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Refunds and Transferring out

If you leave your current employer you have several options on what to do with your accrued scheme benefits.  The options depend on how long you have been a scheme member and whether or not you transferred membership when you joined.

Refunds

If you leave the Scheme and have been a member for less than the 2 year vesting period, you can choose to receive a refund of the contributions you have paid (net of the statutory deductions) provided that:

  • You do not start working for another Local Government Employer within 1 month and 1 day of your leaving date.

Please note the Cheshire Pension Fund will have to deduct tax and an amount equivalent to the National Insurance you would have paid (to repay on your behalf) if you had not been a member of the scheme.

If you joined the scheme before 1 April 2014, left with less than the 2 years vesting period but have more than 3 months membership you can:

  • Take a refund of your pension contributions (as long as you meet the criteria above and have elected to receive the refund within 6 months of leaving)
  • Have a deferred pension which increases in line with inflation until payment; or
  • Transfer your pension benefits to another scheme.

The vesting period

The vesting period refers to the period of time that you must be an active member of the LGPS before becoming entitled to benefits under the scheme. The vesting period in the LGPS is 2 years however, it can be met before 2 years in certain circumstances.  You will meet the 2 year vesting period if any of the following conditions apply:

  • You have been a member of the LGPS in England and Wales for 2 years
  • You transferred a pension into the LGPS from a different occupational pension scheme or from a European pensions institution and the length of service you had in that scheme or institution was 2 or more years or, when added to the period of time you have been a member of the LGPS the period is in total more than 2 years
  • You have brought a transfer of pension rights into the LGPS in England or Wales from a pension scheme or arrangement where you were not allowed to receive a refund of contributions
  • You have previously transferred pension rights out of the LGPS in England or Wales to a pension scheme abroad (i.e. to a qualifying recognised overseas pension scheme)
  • You already hold a deferred benefit or are receiving a pension from the LGPS in England or Wales (other than a survivor’s pension or pension credit member’s pension
  • You have paid National Insurance contributions whilst a member of the LGPS and you stop paying into the LGPS in the tax year of attaining pension age
  • You cease to contribute to the LGPS at age 75
  • You die in service
Transfer out

Your benefits can be transferred out of the Cheshire Pension Fund at any time after you leave providing that your new employer or pension provider is willing to accept the transfer value.

You should check that your new pension provider will accept transfers and that you are within any time limits they may apply before you request a transfer out of the Cheshire Pension Fund.

If you have less than two years membership at the date you leave and after one year you decide not to transfer your benefits, you will receive a refund of your contributions (plus interest).

The Government’s announced in the 2014 Budget that reforms to workplace pensions would be made to offer greater flexibility in the way individuals aged 55 and over can access any Defined Contribution (DC) pension savings they may have. These changes became effective on 6 April 2015.

It’s important that as a member of the Local Government Pension Scheme (LGPS) you understand that you are a member of a public sector Defined Benefit (DB) scheme and therefore the flexibilities being introduced under ‘Freedom and Choice’ do not impact on how you can take your Defined Benefits from the LGPS.

There are however, some indirect changes which will impact upon any members of the LGPS who are considering transferring the value of their accrued LGPS Defined Benefit pension rights from the LGPS to a DC arrangement offering flexible benefits.

The Cheshire Pension Fund have produced the following factsheet: Freedom and choice and the LGPS have produced Freedom and Choice questions and answers to help you understand the changes.   

If you are interested in transferring the value of your accrued pension rights to another occupational pension scheme (outside of Local Government), to a personal pension plan, to a stakeholder pension scheme or to a buy-out insurance policy, you can ask for a transfer value quotation to be provided, known as the Cash Equivalent Transfer Value (CETV).  Transfers can also take place to other Local Authority Funds, these are known as Interfund Transfers.

If a third party is requesting a CETV on your behalf their request must have your written authority enclosed.  Your authority must state your full name, national insurance number and signature.  Your authority must also have the name of the Cheshire Pension Fund clearly written on it.

A quotation will be issued to you once we have all the relevant documentation to provide a quotation.  The quote will be guaranteed for a period of three months from the date on which it was calculated.  A written option to proceed with the guaranteed transfer value must be received within the three month guaranteed period in order for the original transfer value to stand.

Transfers out pre 2014

LGPS- Receiving Scheme

  • Scheme Details Employer’s Contracted-Out number (ECON): E3900002R
  • National PSTR Number: 00329946RE
  • Scheme’s Contracted-Out number (SCON): S2700140Y
  • Local PSTR Number: 00328801RE

The LGPS is an Occupational Pension Scheme registered under Chapter 2 of Part 4 of the Finance Act 2004. It is a statutory funded pension scheme which provides salary related defined benefits that are not dependent upon investment performance.

The LGPS ceased to be contracted out of the State Second Pension (S2P) with effect from 06/04/2016.

Members of the LGPS who accrued benefits from 6 April 1978 to 5 April 1997 may have a Guaranteed Minimum Pension (GMP). The rate of revaluation for GMP is Section 148 (previously Section 21) Orders. The GMP benefits must be transferred to the receiving scheme as part of the transfer.

Members with an Additional Voluntary Contribution (AVC) attached to their LGPS benefits must transfer the fund at the same time as their main scheme benefits.

The Local Government Pension Scheme and The Cheshire Pension Fund do not need to be registered with the Financial Conduct Authority as no ‘regulated activities’ (within the meaning of section 22 of the Financial Services & Markets Act 200[c.8]) are carried out.

 

LGPS- Scheme Information

Normal Pension Age (NPA) is 65. Members can elect to receive payment of their benefits from age 60 but they may be subject to an actuarial reduction. A table showing the early retirement factors can be found on our website here: www.cheshirepensionfund.org/active-members/retirement-information/reductions.

Members can elect to take their pension benefits from age 55, though they will be reduced for early payment. Full details can be found on our website here: www.cheshirepensionfund.org/deferred-members/pre-2008-leaver/whencan-i-take-my-benefits

Members who draw their pension after their NPA will have their pension increased by 0.010% for every day of service accrued over their NPA.

Lump sums (if applicable) will be increased by 0.001% for every day of service accrued over their NPA.

Benefits accrued up to 31 March 2008 are at a rate of 1/80th of final pensionable pay, with a mandatory tax free lump sum payable equal to three times the pension amount. LGPS pension benefits accrued from 1 April 2008 are accrued at a rate of 1/60th of final pensionable pay with no lump sum accrual.

Members can elect to convert up to 25% of the capital value of their benefits to provide a larger tax free lump sum upon retirement, at a ratio of £12 lump sum for every £1 of pension.

A leaver is unable to make further contributions to the LGPS.

Following an opt out, member benefits are not payable until the same employment has ceased

Members are unable to receive payment of their lump sum benefits and leave their residual pension benefits invested in the fund.

From April 2011 LGPS deferred benefits and pensions in payment increase annually in line with the Consumer Price Index (CPI). Prior to April 2011 benefits were increased annually in line with the Retail Price Index (RPI). If a member dies before receiving their pension benefits, a death grant is payable. An annual pension may also be payable to the member’s spouse/civilly registered partner/Nominated Partner/dependants. Further information on the different benefits payable can be found on our web page Death as a deferred member.  Information on benefits payable for members after retirement can be found on our web page Death in retirement.

 

LGPS- Transfer Information

Transfer values are guaranteed for 3 months from the relevant date shown on the transfer value statement. Members are only entitled to 1 guaranteed transfer quote within any 12 month period in line with the Occupational Pension Schemes (Transfer Values) Regulations 2008.

If an estimate of benefits has been provided please note that the estimate is based on the current information held. If the member is actively contributing to the scheme, the estimate will be calculated on the assumption that the member will continue to contribute to the scheme until their retirement date.

Before a transfer payment can be made to an Appropriate Personal Pension Scheme or a SIPP the receiving scheme must confirm that they are approved by Her Majesty’s Revenue & Customs (HMRC) and provide evidence of their approved status. Verification of the member’s date of birth is required before a transfer payment can be made. A good quality copy of the member’s birth certificate or their passport photo page can be accepted as proof of date of birth.

 

LGPS- Overseas Transfer Information

The receiving scheme must be a ‘Qualifying Recognised Overseas Pension Scheme’ (QROPS).

Before a transfer payment can be made the QROPS receiving scheme must provide evidence of their approved status from Her Majesty’s Revenue & Customs (HMRC).

The member will need to complete a Lifetime Allowance Pensions Declaration Form and the relevant section of Form CA1890 and form APSS263 if they elect to transfer their LGPS benefits to an overseas arrangement.

Transfers out post 2014

LGPS- Receiving Scheme

  • Scheme Details Employer’s Contracted-Out number (ECON): E3900002R
  • National PSTR Number: 00329946RE
  • Scheme’s Contracted-Out number (SCON): S2700140Y
  • Local PSTR Number: 00328801RE

The LGPS is an Occupational Pension Scheme registered under Chapter 2 of Part 4 of the Finance Act 2004. It is a statutory funded pension scheme which provides salary related defined benefits that are not dependent upon investment performance.

The LGPS ceased to be contracted out of the State Second Pension (S2P) with effect from 06/04/2016.

Members of the LGPS who accrued benefits from 6 April 1978 to 5 April 1997 may have a Guaranteed Minimum Pension (GMP). The rate of revaluation for GMP is Section 148 (previously Section 21) Orders. The GMP benefits must be transferred to the receiving scheme as part of the transfer.

Members with an Additional Voluntary Contribution (AVC) attached to their LGPS benefits must transfer the fund at the same time as their main scheme benefits.

The Local Government Pension Scheme and The Cheshire Pension Fund do not need to be registered with the Financial Conduct Authority as no ‘regulated activities’ (within the meaning of section 22 of the Financial Services & Markets Act 200[c.8]) are carried out.

 

LGPS- Scheme Information

 Normal Pension Age (NPA) is based on the state pension age or 65 (if this is later). Members can elect to receive payment of their benefits from age 55 but they would be subject to an actuarial reduction. A table showing the early retirement factors can be found on our website here: http://www.cheshirepensionfund.org/activemembers/retirement-information/reductions.

Members are unable to retire before age 55.

Members who draw their pension after their NPA will have their pension increased by 0.010% for every day of service accrued over their NPA. Lump sums (if applicable) will be increased by 0.001% for every day of service accrued over their NPA.

Benefits accrued up to 31 March 2008 are at a rate of 1/80th of final pensionable pay, with a mandatory tax free lump sum payable equal to three times the pension amount. LGPS pension benefits accrued from 1 April 2008 up to 31 March 2014 are accrued at a rate of 1/60th of final pensionable pay with no lump sum accrual. Benefits accrued after 1 April 2014 are on a Career Average Revalued Earnings (CARE) basis. Pension is added to the CARE pot each year based on 1/49th of earnings and the pot is increased each year by the Consumer Price Index (CPI).

Members can elect to convert up to 25% of the capital value of their benefits to provide a larger tax free lump sum upon retirement, at a ratio of £12 lump sum for every £1 of pension.

 A leaver is unable to make further contributions to the LGPS.

Following an opt out, member benefits are not payable until the same employment has ceased.

Members are unable to receive payment of their lump sum benefits and leave their residual pension benefits invested in the fund. From April 2011 LGPS deferred benefits and pensions in payment increase annually in line with the Consumer Price Index (CPI). Prior to April 2011 benefits were increased annually in line with the Retail Price Index (RPI).If a member dies before receiving their pension benefits, a death grant is payable. An annual pension may also be payable to the member’s spouse/civilly registered partner/Nominated Partner/ dependants. Further information on the different benefits payable can be found on our web page Death as a deferred member. Information on benefits payable for members after retirement can be found on our web page Death in retirement.

 

LGPS- Transfer Information

Transfer values are guaranteed for 3 months from the relevant date shown on the transfer value statement. Members are only entitled to 1 guaranteed transfer quote within any 12 month period in line with the Occupational Pension Schemes (Transfer Values) Regulations 2008.

If an estimate of benefits has been provided please note that the estimate is based on the current information held. If the member is actively contributing to the scheme, the estimate will be calculated on the assumption that the member will continue to contribute to the scheme until their retirement date.

Before a transfer payment can be made to an Appropriate Personal Pension Scheme or a SIPP the receiving scheme must confirm that they are approved by Her Majesty’s Revenue & Customs (HMRC) and provide evidence of their approved status.

Verification of the member’s date of birth is required before a transfer payment can be made. A good quality copy of the member’s birth certificate or their passport photo page can be accepted as proof of date of birth.

 

LGPS- Overseas Transfer Information

The receiving scheme must be a ‘Qualifying Recognised Overseas Pension Scheme’ (QROPS).

Before a transfer payment can be made the QROPS receiving scheme must provide evidence of their approved status from Her Majesty’s Revenue & Customs (HMRC).

The member will need to complete a Lifetime Allowance Pensions Declaration Form and the relevant section of Form CA1890 and form APSS263 if they elect to transfer their LGPS benefits to an overseas arrangement.

Transferring to another pension scheme

What do I need to do now I have my transfer quotation from you?

You should send a copy of the calculation to your new scheme and then compare the benefits provided by both schemes before you make a decision to transfer. Cheshire Pension Fund staff are not legally allowed to give financial advice. You may wish to obtain independent financial advice before you make a decision to transfer your benefits out of the LGPS, as this decision could affect your future pension benefits.

 

What if I don’t have another scheme to transfer to?

Your LGPS benefits will remain in the Cheshire Pension Fund and these benefits will enjoy cost of living increases. If you join another pension scheme at a later date you can request another transfer quotation. Members are entitled to 1 guaranteed transfer quote within any 12 month period.
What will happen if I do not wish to transfer my previous pension from Cheshire Pension Fund?
If you decide not to continue with the transfer, your deferred LGPS benefits will remain in the Cheshire Pension Fund and these benefits will enjoy cost of living increases. Please indicate your decision on the enclosed option form, and return it to us.

 

What will happen if my option form and my new scheme’s form are not returned to the Cheshire Pension Fund?

Your transfer cannot proceed without the completion and return of these forms to the Cheshire Pension Fund.

 

Is there a time limit on returning the relevant option and authorisation forms?

Yes. A transfer valuation quote is guaranteed for three months. If we haven’t received the completed forms within the timescale we will close our files and will notify you in writing that we have taken this action.

 

If I decide to transfer will I be entitled to any further benefits from the Cheshire Pension Fund?

If a transfer payment is made you won’t be entitled to any further benefits from the Cheshire Pension Fund for yourself, your spouse, civil partner or any benefits for your dependants.

 

I am still contributing to the scheme, can I transfer?

Only members who have left the pension scheme can transfer their accrued benefits from the scheme. If you want to investigate this option you should obtain independent financial advice before you make the decision.

Pension scam warning

The Pensions Regulator has updated it’s guidance on Pensions Liberation. A large number of Companies are singling out pension savers and claiming that they can help them access their pension cash early.

With demand for early access to pension savings on the increase, there is clear evidence that more members of the public are being duped into transferring their funds to rogue pension arrangements.

Pension liberation, also known as ‘pension loans’ and ‘pension scams’, is the transfer of a member’s pension savings to an arrangement that will allow them to access their funds before they are entitled to receive them. This activity can be fraudulent where members are not informed, or are misled, about the consequences of these schemes and can result in a massive tax charge to the unsuspecting member.

To help you, The Pensions Regulator has updated its guidance to include a booklet and a video on the dangers of Pension Liberation and how to spot some of the warning signs.

Pension Scam member booklet

Scamproof your savings