Converting A Classic Civil Service Pension To A Different Type Of Pension

Ripley43

Is it possible to convert a deferred classic civil service pension into some other type of pension? 
I'm posting this query on behalf of my Mum.
My Mum wants to claim her deferred pension now age 64, she has been deferring this pension from age 60 as she was informed that this was allowed whilst receiving income and contributory based ESA. However she has just recently found out that all pension payments from age 60 will be paid as a backdated taxable lump sum and someone from the DWP has informed her that when she receives this payment it means that she will have to pay back all her overpaid ESA as the lump sum will be attributed back as income for the years she received ESA, this will also trigger the need to pay back all her housing and council tax benefits from these years as pension will wipe out her income based entitlement.
So the only way she's thinking she can avoid this overpayment is to change her pension into a different type where she gets no backdated arrears from age 60 till now and just receive her future pension payments?
Can anyone please advise how she can do this if possible??

Silvertabby

No, it's not possible I'm afraid, for two reasons.   

1.  The CSPS is a non funded public sector pension scheme, which no longer allows transfers out to DC/personal pensions.

2.  Your mum is over her normal scheme retirement age, and so wouldn't have had a statutory right to a transfer even if the scheme rules hadn't changed barring transfers out to non DB schemes.  

Keep_pedalling

How advised her to do this?

Ripley43

Keep_pedalling said:

How advised her to do this?

She thought it was her only way out as the DWP operative she spoke to seemed certain that this would trigger a massive overpayment even though their own legislation states you can defer your occupational pension until state pension age! (No where does it state that this is on the proviso that you do not receive any back payments of the deferred pension)
She is really not coping well and thinks she's just going to have to forfeit this pension altogether 😢

Silvertabby

Ripley43 said:

Keep_pedalling said:

How advised her to do this?

She thought it was her only way out as the DWP operative she spoke to seemed certain that this would trigger a massive overpayment even though their own legislation states you can defer your occupational pension until state pension age! (No where does it state that this is on the proviso that you do not receive any back payments of the deferred pension)
She is really not coping well and thinks she's just going to have to forfeit this pension altogether 😢

Forfeiting this pension won't work - DWP will just assess her as having received it anyway. 

Marcon

Ripley43 said:

Keep_pedalling said:

How advised her to do this?

She thought it was her only way out as the DWP operative she spoke to seemed certain that this would trigger a massive overpayment even though their own legislation states you can defer your occupational pension until state pension age! (No where does it state that this is on the proviso that you do not receive any back payments of the deferred pension)
She is really not coping well and thinks she's just going to have to forfeit this pension altogether 😢

I can understand exactly why your mum is struggling with this, which must feel like the proverbial bolt out of the blue.

As SilverTabby has helpfully explained, she'll be treated as having received the pension, so forfeiting it isn't going to help.

It may not be quite as dire as she obviously fears, but the only way to find out is to put the pension into payment and see what happens. From a tax perspective your mum can choose to have her pension taxed as if it had been paid in the year to which she became entitled to it (ie from age 60), or have the lot taxed as one lump sum in the year she receives it. It might be worth trying to establish with DWP how the two approaches would impact on her entitlement to ESA/whether and how much she would have to repay, and then making her decision about which route to go, especially given what their own legislation says.

As I typed the above paragraph bells started to ring - didn't this issue get resolved (with some very helpful input from people who know far more about benefits than I do): https://forums.moneysavingexpert.com/discussion/comment/80980212#Comment_80980212

What's changed since that thread in September?

hugheskevi

Did she have any post 2015 service? If so, she will be in scope of the 2015 Remedy and offered a choice between classic and alpha-like for service after 2015.

That wouldn't solve the problem, but it would reduce it, as her Normal Pension age in alpha would be 66.

Decisions about lump sum commutation and allocation (enhancing future survivor benefits by reducing pension) might also affect the position.

Ripley43

hugheskevi said:

Did she have any post 2015 service? If so, she will be in scope of the 2015 Remedy and offered a choice between classic and alpha-like for service after 2015.

That wouldn't solve the problem, but it would reduce it, as her Normal Pension age in alpha would be 66.

Decisions about lump sum commutation and allocation (enhancing future survivor benefits by reducing pension) might also affect the position.

She left the civil service almost 20 years ago.

Ripley43

@Marcon

She was extremely grateful for all the advice that she previously received on here. However, since then she has spoken to someone in the DWP and they have said that the advice given is wrong and if she claims the pension then a massive recoverable overpayment will be triggered. That is why I posted here today.

Marcon

Ripley43 said:

@Marcon

She was extremely grateful for all the advice that she previously received on here. However, since then she has spoken to someone in the DWP and they have said that the advice given is wrong and if she claims the pension then a massive recoverable overpayment will be triggered. That is why I posted here today.

Thank you - I rather suspected that might be the case. There are some pretty authoritative posts on your September thread, from people who really do seem to know what they're talking about, so I wonder if the 'someone in the DWP' has got it wrong? I'd go back and challenge it, citing some of the comments on that thread, and asking them to give you the appropriate legislative references for their take on things. Might then be worth sending a private message to @Newcad and @KaMelo - although fingers crossed they might pick up that they've been mentioned on this thread and come to the rescue when you post the response when you've had time to query with DWP.

Edit - have sent them PMs now asking if they'd be kind enough to have a look at this thread.

Ripley43

@Marcon Thank you so much for your help and taking the time to message the other members, it is really kind of you.