20th August 2015 by Jessica
Are you part of a UK public sector, defined benefit scheme? Did you miss the deadline to transfer out? All may not be lost!
Transfers from unfunded public sector pensions – including civil service pensions, teachers pensions, the armed forces, and the police and fire services were banned from being transferred into QROPS and other defined contribution schemes when the pension freedoms came into force in April 2015.
Many of those who were part of a public sector scheme were keen to transfer to QROPS following the new flexibility rules and various other benefits, such as mitigating UK income tax liability (subject to where you are resident) and aiding succession planning. But the cut off date was April and if you hadn’t applied before then, you would no longer be able to benefit from the option to transfer.
It has come to light, however, that there is an accidental loophole in the system. Now Public sector pensions have been given new hope and another green light.
Despite the new legislation that came into effect in April and the huge rush to transfer, it has emerged that it is in fact still possible for a transfer to take place.
The loophole suggests that provided the pension goes to a non-occupational QROPS within the European Economic Area that this is sufficient and if the transfer meets this criteria, it may be possible to transfer out.
The government has admitted that this loophole will allow those in public sector schemes to transfer their pension even though the deadline has passed.
However a word of warning – individuals have been urged to act quickly. The Government is of course looking to close it as soon as possible. So the window of opportunity is likely to be extremely short lived!