DB LGPS and DB NHS Pension Options.

LancashireFogie

Querying an old LGPS with Cheshire (no longer contributing) and existing DB NHS pension which is current.  On behalf of my wife who used to work in a Cheshire health facility but left 12 years ago for the NHS. She is over the 55 year mark just.

She now wants to cease work with NHS as she has some private work which she wants to pursue as her full time employment.

Initial thinking was to take 25 Percent of the retired Cheshire scheme and also 25 percent of the (soon to be retired) NHS pension.  

I got ahead of myself and suggested that she transferred out of both and set up a private pension going forward.

Then I started reading more and it looks like NHS pensions do not allow transfers out into a DC pension. Only options are to leave it until retirement age 65/67 or transfer into a suitable DB which is pointless I think.

So my questions to anyone with the knowledge are

1) Is it at all possible to take a 25 percent lump from the NHS pension and finish work with the NHS at the same time, thus keeping the remaining funds with the scheme until retirement?
2) Are my assumptions correct in not being able to transfer out of the NHS into a private DC?
3) Regarding the LGPS : I'm fairly certain a 25 percent lump can be taken out right now but would there be restrictions in also transferring out this DB into a DC pension?

Many Thanks

daveyjp

First question is does she need to pension money?

She then needs to understand both her LGPS and NHS pensions.  As DB they both have very specific rules on early payment based on age, years of service etc etc. 

Transferring either to a DC is an expensive or even a none starter option.  Taking DB pensions early may result  in large reductions to account for the extra years the pensions will be paid.  You can't take some and leave some.  Its leave it all in and benefit from annual increases, or retire.

Her starting pount is to therefore to read up on both the DB pensions and ask LGPS and NHS for quotes.  With LGPS this may be possible online.

Brie

DB pensions are incredibly difficult to transfer out as the first thing is you have to pay a huge amount to an IFA to tell you whether it's good advice.  I was quoted £7500 recently for a pension that would have a transfer value of £135k.  So you'll have the same problem with the LGPS DB scheme as for the NHS.  The IFA will take your money and then tell you it's not a good idea.  The only time it might be a good idea is if there is a very limited life expectancy and no one wants that.  

And normally with a DB scheme whatever lump sum is available (might not be 25%, check scheme rules) is only paid out when the monthly payments are also going to start.  I believe this is the case with both your wife's schemes.  

She may not have to wait until state pension age to take the DB payments though.  That said it would mean the amounts would be reduced due to being accessed early - again the scheme rules will say if this is possible.  

Andy_L

1. No. You have to take both at the same time

2. Yes

3. You can transfer the LGPS into a DC pension but it is a difficult & expensive process & probably not a good idea. There are many existing threads on transferring DB pensions to a DC scheme

Marcon

LancashireFogie said:

Querying an old LGPS with Cheshire (no longer contributing) and existing DB NHS pension which is current.  On behalf of my wife who used to work in a Cheshire health facility but left 12 years ago for the NHS. She is over the 55 year mark just.

She now wants to cease work with NHS as she has some private work which she wants to pursue as her full time employment.

Initial thinking was to take 25 Percent of the retired Cheshire scheme and also 25 percent of the (soon to be retired) NHS pension.  

I got ahead of myself and suggested that she transferred out of both and set up a private pension going forward.

Then I started reading more and it looks like NHS pensions do not allow transfers out into a DC pension. Only options are to leave it until retirement age 65/67 or transfer into a suitable DB which is pointless I think.

So my questions to anyone with the knowledge are

1) Is it at all possible to take a 25 percent lump from the NHS pension and finish work with the NHS at the same time, thus keeping the remaining funds with the scheme until retirement?
2) Are my assumptions correct in not being able to transfer out of the NHS into a private DC?
3) Regarding the LGPS : I'm fairly certain a 25 percent lump can be taken out right now but would there be restrictions in also transferring out this DB into a DC pension?

Many Thanks

1) No
2) Your assumptions are correct
3) Your wife can't take 25% direct from the LGPS and then transfer the rest. If the (whole) transfer value is over £30K (and it will be), there's a long and winding path to pursue before such a transfer would be an option. Think at least £5K for the mandatory regulated advice your wife would need.

LancashireFogie

Many thanks for the replies. Lots of food for thought.  I personally am in the world of private pensions and a British Telecom DB pension which I am drawing. I have 2 small DC pensions and manoeuvre them from time to time.  The main BT one didn't take any brainpower to work out as the modellers that we were given were excellent and easy to plan for retirement. My wifes NHS by comparison is at the opposite end of the scale and not flexible at all when it comes to deciding what to do with the funds.  She does want some capital as a cushion while she grows her own business over the coming year or two.  She is fine about leaving the majority until normal retirement age.  Will tell her things may not be as straightforward as thought but to approach both pension schemes for options.
There seems to be a raft of people we know in similar situations that have managed to release monies from DB schemes all at a similar age.
A friend of hers has taken a lump from a closed LGPS and leaving the rest until retirement age. An NHS colleague has taken a lump to pay off her mortgage and again is leaving the rest until retirement ( she is still in employment and still contributing though) and some that have cashed private pensions that were something to do with opting out of serps.  
Thanks again

hyubh

LancashireFogie said:

There seems to be a raft of people we know in similar situations that have managed to release monies from DB schemes all at a similar age.
A friend of hers has taken a lump from a closed LGPS and leaving the rest until retirement age. An NHS colleague has taken a lump to pay off her mortgage and again is leaving the rest until retirement ( she is still in employment and still contributing though) and some that have cashed private pensions that were something to do with opting out of serps.

This is unfortunately Chinese whispers. In the LGPS case the closest would be either if someone has acquired multiple LGPS memberships over time and did not aggregate them, so could take the first separately, or took a flexible retirement with employer consent. In both cases however the member would not be taking a lump sum only at the earlier point. Frankly this goes for most private sector DB schemes too, indeed the concept of partial crystallisation is a DC one, and in the grand scheme of things a not-that-old DC one.