another pension reform idea

chiefie

for George....


Why not allow people who have a DC AVC that runs with a DB pension to access or transfer the AVC pot at age 55 but leave the DB pot in place ?


This may then prevent some people from attempting to transfer a good db pot just to get access to some money early ?


Just a thought ....


or am I missing something fundamental ?

hyubh

chiefie wrote: »

This may then prevent some people from attempting to transfer a good db pot just to get access to some money early ?

Personally I'd have a means test (wouldn't need to be particularly stringent) and just allow people to be foolish otherwise, pending trustee (or in the LGPS, administering authority) agreement. People who force through their own transfer then whinge when it doesn't turn out well deserve what they get IMO - there's enough information out there (of which this forum plays a small part) to make informed decisions.

kidmugsy

chiefie wrote: »

Why not allow people who have a DC AVC that runs with a DB pension to access or transfer the AVC pot at age 55 but leave the DB pot in place ?


This may then prevent some people from attempting to transfer a good db pot just to get access to some money early ?

Is there any legal obstacle to that now? Or is the obstacle only the schemes' own rules?

hyubh

kidmugsy wrote: »

Is there any legal obstacle to that now? Or is the obstacle only the schemes own rules?

Surely the latter, but I'm struggling to find a definitive reference... cf. para. 2.10 here:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/332714/pensions_response_online.pdf

Personally I'd be opposed to government forcing trustees to liberalise matters, given doing so may have (albeit indirect) funding implications on the DB side.

robin61

chiefie wrote: »

for George....


Why not allow people who have a DC AVC that runs with a DB pension to access or transfer the AVC pot at age 55 but leave the DB pot in place ?


This may then prevent some people from attempting to transfer a good db pot just to get access to some money early ?


Just a thought ....


or am I missing something fundamental ?

I am pretty sure I can already do this. It means transferring the whole of the AVC to an annuity or SIP.

LHW99

Another idea for George to think about - couldn't uncrystallised funds be used to buy an immediate care needs annuity, if the need arose, without being taxed as income - provided the funds go straight from the pension pot to the annuity.

kidmugsy

LHW99 wrote: »

Another idea for George to think about - couldn't uncrystallised funds be used to buy an immediate care needs annuity, if the need arose, without being taxed as income - provided the funds go straight from the pension pot to the annuity.

I wouldn't be surprised to see that sort of thing in the Conservative manifesto.

kidmugsy

hyubh wrote: »

Personally I'd be opposed to government forcing trustees to liberalise matters, given doing so may have (albeit indirect) funding implications on the DB side.

I tend to agree: interference by government can have unpleasant consequences. But as a voluntary matter for the trustees, I'd have thought that the DB scheme would often gain by such a possibility. Instead of members using the AVC to take lump sum, and thus lumber the DB fund with larger pension liabilities than otherwise, members might transfer the AVC elsewhere.