I need to transfer my frozen pension contributions

Desertstormer

I worked for a local council for 15 months and left in 2013. I have £1,050 of total pension contributions which are 'frozen' in what I believe was a final salary pension scheme. A refund of contributions is an option, but this means that I lose my employer's contributions, which I don't want to do.


My existing private pension providers won't accept a transfer in on such a small amount or from a final salary scheme. Ideally I would like to set up a Stakeholder pension and transfer all the contributions into this. I'm a female approaching 60, self-employed with earnings of only £1,500pa plus non-earned income from investment dividends and a rental property (approx £9,000pa).


Does anyone know of a Stakeholder pension provider who would accept my transfer in? I'm looking to make small ad-hoc payments into the pension as and when I can afford to until my state retirement age. Any other solutions to my problem would be gratefully received too!

MallyGirl

why do you want to transfer it elsewhere - why not just take the small, but guaranteed, income when it becomes payable?

Desertstormer

Apparently I need to have accrued at least 2 years contributions for deferred benefits. As I worked there for less than 2 years I am not entitled to a pension. There are only 2 options available to me - a refund of my contributions or transfer the whole pot to another pension provider. I appreciate that we're only talking about a small pension pot here, but I really need to maximise my retirement income.

p00hsticks

Desertstormer wrote: »

Apparently I need to have accrued at least 2 years contributions for deferred benefits. As I worked there for less than 2 years I am not entitled to a pension. There are only 2 options available to me - a refund of my contributions or transfer the whole pot to another pension provider. I appreciate that we're only talking about a small pension pot here, but I really need to maximise my retirement income.

I'm surprised if you left in 2013 that the offer to transfer is still on the table - when I was in a similar position after leaving the civil service I was told that if I hadn't arranged a transfer within six months of leaving my contributions would simply be refunded automatically.

I set up a new pension with Aviva and asked them to handle the transfer in. I'm not aware of a minimum transfer value they would deal with, but I was also adding new contributions to it.

xylophone

I worked for a local council for 15 months and left in 2013. I have £1,050 of total pension contributions which are 'frozen' in what I believe was a final salary pension scheme.

Silvertabby is the expert on LGPS

https://forums.moneysavingexpert.com/member.php?u=2533069

so well worth a pm to her but are you sure that you can still take a refund of contributions?

Looking at below it seems that you may have deferred benefits in the scheme? Have you checked your situation with the administrator?

https://www.lgpsmember.org/tol/thinking-leaving-opt.php


If you were in the scheme before 1 April 2014 and opt out on or after that date with 3 or more months' membership and before completing the 2 years vesting period you will also have the option of having deferred benefits in the scheme instead of taking a refund of your contributions (less any statutory deductions). Use the find out more buttons on the right hand side for information about the different ways the 2 year vesting period can be met.

Silvertabby

xylophone is right - the vesting period changed from 3 months to 2 years on 1 April 2014, so you may be reading the new rules and not the (old) rules that apply to you,

As you have more than 3 months service you have deferred pension benefits rather than a 'frozen' refund. You may either leave your benefits with the LGPS until your normal retirement date (age 65, even though your SPA is later) or, as you are over 55, you may take them now (but subject to a reduction for early payment) If you leave them deferred until 65, then they won't stagnate - they will increase in value each year in line with CPI inflation.

As this is the LGPS, you still have the option of a transfer to another scheme - but your problem will be finding a transfer specialist IFA who will recommend a transfer out of a guaranteed public sector defined benefit pension scheme.

xylophone

but your problem will be finding a transfer specialist IFA who will recommend a transfer out of a guaranteed public sector defined benefit pension scheme.

Silvertabby, have you any idea whether value of the benefits in the deferred pension would be under £30,000?

If so, the advice of a pension transfer specialist would not be mandatory but despite that it could still be the case that another provider would be unwilling to accept the transfer without.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

xylophone

I'm a female approaching 60, self-employed with earnings of only £1,500pa

Despite these low relevant earnings, you could still contribute up to £288O per tax year to your personal pension and the provider would claim £720 from HMRC and add it to your pension.

Under current rules, this would be possible up to age 75.

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

Silvertabby

“ but your problem will be finding a transfer specialist IFA who will recommend a transfer out of a guaranteed public sector defined benefit pension scheme.

xylophone wrote: »

Silvertabby, have you any idea whether value of the benefits in the deferred pension would be under £30,000?

If so, the advice of a pension transfer specialist would not be mandatory but despite that it could still be the case that another provider would be unwilling to accept the transfer without.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/495377/pension-benefits-with-a-guarantee-factsheet-jan-2016.pdf

Based on OP's contributions of just over £1K for 15 months, I make her annual salary somewhere in the region of £16K. So, yes, a 15 month service transfer value will be substantially less than £30K. But, even so, many pension companies won't accept a transfer from a public sector DB scheme without financial advice - and IFAs are wary of recommending transfers out of the LGPS because of the poor CETV rates offered (set by GAD rather than determined by the value of gilts). They may also think that the transfer amount we are talking about (lick finger and stick it in the wind ..... £5K ?) isn't worth their while.

Another option may be trivial commutation (which could be higher than the transfer value, especially if OP leaves it until 65). The LGPS will have to tax the 75% taxable element at first, but OP may be able to claim it back if her total taxable income is less than her personal allowance. She'll then be able to do whatever she wants with it.

Desertstormer

Thanks to all who have responded for your valuable comments.

Yes, the offer to transfer is still available when I spoke to the Scheme Administrator last week. Having checked with the providers of my current (paid-up) private pensions, they won’t accept transfers in on amounts less than £100,000 due to administration costs and having explored the possibility of a Stakeholder Pension with Aviva, this must be applied for via a FA. Having checked Cavendish Online, who offer Aviva Stakeholder pensions, they state ‘Following guidelines from the FCA and due to the complications and risk involved in transfers from certain occupational schemes, Cavendish Online does not offer transfers from defined benefit / final salary schemes’.

Regarding the LGPS, the scheme administrator informs me that I don’t have deferred benefits and that I no longer have a pension set up in my name and NI number. It is held separately and frozen (with interest) until such time that I request a refund of my contributions or authorise a transfer of my ‘accrued pension rights’ to another pension provider.

Silvertabby – apologies, but I neglected to say that the local authority is in Scotland, where I live and the dates of LGPS membership were May 2010 – August 2011. According to my 2011 benefit statement which the council sent me, the provider is the LGPS (and not the SPPA). It may be possible that Scottish pension rules differed from the England and Wales pension rules at that time.

Xylophone - Regarding my State Pensions statement, I checked this last month and have 41 full years of contributions and 3 years ‘not full’ as expected, because I left paid employment in 2015 and have not been employed since. Like many others I was contracted out of SERPS therefore my weekly pension forecast is £131.89 rising to £164.35 providing I continue to make contributions until state retirement age. If I were to request a return of contributions from the LGPS, then I could make a voluntary contribution of NI to increase my ‘full years’ to 42, but of how much benefit this would be at state retirement age, I don’t know.

I’m thinking that I’ll just have to ‘bite the bullet’ and request a refund of my own contributions to invest outside of a pension if I can't find a suitable product.

xylophone

https://www.royallondon.com/global/documents/goodwithyourmoney/topping-up-your-state-pension-guide.pdf

With regard to the transfer, I wonder whether it might be worth contacting Hargreaves Lansdown and explaining the exact circumstances?

They might accept the transfer and then you might follow the strategy in
8 above?