Local Government Pension Scheme

jem16

xylophone wrote: »

"The Government has announced that private sector workers, or those in a funded public sector scheme, will be able to transfer from a DB scheme to a DC one if they want to, meaning they can benefit from the upcoming changes.
Previously it stated the changes would apply just to those with DC pensions.

That still doesn't change the fact that Defined Benefit schemes are not part of the pension changes which only affect Defined Contribution schemes.

Yes of course some people would be able to transfer their DB pension to a DC pension but that would probably prove to be a very expensive mistake to make. Fortunately it would require an IFA to sign off such a transfer and the majority wouldn't touch it unless there were very clear reasons to do so. In the OP's case I haven't seen anything that would constitute a good reason so far.

atush

You have other options that are less costly than doing what you asked about.

Perhaps start with looking at cashing in your own, non defined benefit pension?

System

albepi wrote: »

My wife is 57 and has a deferred LG pension. We need to raise some finance to pay off our mortgage. I need some free advice on what the options are both now and in April 2015. ie if she can take a lump sum.

Any advice would be appreciated.

Hi

Well depending on the dates for her pension accrual...

What does the Annual Benefit Statement actually say...

If you can give the start and end dates of her service that would help tremendously.

Lump sum entitlement is inherent in the scheme, so YES.

Then we do some real sums...

http://www.pensionpage.webspace.virginmedia.com/

hyubh

johndough wrote: »

Lump sum entitlement is inherent in the scheme, so YES.

Like the others, I'm pretty sure the OP was asking whether a lump sum could be taken 'out of band' either immediately or after DC pensions are liberalised next year, not whether a lump sum was involved (or could be involved) in the pension benefits taken normally.

Then we do some real sums...

http://www.pensionpage.webspace.virginmedia.com/

Is this you idea of something better than the LGA's efforts...?

xylophone

That still doesn't change the fact that Defined Benefit schemes are not part of the pension changes which only affect Defined Contribution schemes.

If you read the above carefully, you will see the extent to which funded DB schemes are affected by the new rules.

You will no doubt be aware that originally it was stated that even transfers out of public DB schemes would not be permitted.

Yes of course some people would be able to transfer their DB pension to a DC pension but that would probably prove to be a very expensive mistake to make. Fortunately it would require an IFA to sign off such a transfer and the majority wouldn't touch it unless there were very clear reasons to do so. In the OP's case I haven't seen anything that would constitute a good reason so far.

Nobody has said that taking this option would be a good option.

Indeed, in post 7 above, Hugheskevi comments

Probably a very bad choice, but it is an option.

However, if you read the OP's first post, he asks

what the options are both now and in April 2015. ie if she can take a lump sum.

and that is the information he has been given?

jem16

xylophone wrote: »

If you read the above carefully, you will see the extent to which funded DB schemes are affected by the new rules.

We're really just splitting hairs here for some reason, especially as I didn't question hugheskevi's post just after mine of having another option to transfer out of the DB scheme. I'm not really sure why you are feeling the need to go over it again as if I have said something wrong???

If you are in a DB scheme you cannot take the whole lot as a lump sum, either now or from April 2015.

To take the whole lot as a lump sum you have to be in DC scheme and then you can do so from April 2015.

You will no doubt be aware that originally it was stated that even transfers out of public DB schemes would not be permitted.

Yes I am aware of that and also the subsequent announcement that private sector DB and public sector funded DB pensions would be allowed to transfer to DC schemes.

You could also get around that limitation (if you see it as that) by transferring your unfunded public sector DB pension to a DC scheme now or before April 2015.

xylophone

I'm not really sure why you are feeling the need to go over it again as if I have said something wrong???

I was pointing out (for completeness) that the new rules do have some effect on DB schemes ( see the newspaper article cited) and in particular on funded DB public service schemes.

And as I am fortunate enough to benefit from a DB Scheme (as indeed are you I believe), I am well aware of the disadvantages of transferring out ( except in certain limited circumstances) and indeed have often pointed this out in previous posts.

I see the rules surrounding transferring out of a DB Scheme not as a limitation but as a safety measure for employees since any receiving scheme is almost certain to insist on specific advice from a properly qualified IFA.

However, as I said, the OP was asking about options and these have been discussed.

hyubh

xylophone wrote: »

I was pointing out (for completeness) that the new rules do have some effect on DB schemes ( see the newspaper article cited) and in particular on funded DB public service schemes.

Surely the 'effect' is more the other way round, i.e. it's the pay-as-you-go schemes coming to ban transfers out to money purchase arrangements that will be the novelty, not the LGPS continuing to allow them.

I see the rules surrounding transferring out of a DB Scheme not as a limitation but as a safety measure for employees since any receiving scheme is almost certain to insist on specific advice from a properly qualified IFA.

Which, however, has nothing to do with the government banning DC transfers out from the TPS etc., and conversely, not banning them from the LGPS.

xylophone

Which, however, has nothing to do with the government banning DC transfers out from the TPS etc., and conversely, not banning them from the LGPS.

My comment

I see the rules surrounding transferring out of a DB Scheme not as a limitation but as a safety measure for employees since any receiving scheme is almost certain to insist on specific advice from a properly qualified IFA.

was in reply to

You could also get around that limitation (if you see it as that)

And I was further pointing out that it was not correct to say

The new pension regulations coming in from April 2015 only affect Defined Contributions schemes.

because if you read the article cited in my first post

"The Government has announced that private sector workers, or those in a funded public sector scheme, will be able to transfer from a DB scheme to a DC one if they want to, meaning they can benefit from the upcoming changes.
Previously it stated the changes would apply just to those with DC pensions. It may well be worth seeking some professional independent financial advice to get more perspective on what you should do with your scheme."

this is clearly not the case!

And my understanding was that the government's original idea was to ban all transfers out of public service schemes, whether funded or not.

http://www.moneymarketing.co.uk/news-and-analysis/pensions/budget-2014-govt-to-block-public-sector-pension-transfers-to-prevent-mass-exit/2008146.article

The Budget documents say: “Having considered this carefully, the Government intends to introduce legislation 
to remove the option to transfer for those in public sector schemes, except in very limited circumstances."

jem16

hyubh wrote: »

Surely the 'effect' is more the other way round, i.e. it's the pay-as-you-go schemes coming to ban transfers out to money purchase arrangements that will be the novelty, not the LGPS continuing to allow them

Yes I agree. You have always been able to transfer your DB pension out to to a DC pension, so long as you can actually find an IFA willing to sign off the transfer. For the LGPS nothing will change.