Forces & NHS Pension Changes – A call for action?

Posted on: September 22nd, 2014 by Simon No Comments

From April 2015, many who are employed or were previously employed within the public sector will find all requests to transfer their pensions denied following the Government’s recent changes in legislation surrounding ‘unfunded schemes’.

This means that from April all former members from the NHS, Teachers, Police/Fire Service and Armed Forces, will not get the opportunity to take professional advice on the merits of taking their pensions with them should they choose to move overseas with no intention of returning to the UK.

In August, Chancellor, George Osborne presented a document to parliament confirming that members of other ”funded” public sector defined benefit pension schemes will still be able to transfer their pensions to a defined contribution (DC) scheme after taking professional advice.

However, he then added that those in “unfunded” schemes will be prevented from transferring their pensions to “Protect the exchequer and UK taxpayers”. This ban directly impacts most on former members of the Armed Forces, those who worked for the NHS, Civil Service firefighters, police officers and teachers- all of whom have ‘unfunded’ pension schemes.

“Funded schemes” typically have a physical invested pension fund while “unfunded schemes” are paid from a Government Department’s budget.

These changes may be particularly relevant to those who have served in the Armed Forces who decide to retire overseas.  Having been stationed in various parts of the world on postings, many of the Armed Forces personnel elect to have their retirement years in sunnier climes and would logically seek advice on relocating their pensions overseas together with their other savings and investments. The changes mean that from next year, they simply won’t have the option to take professional advice on this.

Our Head of UK Financial Planning, Kevin White, who specialises in financial planning for ex-forces personnel explains the affect these changes will have on those who have served in the Armed Forces;

‘I deal with a lot of ex-forces personnel who go into the Close Protection and Maritime sector who will move overseas to station themselves in the Middle East or Africa with a view to stay and enjoy retirement abroad. Being denied the option to consider the merits of moving their pension means that they may pay more tax than they need to, have less control than they want and potentially get a smaller Pension Commencement Lump Sum than they might otherwise have had.’ He continues ‘Transferring any pension scheme requires specialist advice, particularly when you are looking at gold plated schemes as the NHS, Armed Forces, Police and Fire Service pensions, but should an individual’s circumstances change and they move overseas, they should have the option to fully review what is the best option for them.

The fact that people who might be affected by this may not have been given the option to take professional advice means that they could find out about these changes after the window has closed.’


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