Your pension is worked out when you leave the Scheme and it is calculated on how long you have been a member and your pensionable pay. This pension is left in the Scheme where it will be revalued each year in line with the cost of living, until it starts to be paid. This type of pension benefit is known as deferred benefits. Up until you retire and your pension is paid you have two options:
- you can choose to leave your benefits in the Scheme, or
- you may be able to transfer your deferred benefits to another pension arrangement.
If you defer your benefits the amount held in your active pension account up to your date of leaving is transferred to a deferred pension account and you then have what are known as deferred benefits. The value of the pension in your deferred pension account is held in the Scheme for you until either you decide to transfer the value to another pension scheme, or the deferred benefits are due to be paid at your normal retirement age.
Your personal deferred benefits package consists of an annual pension, payable for the rest of your life, plus an option on retirement to exchange some of this pension for a one-off tax-free lump sum. It also includes life cover and financial protection for your family.
Your deferred benefits will be revalued every year in line with the cost of living until they are due to be paid and each year we will send you an Annual Benefit Statement to tell you the current value of your benefits.
Approximately three months before the date your pension becomes payable, we will write to you with details of your pension and the options available to you.
Recent increases to deferred pensions are set out in the table below:
You can transfer your Scheme benefits to another pension arrangement if you wish. This may even be to an overseas pension scheme or arrangement that meets HM Revenue and Customs conditions. You can only transfer your benefits if you leave more than one year before your Normal Pension Age and have elected for a transfer to proceed at least one year before your Normal Pension Age.
If you have paid Additional Voluntary Contributions (AVCs) arranged through the Scheme (in-house AVCs), you have the following options:
- Transfer out your AVC fund with your main Scheme benefits.
- Transfer out your AVC fund and keep your main Scheme benefits with NILGOSC.
- Transfer out your Scheme benefits and keep your AVC fund with the in-house AVC provider.
Your new pension provider will require a transfer value quotation which, under the Pensions Act 1993, NILGOSC will guarantee for a period of three months from the date of calculation (known as the ‘Guarantee Date’). Your new pension provider can then advise you of the additional benefits the transfer will buy in their scheme. A written option to proceed with the guaranteed transfer value must be received within the three month guaranteed period. If you opt to proceed, the normal time limit for payment of the guaranteed transfer value will be six months from the ‘Guarantee Date’. If payment is not made within this period, NILGOSC will need to recalculate the value as at the actual date of payment and pay the recalculated value or, if it is greater, the original value plus interest.
Transfer values are calculated in accordance with the terms and conditions of the Local Government Pension Scheme Regulations (Northern Ireland) 2014 which comply with the requirements of the Pensions Schemes Act 1993, as amended.
The benefits that you have within the Scheme are known as safeguarded benefits. This means that from 6th April 2015 you are required to take appropriate independent advice before being allowed to transfer your benefits to a defined contribution scheme or personal pension. You must take this independent advice from an advisor who is authorised by the Financial Conduct Authority (FCA) to advise on transfers and NILGOSC must be provided with evidence of the advice.
If the transfer value of all your benefits in the Scheme is less than £30,000 you are not required to formally take advice.
Transfers to public sector schemes usually give benefits that are similar to those in the Scheme, under what are known as Club transfer rules. To qualify for a Club transfer, you must apply for the transfer within 12 months of joining your new pension scheme and must not have had a continuous break of more than five years in active membership of a public service pension scheme.
If you are considering whether to transfer benefits, make sure that you have the full information about the two pension arrangements, i.e. details of what your benefits are worth in the Scheme and details of what your benefits would be worth in the new pension scheme, if transferred. When you compare your options, don’t forget that your Scheme benefits include cost of living increases.
Pension transfers can be complex, so in all cases you may wish to consult an independent financial adviser before making a decision. If you do transfer your deferred benefits to a personal pension plan, stakeholder pension scheme, buy-out insurance policy or to an employer’s money purchase scheme, you will be bearing all of the investment risk which could significantly affect your future pension benefits.
If a full transfer payment is made, you will not be entitled to any further benefits from the Scheme for yourself, your spouse, civil partner, eligible cohabiting partner or eligible children.
Don’t let a Scammer enjoy your retirement
Your pension is one of your most valuable assets and now that you have more choices about what you can do with your savings, scams are becoming more common, more sophisticated and harder to identify. You could lose all your pension savings in a moment, so it is important to be alert to false claims.
The scammers have a variety of tricks to catch you out. They may:
- claim that you can access your pension pot before age 55 – sometimes known as ‘pensions liberation’ or ‘pension loans’
- claim that you can take more than 25% of your pension as cash
- approach you out of the blue over the phone, via text message or in person door-to-door
- entice you with promises of tax loopholes or better returns on your savings
- offer a free pension review, health check or try to lure you in with so-called one-off investment opportunities such as overseas property or renewable energy bonds which often don’t exist or are extremely high risk with low returns.
Check the facts before you make an irreversible decision. A lifetime’s savings can be lost in a moment.
What to do if you think you’re being targeted:
- never be rushed or pressured into making a decision
- check the FCA register of regulated companies at https://register.fca.org.uk/ or the FCA warning list
- seek independent financial advice from a FCA regulated firm
- before you sign anything, call MoneyHelper on 0800 011 3797
- if you have already accepted an offer, call Action Fraud on 0300 123 2040 or report it online at www.ActionFraud.police.uk/
Understand your options by visiting Pension Wise – a service from MoneyHelper or visit http://www.thepensionsregulator.gov.uk/individuals/dangers-of-pension-scams to find out more.