12k Transfer Sum from Civil Service

Lamentation

Advice would be greatly appreciated on the following.

The Civil Service are refunding my pension contributions because I have less than 2 years service (I actually didn't know when I left ahead of my fixed term contract that there was this condition in place so I paid in an additional contribution of £6500 and paid another £1k in contributions while in employment).

They have offered me a 12k transfer sum to another pension arrangement or a miserly 5.9k cash refund (1.6k less than I paid in!).

I currently have a dormant pension with Phoenix Life from a historic employer (set to pay me £15 a week on retirement) that could be revived and accept this sum.

But can you suggest alternative pension arrangements that could benefit me more (must be a UK Defined Benefit pension scheme registered by HMRC)?

thanks

Silvertabby

I suspect that the most, if not all, defined benefit schemes open to new entrants are public sector.

What are you doing now? How old are you? Is there any chance that you will return to the public sector, in any capacity, in the future?

Taking the refund should be a last ditch option. Incidentally, the refund offer is less than the amount you paid in because it's taxable - you received tax relief on the way in.

xylophone

http://www.civilservicepensionscheme.org.uk/media/181376/lnl2-april2016.pdf

Are you sure it must be DB? in the "less than two years" scenario you describe?

Above (dated April 2016) says

I have more than three months’ service, how can I take
a transfer?

If you want to ask for your pension benefits to be
transferred, you must return your completed application
form to MyCSP by the date given in their letter.

Please note that you will only be able to take a transfer
if you join your new employer’s pension scheme or set
up your own personal pension. MyCSP can only pay a
transfer value to a pension scheme or arrangement that
is registered by HM Revenue & Customs (HMRC), or is a
qualifying recognised overseas’ pension scheme.
If you do not reply to the letter from MyCSP by the date
given then they will assume you want a refund of your
contributions.


A Personal Pension is DC not DB.

Kynthia

As has been said you are receiving all your contributions back with an adjustment made for the tax and NI (to contract back in I believe) you would have paid on that money if it hadn't gone direct into the pension.

The better deal is to take the transfer as that includes the employers contributions as well as your own. It doesn't need to be another defined benefit pension scheme as you can only get one of these if you start with one of the few employers that offer one.

Would you not be able to open a SIPP for now to put it in to buy you time? You could then take your time to find a better place for it later after more research or transfer it into a future employer's scheme should you start somewhere with a good scheme?

marlot

It doesn't help the OP, alas, but just in case anyone else is reading this.

If you do a transfer [from another sceheme] into the civil service scheme within your first year, you can leave your money in - ie. you don't have to have a refund or move it to another scheme if you leave within two years.

xylophone

Assuming you can transfer to a DC Pension, see my post above, then you might look at

https://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/



http://www.hl.co.uk/pensions/sipp/apply-now

It might also be possible to transfer in the Phoenix Life pension.

Acquinas

Getting access to the LGPS might not be a bad idea. It is a DB scheme based on average salary, and it also has a two-year rule in terms of paying you off rather than preserving a pension, though they stretch the point a bit by saying something like "the equivalent of 2 years". It is apart of the public sector transfer club too so it will also accept transfers in from schemes like the Civil Service scheme. Just need to get yourself a job as a lollypop man for about 5 hours a week! Plenty of them.

PensionTech

The civil service pension schemes are unfunded so can only transfer to DB schemes.

I'm not sure whether that applies to under 24 months' service transfers though - I shall check...

Edit: I've checked and I don't believe the DB restriction applies to transfers where the member had less than 24 months' service (and therefore isn't entitled to preserved benefits) so you should, as xylophone says, be able to transfer to a DC scheme. I'd argue this with the administrators if they tell you different as they've probably got the wrong end of the stick.

(If you have to get technical, you can point out that the right to transfer for a member in your situation is conferred by s101AB and 101AE of the Pensions Act 1993, which does not prohibit transfers from unfunded public sector DB schemes to DC arrangements. The restriction on transferring from unfunded public sector schemes applies only to the right to transfer conferred by s95 of the same Act, which relates to members with a preserved benefit. So they have to allow you to transfer to a personal pension.)

Silvertabby

The civil service pension schemes are unfunded so can only transfer to DB schemes.

I'm not sure whether that applies to under 24 months' service transfers though - I shall check...

I thought that as well - but the scheme booklet (2016) does mention the possibility of a transfer to a personal pension. Must be because the OP is under the vesting period of 2 years and so doesn't have pension benefits as such.

PensionTech

I thought that as well - but the scheme booklet (2016) does mention the possibility of a transfer to a personal pension. Must be because the OP is under the vesting period of 2 years and so doesn't have pension benefits as such.

Yep - I've looked at the regs and it's fine. I don't like to rely solely on scheme booklets as they might get the occasional thing wrong!

Silvertabby

I've checked and I don't believe the DB restriction applies to transfers where the member had less than 24 months' service (and therefore isn't entitled to preserved benefits) so you should, as xylophone says, be able to transfer to a DC scheme. I'd argue this with the administrators if they tell you different as they've probably got the wrong end of the stick.

PensionTech - reading OP's post again, I think that he/she has specified a DB scheme because he/she knows that they are better than a DC.