Local Authority Pensions: Commonly Asked Questions
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On receipt of your signed letter of authority it normally takes between 2 to 3 months. However this is dependant on which Local Authority your pension was with. Some take longer than others to supply the information.
Accessing money from your pension earlier than your normal retirement age is known as unlocking your pension or pension release. Money can be only be released from your LGPS through a transfer to a personal pension. Pension release is unsuitable for the majority of people as taking money from your pension now will result in a smaller income when you come to retirement. However there are numerous reasons why many people release cash.
To gain access and release money from your LGPS pension it has to be transferred into a new pension, called a Flexi Access Drawdown pension with one of the major UK providers. Once the money is transferred to the new pension provider the amount of tax free cash is calculated and paid to you. The remaining fund will then remain invested until retirement or, if required, under the new Pension Freedom & Choice Rules you can even take the entire fund as cash.
Current rules allow you to release a cash lump sum of up to 25% of the value of your accumulated pension funds. This is tax free and is know as a Pension Commencement Lump Sum.
It is possible to release less than the maximum 25% and draw more later. You can also continue to contribute to your pension, which will build up more tax free cash for the future. Under the new Pension Freedom & Choice Rules you can even take the entire fund as cash!
If you want to explore whether you are eligible for pension release then:
- Complete the online enquiry form to confirm you are eligible
- If you are eligible complete the on-line information
- Print off and send us the completed ‘letter of authority’. These are pre-populated from your information input
- We will do the rest!
Once we receive the letter of authority we will contact your LGPS administration department and obtain the current cash equivalent transfer value. We analyse this information and send you a comprehensive report, which contains information on how much cash you are able to release.
To complete the process and obtain your tax free cash you will need to complete discharge forms issued by your LGPS administration department and an application form. Once these have been completed you will receive your cash direct into your nominated bank account.
There is no charge for the work carried out up to issuing your report. Our terms of business which you will need to accept as you go through the enquiry sets out how and when we are paid. The pension provider that will release your tax free cash and hold your remaining funds pays us a fee dependent on the size of your pension fund. This is only paid on completion of the transfer and cash release process. The payment sum is deducted from your remaining pension fund.
No. Our entire process is conducted online, email and via post.
No. The money is already invested in your pension. You are simply accessing it now rather than when you retire. There are a number of web sites offering a loan of up to 50% of your pension value. These are not recognised UK financial products. You are expected to sign over your pension rights which will then go to the lender on death. Clearly it is not advisable to do this as you will receive no income at retirement!
Up to 25% of your pension can be released totally free of income or capital gains tax, even if you are a higher rate tax payer.
No. You are not able to sell your pension fund. Pension release is a way of accessing money which is already yours prior to your normal retirement date.
No. You can continue to work, and even continue to contribute to the pension arrangement.
I still have questions!
If there are any further questions you would like to ask please contact us using the contact us button on the website or call us on 0800 177 7794 and we will reply to any questions or queries you might have.