What Will a Transfer Provide?
Transferring benefits from another Public Sector pension scheme
Club schemes calculate the period of membership purchased in the new scheme (known as a service credit) by using a set of standard tables that are used by all Club schemes. The Club arrangements also require the new scheme to use the member's salary in the old scheme when calculating the service credit, regardless of any increase on moving.
Where a Club transfers takes place between two Club schemes with identical provisions, the transfer should produce a year-for-year service credit. When the scheme provisions differ, for example if they have different pension ages, a transfer might produce a higher or lower service credit.
A Club transfer is normally beneficial for the member but in some cases this may not be true if you are taking a large pay cut on joining your new scheme or you have substantial benefits in your former scheme and are near to pension age when you join your new scheme with the intention of working beyond your normal retirement age.
You should also bear in mind that not all Club schemes have the same pension benefit structure and qualification for pension scheme and early retirement benefits will depend on the provisions of each scheme's rules.
Transferring benefits from another company, occupational or personal pension scheme
In these circumstances your former scheme will calculate a transfer payment that is the cash value of your pension benefits held in their scheme (known as the Cash Equivalent Transfer Value or CETV). Your former scheme administrators will base this CETV on the rate of pay you were earning at the point that you left their scheme and allow for increases up to retirement, at most in line with prices.
The LGPS as receiving scheme must offer an equivalent value but the service credit is based on your salary at the point you join the LGPS. Other factors are applied which allow for expected salary increases. So even when the two schemes are similar in structure, the result is generally a lower service credit in the LGPS. This is particularly so if you are receiving a higher salary in your employment.
