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
    • By Silvertabby 14th Mar 17, 1:01 PM
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    Silvertabby
    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?
    Last edited by Silvertabby; 14-03-2017 at 2:22 PM.
    • hyubh
    • By hyubh 14th Mar 17, 9:19 PM
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    hyubh
    "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."
    Originally posted by Flump55
    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...
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