Local Authority Pension Scheme

WHY LOCAL AUTHORITY PENSIONS ARE CONSIDERED VALUABLE

Hundreds of thousands of people from all over the UK were awarded valuable local authority pensions for their service to their country and local communities. Not generally to be sniffed at, these government-backed pensions are often a type of defined benefit pension scheme, offering scheme members the promise of a guaranteed income in retirement, often based on either their final salary, or career average salary, and their length of service.

Unlike many private pension schemes, local authority pensions are set to pay-out to scheme members for their entire life, right the way through retirement, leaving less for members to worry about when it comes to retirement planning.

They also pay out death benefits to spouses or dependents if the scheme member dies before retiring, making them particularly valuable and offering peace of mind.

So why do people transfer local council pensions?

TRANSFERRING LOCAL AUTHORITY PENSION BENEFITS

If a person is considering transferring their local authority pension (often because they have already been told it might be a good idea by a pension review company), they will likely request a transfer valuation; a CETV or Cash Equivalent Transfer Valuation.

As with many final salary schemes, some current and former local authorities did just that, and received a valuation that looked great, making them think that by transferring and re-investing the money, they may get more in retirement.

This could be true! But not without exposing the money to plenty of risk.

When the local authority pension benefits remain with the scheme, the promise of a guaranteed income in retirement remains. Once the money leaves the scheme, it is unlikely that a valid promise of a guaranteed income remains.

The investments market can be a harsh place, and for people who don’t know their way around it, high-risk investments and scams represent some serious pitfalls – ones we’ve sadly seen many people fall into after transferring a local authority pension.

If trying to earn more money for retirement is the only reason for a transfer, then it could be down to negligent pension transfer advice…

NEGLIGENT TRANSFER ADVICE

Of course, there are a few good reasons to transfer from a local authority pension scheme, but these situations are rare. Financial advisers are supposed to follow strict suitability rules and assess each transfer enquiry on a case-by-case basis. They must not allow large fees and commission to influence their decision, advising only in their client’s best interests.

If financial advisers always followed these rules, then few people would transfer away final salary benefits and from other local authority pension schemes.

But each year, tens of thousands of people receive advice to transfer, which often puts their retirements at risk, usually without them realising.

CAN YOU CLAIM FOR A MIS-SOLD PENSION TRANSFER?

If you’re transferred any sort of local authority pension after a free pension review, or on the advice of a financial adviser, then you may have been mis-sold.

We offer a FREE initial assessment for anybody with concerns, although we’re particularly interested in speaking to people who have transferred away from the following local authority pension schemes:

Greater Manchester Pension Fund
West Yorkshire Pension Fund
Merseyside Pension Fund
Strathclyde Pension Fund
West Midlands Metropolitan Authorities Pension Fund