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Pension Flexibility - Freedom and Choice

The Government has introduced new flexible options for people age 55 years and over who decide to draw their pension benefits from 6 April 2015. These new options include:

  • the ability to take all your pension benefits as a cash lump sum but, only 25% of the total sum is tax free. The remaining 75% is subject to your marginal rate of income tax which can be as high as 40% or 45%.

But the government decided that these new flexible options will not apply to the LGPS. This is because the scheme is classified as a defined benefit pension scheme.

Taking advantage of the flexible options

If you wish to take advantage of these flexible options:

  • then you have the ability to opt out of the LGPS and transfer your LGPS benefits to another pension arrangement that will allow these new options.

are known as defined contribution pension schemes. For further information on these schemes, contact an independent financial adviser (IFA).

If your transfer value is above £30,000:

  • you will have to provide us with written confirmation that you have received independent financial advice

We will need this before being able to release the funds to your new pension provider. You will have to pay the cost of this financial advice.

But there is no need for you to get financial advice for any transfer value up to £30,000.

Please be aware that members of the Cornwall Pension Fund can have:

  • Cash Equivalent Transfer Value quotation (CETV) every 365 days. A second CETV can be produced within this period for a fee of £175.00 plus VAT.

Any application to transfer out must be made no later than one year before your normal pension age.

Further Information

Further information on these options can be found on the Pension Wise website or the Freedom and Choice webpage on the LGPS members website.

With the new flexibilities there is a strong possibility that you may be contacted by criminals trying to cheat you out of your pension. This is commonly referred to as “pension scam” and could result in you losing most or all of your pension fund, or you may be subject to excessive tax charges.

Further information can be found on the Pension Regulator website and the Money Helper website.

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