Section 6: Transferring Scheme Benefits

6.1 Information common to both Transfer In and Out

6.1.1 What Transferring Means

6.1.2 Eligibility

6.1.3 The responsibility of the Employer

6.1.4 Transfer Tables

6.1.5 Advice

6.2 Transferring in to the HSC Pension Scheme

6.2.1 Types of Transfer In

6.2.2 Time Limits & Procedures for Transferring In

6.2.3 Guaranteed Minimum Pension (GMP) Liability

6.2.4 Issues Affecting Membership Credit

6.2.5 Practitioner

6.2.6 Member leaves / opts out before the transfer is

6.2.7 Interest

6.3 Transferring Out of the HSC Pension Scheme

6.3.1 Types of Transfers Out of the HSC Pension Scheme

6.3.2 Transfer Out Process

6.3.3 Free Standing AVC

6.3.4 Hypothetical transfer values

6.1 Common to Both Transfer IN and OUT

6.1.1 What Transferring Means

The portability of pensions means that when members come to retire, their benefits can be held in one fund. HSC Pension Scheme can accept transfers from or to most pension schemes, although there are different types of transfer.

A transfer value is a single payment from or to the HSC Pension Scheme and is paid by/paid to another pension scheme or arrangement. The transfer value is converted into pensionable service, (or pensionable pay in the case of a practitioner) which is added to accrued service and therefore reckons for all benefits in the HSC Pension Scheme.

6.1.2 Eligibility

There are time limits to transfer from or to the HSC Pension Scheme; these are detailed in section 6.2 and 6.3.

Transfers completed on or after 6th April 2006 must be from one of the HMRC registered pension scheme to another. A transfer between two registered pension schemes is called an authorised transfer, also known as a recognised transfer, and no tax charge applies to these transfers.

6.1.3 Responsibilities

The HSC Pension Service, employers and employees have specific responsibilities when dealing with transfers from and to the HSC Pension Scheme. These are listed below and must be adhered to.

Employer Responsibilities

It is essential that member’s pension records are kept up to date and necessary forms, in particular, termination documents are completed in full and submitted to HSC Pension Service timeously. It is also crucial that employers respond to requests for information timeously.

Employers should also make the member aware of their rights to transfer immediately on joining the HSC Pension Scheme by providing the member with the appropriate New Joiner Questionnaire which has a link to the Scheme Guide and Transfer Guide.

HSC Pension Service Responsibilities

On receipt of a transfer request HSC Pension Service is required to ensure that all information pertinent to the transfer value calculation is obtained, received or issued and the appropriate action is taken within specific timeframes, including updating the member’s record.

HSC Pension Service is obliged to acknowledge a transfer out request within 20 days and is also obliged by the Pensions Act 1995 to supply transfer out information within 3 months of the request.

Employee Responsibilities

The employee is required to request a transfer in or out of the HSC Pension Scheme within the required timescales as detailed in paragraphs 6.2 and 6.3 and provide the necessary information as required.

6.1.4 Transfer Tables

The HSC Pension Scheme, along with other Public Sector schemes, base all transfer calculations on standard factor tables provided by the Scheme Actuary and there are separate tables for men and for women. All pension schemes must now provide a transfer value based on converting the value of a member’s pension rights to a current cash equivalent value.

The member will receive pensionable service strictly in accordance with the actuarial assessment of what that transfer value will buy when transferring to another scheme.

6.1.5 Advice

Unfortunately, HSC Pension Service is unable to offer advice and recommends that independent advice is sought by the member should there be any doubt as to whether a transfer is their best option.

There is no pressure on the member to transfer their benefits even if an enquiry has been made. There is no obligation by the member to complete the transfer in once they have received their estimated pensionable service credit from HSC Pension Service.

However, HSC Pension Service cannot cancel a transfer from the HSC Pension Scheme to another pension provider once payment has been sent to the new scheme. Equally, HSC Pension Service cannot cancel a transfer in once payment has been received.

Scheme members may wish to seek financial advice before deciding on whether to transfer their benefits. HSC Pension Service cannot offer any advice, however, the following organisations provide information which may be of help:

The Financial Conduct Authority at http://www.fca.org.uk/ or contact:

The Financial Conduct Authority

25 The North Colonnade

London

E14 5HS

The Pensions Regulator at www.thepensionsregulator.gov.uk or contact:

The Pensions Regulator

Napier House

Trafalgar Place

Brighton

BN1 4DW

The Pensions Advisory Service at www.pensionsadvisoryservice.org.uk or contact:

The Pensions Advisory Service

10 South Colonnade

Canary Wharf

London

E14 4PU

6.2 Transferring in to the HSC Pension Scheme

6.2.1 Types of Transfer IN

There are different types of pension schemes that can be transferred in to the HSC Pension Scheme. These are as follows. However, HSC Pension Service cannot cancel a transfer in for which payment has been received.

Health Service Schemes outside Northern Ireland

If a member has been working for the HSC Schemes for England & Wales, Scotland or Isle of Man, they may wish to transfer these benefits to the HSC scheme in Northern Ireland.

Public Sector Transfer Club

These are public and private sector occupational pension schemes, like the HSC Pension Scheme, who are all members of the Public Sector Transfer Club, also known as “the Club”. Other examples of Club schemes are the Local Government Pension Scheme, Civil Service Pension Scheme and Teachers’ Pension Scheme. All schemes within the ‘Club’ calculate transfer values based on standard factor tables and guidance provided by the Scheme Actuary.

Non Public Sector Transfer Club

Any pension providers who are not employees of the ‘Club’, are known as ‘Non-Club Schemes’ and include other occupational pension schemes, Section 32 Buy-Out Private Personal Pensions administered by insurance companies, banks etc. and contracted out/in money purchase schemes. Qualifying Recognised Overseas Pension Schemes (QROPS)

HSC Pension Service can only consider a transfer from an overseas pension scheme which is classed as a Qualifying Recognised Overseas Pension Scheme, approval for which is granted by HMRC (see www.hmrc.gov.uk for more information). HMRC will issue the scheme with an acceptance letter, a copy of which must be provided before any request for an overseas transfer can be considered. Transfer in payments must be made in Pounds Sterling for non EEC countries. Euros are acceptable for EEC employees.

6.2.1 Time limits & Procedures for Transferring IN

There are specific time limits for requesting a transfer in to the HSC Pension Scheme depending on the type of the previous pension scheme and the date that the member joins or re-joins the HSC Pension Scheme.

Health Service Schemes outside Northern Ireland

There is no time limit to transfer in from another HSC scheme. Once requested, the transfer in is automatic and the member will not be given an estimate. HSC Pension Service will request the transfer in information from the former HSC scheme and send the member an acknowledgement letter. However, the member must (1) be under normal pension age at the time of transfer request, (2) have more than 2 years qualifying membership with the other HSC Scheme and (3) have not incurred a disqualifying break of 12 months between the previous pensionable employment and the current pensionable employment.

If the member has an AVC or Additional Pension (AP) arrangement with another HSC Scheme and wishes to continue this then they are advised to transfer in as soon as possible in order to avoid an arrears situation. The member will inform PSSC accordingly through the New Employee Joiner Form, who will be responsible for implementing the continuation of the AP or Added Years contract and contacting the member to arrange collection of any AP arrears which may be due. In the case of Free Standing AVC’s (FSAVC) under the scheme’s money purchase arrangement, employees are required to arrange continuation of payment with the Standard Life Assurance Society. (www.standardlife.co.uk). A transfer in is not possible if the FSAVC incorporates contributions to contract the member out of State Second Pension (previously SERPS). There are no time limits involved; however, the AVC fund cannot be transferred to the HSC Pension Scheme for conversion into a main scheme membership credit.

The transfer in procedure can take up to 4 months and once complete HSC Pension Service will inform the member of the actual pensionable service credit transferred.

If the transfer in is from the 1995 section of an HSC scheme outside Northern Ireland and the member is in the 1995 scheme in HSC Northern Ireland then this transfer credit will usually be on a like for like basis. The same will apply if the transfer in is from the 2008 section of an HSC scheme outside Northern Ireland and the member is in the 2008 scheme in Northern Ireland.

If the transfers are from differing sections then the service credit will not result in a like for like transfer in. In such cases HSC Pension Service will send an estimate to the member seeking permission to progress with the transfer in.

Public Sector Transfer Club

A member has 12 months from joining or re-joining the HSC Pension Scheme to request a transfer in from a Public Sector Transfer Club scheme.

Where the member joins or re-joins the HSC Pension Scheme and has more than one consecutive pensionable employment, the 12 months’ time limit will apply from the commencement date of the first pensionable employment.

HSC Pension Service will request a transfer in value from the former Club scheme and send the member an acknowledgement letter. Once a transfer in value is received HSC Pension Service will calculate a service credit and send the member an estimate of this credit along with options forms to be completed and returned.

If the member elects for the transfer in to go ahead HSC Pension Service will request payment from the former scheme and when payment is cleared an award calculation is carried out. The member will then be sent a letter from HSC Pension Service confirming the service credit and the completion of the transfer in.

The member’s age, gender and pensionable pay that the former scheme used in their transfer calculation will be used in HSC Pension Service’s calculation. ‘Club’ calculated transfer values are based on standard factor tables and guidance provided by the Government Actuaries Department (GAD).

Non Public Sector Transfer Club

A member has 12 months from joining or re-joining the HSC Pension Scheme to request a transfer in from a Public Sector Transfer Club scheme. Where the member joins or re-joins the HSC Pension Scheme and has more than one consecutive pensionable employment, the 12 months’ time limit will apply from the commencement date of the first pensionable employment.

On receiving a transfer request, HSC Pension Service will send a Transfer In Application letter to the member, which includes:

a mandate which the member is required to sign which gives HSC Pension Service permission to deal with the former provider.
personal details from the member such as marital status and contact numbers.
details of all pensions that the member wishes to transfer and contact details of the former providers.
form B, which has to be completed by the employee’s current Payroll department stating the member’s salary at date of joining the HSC Pension Scheme and returned to the member timeously.

The member is required to return the Transfer In application forms to HSC Pension Service who will request a transfer value from the former provider. Non club transfers can be complex as former providers may issue a 3 month guarantee from the date of their calculation. On receipt of these details, HSC Pension Service is required to contact the Contracted Out Employment Group (COEG) for any transfer that has ‘Protected Rights’, which is the SERPS element of the pension.

A Guaranteed Minimum Pension (GMP) figure is also required as this is used in the calculation.

When HSC Pension Service has all the relevant information a transfer in value is calculated and an estimate provided to the member along with options forms asking them if they wish to go ahead with the transfer in. The member must make a decision and is recommended to consult an IFA and/or Staff Benefits representative before returning the options forms.

If the transfer in is to go ahead HSC Pension Service will then request payment from the former pension provider before the end of the guarantee date. This is a very tight schedule to meet within 3 months and in some cases pension providers will only allow one calculation each 12 months. If the guarantee date is not met then the member would then need to wait a further 12 months and the calculation would then be based on their current salary which would not be beneficial to the member.

When a payment is made by the former provider an award calculation is processed by HSC Pension Service, who will then send a letter to the member confirming the pensionable service credit and confirmation that the transfer is now completed.

For transfers from a Non-Club scheme, calculations are based on the member’s age, gender and salary at start date. A test is undertaken by HSC Pension Service to ensure the GMP is not more than the transfer value.

Qualifying Recognised Overseas Pension Schemes (QROPS)

A member has 12 months from joining or re-joining the HSC Pension Scheme to request a transfer in from a QROPS. Where the member joins or re-joins the HSC Pension Scheme and has more than one consecutive pensionable employment, the 12 months’ time limit will apply from the commencement date of the first pensionable employment.

On receiving a transfer request, HSC Pension Service will send a Transfer In Application letter to the member, which includes:

a mandate which the member is required to sign which gives HSC Pension Service permission to deal with the former provider.
personal details from the member such as marital status and contact numbers.
details of all pensions that the member wishes to transfer and contact details of the former providers.
form B, which has to be completed by the employee’s current Payroll department stating the member’s salary at date of joining the HSC Pension Scheme and returned to the member timeously.

The member is required to return the Transfer In application forms to HSC Pension Service who will then request a transfer value from the former provider. QROPS transfers can be complex as former providers may issue a 3 month guarantee from the date of their calculation. On receipt of these details, HSC Pension Service is required to contact the Contracted Out Employment Group (COEG) for any transfer that has ‘Protected Rights’, which is the SERPS element of the pension. A Guaranteed Minimum Pension (GMP) figure is also required as this is used in the calculation.

When HSC Pension Service has all the relevant information a transfer in value is calculated and an estimate provided to the member along with options forms asking them if they wish to go ahead with the transfer in. The member must make a decision and is recommended to consult an IFA and/or staff benefits representative before returning the options forms.

For transfers from a QROPS, calculations are based on the member’s age, gender and salary at start date. A test is undertaken by HSC Pension Service to ensure the GMP is not more than the transfer value.

Joining the HSC Pension Scheme

If a member joined the 1995 Section of the HSC Pension Scheme before 1st April 2008 the member should have requested a transfer of pension benefits from their former pension provider within 12 months of joining the scheme and be under age 60 at the time the request is made. If the transfer in is from the 1995 section of an HSC scheme outside Northern Ireland and the member is in the 1995 scheme in HSC in Northern Ireland then this transfer credit will usually be on a like for like basis.

If the member joined the 2008 Section of the HSC Pension Scheme on or after 1st April 2008 the member should have requested a transfer within 12 months of joining the scheme and be under age 65 at the time the request is made. If the transfer in is from the 2008 section of an HSC scheme outside Northern Ireland and the member is in the 2008 scheme in HSC Northern Ireland then this transfer credit will usually be on a like for like basis.

If the transfers are from differing sections then the service credit will not result in a like for like transfer in. In such cases an estimate will be sent to the member seeking permission to progress with the transfer in.

If the member is approaching their normal retirement age it is important that HSC Pension Service receives the transfer details before the member reaches normal retirement age; the transfer cannot be completed if the member is over normal retirement age at the time the request is made.

If the member has not previously been a member of the HSC Pension Scheme, they will receive a New Joiner Questionnaire from their employer. This form will have a link to the Transfer Pack which will ask them if they have any pensions from former providers that they wish to transfer in to HSC Pension Scheme.

The Options form must be completed and returned to HSC Pension Service within 12 months of joining the scheme. Alternatively, the member can write to HSC Pension Service to request a transfer in, stating the name of their former pension provider. This must be done within 12 months of joining the scheme.

Re-joining the HSC Pension Scheme

If a member re-joined the HSC Pension Scheme before 1st October 2008 after a break in scheme membership, the member must request a transfer of pension benefits from their former pension provider within 12 months of joining the scheme and be under age 60 at the time the request is made.

If the member re-joined the scheme on or after 1st October 2008 after a break in scheme membership of five years or more the member must request a transfer within 12 months of joining the scheme and be under age 65 at the time the request is made.

When a member re-joins the HSC Pension Scheme, they must request a transfer in by writing to HSC Pension Service within 12 months of re-joining the scheme.

If the transfer in request is from another non HSC Registered Occupational Pension Scheme and is not covered under the Club, Non-Club or QROPS schemes and is not completed within 12 months of joining, HSC Pension Service will base any calculations on age, salary and factors provided by the Scheme Actuary on the date payment is received. However, consideration will be given where HSC Pension Service is responsible for any delays in the transfer process.

If time limits are not met

If the transfer in request does not meet the time limits, the request will not be accepted. However, if it is confirmed that the member has been denied access to, or information about the HSC Pension Scheme, then exceptionally, HSC Pension Service may be able to allow a late request. HSC Pension Service will check with the employer to ensure that the member was issued with a Guide to the Scheme when they commenced HSC employment.

There is provision in the regulations for HSC Pension Service to allow discretion to extend the time limits, but this can only be used in exceptional circumstances.

6.2.3 Guaranteed Minimum Pension (GMP) Liability

GMP liability means that a scheme must guarantee to pay a pension at least equal to, or greater than, that the member would have received had they been contributing to the State Second Pension.

If the former scheme was ‘Contracted Out’ of State Second Pension, the HSC Pension Scheme will accept their liability for the GMP. However, if the scheme was Non-Club, HSC Pension Service will undertake a test to ensure that the transfer in offered is more than the annual GMP liability with the former scheme. HSC Pension Service cannot accept the transfer in if it is not.

6.2.4 Issues Affecting the Membership Credit

Employee’s transferring in may find that the membership credit in the HSC Pension Scheme bears no resemblance to the membership in their former scheme because of the difference in benefits payable by the HSC Pension Scheme.

The most common reasons for reduced membership credits on transferring are:

where a female member’s previous pension scheme did not provide widower’s cover entitlement on all previous membership;
where any period of previous membership provided for a lesser lump sum than the 3/80 given by the HSC Pension Scheme 1995 Section;
where the previous pension scheme made retirement benefits payable at a normal retirement age later than the HSC Pension Scheme.

If a member is transferring benefits from another scheme into the 2015 HSC Pension Scheme they will be attributed with a pensionable earnings credit. This credit will normally be associated with the member’s first Scheme year’s actual pensionable earnings and used to calculate the amount of pension they have built up in that year.

6.2.5 Practitioner

Where a practitioner joins the HSC Pension Scheme with practitioner pensionable employment only the payment will be adjusted and credited as practitioner pensionable pay rather than as years and days service. The member will receive a qualifying membership credit based on the membership served in the previous scheme.

When a member joins the HSC Pension Scheme and has concurrent practitioner/non practitioner membership and both start on the same date, the member will be asked to decide between a non- practitioner membership credit and additional practitioner pay.

6.2.6 Member Leaves / Opts out before the Transfer In is Complete

If payment has been received prior to the member leaving or opting out of HSC pensionable employment, the transfer in will continue. If the transfer in is at the estimate stage at the time of the member leaving, the member can choose to continue with the transfer, however, if the member is opting out of the HSC Pension Scheme the transfer in will be cancelled.

6.2.7 Interest

If a transfer in is not paid by the previous pension scheme provider within 6 months of the member’s request, the former scheme is liable for payment of interest and should include this with the transfer payment. Any interest will be excluded from the transfer in value from a ‘Club’ scheme but will be treated as part of the transfer value where the transfer is from a ‘Non-Club’ or QROPS scheme.

6.3 Transferring out of the HSC Pension Scheme

6.3.1 Types of Transfer Out of the HSC Pension Scheme

There are different types of pension schemes that can be transferred out of the HSC Pension Scheme. These are as follows:

Health Service Schemes outside HSC Northern Ireland

If a member has been working for HSC Northern Ireland they may wish to transfer these benefits to the HSC Schemes for England & Wales, Scotland or Isle of Man.

Public Sector Transfer Club

Non Public Sector Transfer Club

Any pension providers who are not employees of the ‘Club’, are known as ‘Non-Club Schemes’ and include other occupational pension schemes, Section 32 Buy-Out Bond policies, personal pensions administered by insurance companies, banks etc. and contracted out/in money purchase schemes.

Qualifying Recognised Overseas Pension Schemes (QROPS)

HSC Pension Scheme can only consider a transfer to an overseas pension scheme which is classed as a Qualifying Recognised Overseas Pension Scheme (QROPS), approval for which is granted by HMRC (see www.hmrc.gov.uk for more information). HMRC will issue the scheme with an acceptance letter, a copy of which must be provided before any request for an overseas transfer can be considered. Transfer in payments must be made in Pounds Sterling for non EEC countries. Euros are acceptable for EEC employees.

There are specific time limits for requesting a transfer out of the HSC Pension Scheme depending on the type of the new pension scheme.

HSC Pension Service is obliged by the Pensions Act 1995 to supply transfer information with 3 months of the request. It is crucial that employer’s respond to requests for information timeously.

Health Service Schemes outside HSC Northern Ireland

There is no time limit to transfer out to another HSC scheme outside Northern Ireland provided the member joined within one year of leaving the HSC Pension Scheme. HSC Pension Service will try to meet any request for a transfer out but would expect an application to be received no later than 6 months prior to the employee’s normal retirement age.

If the transfer out is to England, Wales or Scotland, HSC Pension Service will pay the transfer out value immediately using standard factor tables at the date the transfer out request was received. The receiving scheme credits the member with exactly the same period of membership, including any with Mental Health Officer (MHO) status that they had with the HSC Pension Scheme Northern Ireland. (With the exception of employee’s transferring deferred benefits, who joined the HSC Scheme Post October 1st 2008 who had more than a 5 year break in membership before transferring. This will be completed on a Non Club basis).

HSC Pension Service will notify the receiving scheme of the membership being transferred out by sending them a membership statement. HSC Pension Service will also send the receiving scheme copies of any continuing elections to purchase additional pension (AP) or additional voluntary contributions (AVCs).

If the transfer out is to the Isle of Man, the receiving scheme will receive a transfer out value quote, together with a membership statement and copies of any continuing contracts to purchase additional pension (AP), or Additional Voluntary Contributions (AVCs). If a request for payment is received via the option form within the 3-month guarantee period, HSC Pension Service will pay the guaranteed amount shown on the provisional letter.

If it is received outside the 3-month guarantee period HSC Pension Service recalculate the transfer out value at the date the request for payment was received and pay that amount to the new scheme.

For transfer purposes HSC Isle of Man is also a QROPS as it is subject to different tax laws.

Public Sector Transfer Club

If a member has at least 2 years scheme membership they can apply for a transfer out at any time before their normal retirement age. Employees should note that although HSC Pension Service has no time limits for transferring out benefits, their new provider may have time limits to transfer benefits into their scheme.

If a member has less than 2 years scheme membership they must join their new pension scheme within 12 months of leaving the HSC Pension Scheme and must apply for a transfer within 12 months of joining their new scheme.

HSC Pension Service will try to meet any request for a transfer out but would expect an application to be received no later than 6 months prior to the employee’s normal retirement age.

Non Public Sector Transfer Club

HSC Pension Service will try to meet any request for a transfer out but would expect an application to be received no later than 6 months prior to the employee’s normal retirement age.

Qualifying Recognised Overseas Pension Schemes (QROPS)

If a member has at least 2 years Scheme membership they can apply for a transfer out at any time before their normal retirement age. Employees should note that although HSC Pension Service has no time limits for transferring out benefits, their new provider may have time limits to transfer benefits into their scheme.

HSC Pension Service will try to meet any request for a transfer out but would expect an application to be received no later than 6 months prior to the employee’s normal retirement age.

A transfer out application should be received from the new pension arrangement/ provider. This gives HSC Pension Service important information about the scheme the benefits are transferring to, as well as confirming that the scheme is able to accept transfers from the HSC Pension Scheme.

If the HSC employer has not informed HSC Pension Service that the member has left the HSC Pension Scheme HSC Pension Service will contact them accordingly. HSC Pension Service will request leaver details as well as the pensionable pay to be used in the calculation of the transfer out value.

If the member has scheme membership prior to 6th April 1997, HSC Pension Service will also need to write to HMRC for the GMP figure if this is not already held, as this forms part of the transfer out value calculation.

6.3.2 Transfer Out Process

When all required information has been received, HSC Pension Service calculate the transfer out value by converting the value of the member’s pension rights to a current cash equivalent value in accordance with the HSC Pension Scheme regulations, using factors and guidance provided by the Scheme Actuary.

After calculating the member’s benefit entitlement, (including any additional benefits purchased), HSC Pension Scheme will take account of any cost of living increases, any GMP liability, and any adjustment for market conditions (AMC) at the time of the transfer calculation. The AMC changes each month and is calculated at the beginning of each month from the figure published in the Financial Times.

Pensions increase (PI) is applied to the transfer out value to take account of any changes in the ‘cost of living’ from the date the member left the HSC Pension Scheme to the date the transfer out value is calculated.

Details of the provisional transfer out value are sent to the new scheme with an options form – this is a discharge form that must be completed by the member and their new scheme if they wish the transfer out to proceed. The transfer out value is guaranteed for 3 months in accordance with the Pensions Act 1995. (QROPS should not be guaranteed for 3 months, however, HSC Pension Service apply this administratively).

If the option form is returned within 3 months, HSC Pension Service will pay the provisional amount quoted on the estimate. If the option form is returned outside the 3-month guarantee period HSC Pension Service will recalculate the transfer out value and pay the new amount to the receiving scheme.

6.3.3 Free Standing AVC

If HSC Pension Service records show that the member has a FSAVC, HSC Pension Service will notify the FSAVC provider of any transfer of benefits to a new pension scheme.

6.3.4 Hypothetical Transfer Values

A hypothetical transfer value for information only can be sought but cannot be guaranteed. A member is only entitled to one free hypothetical transfer value per 12-month period however any additional requests can be provided at a charge of £408. Hypothetical transfer values must not be used for divorce purposes. HSC Pension Service will provide details of the transfer out value but no discharge forms.