Grim,
You're right, to an extent. You can transfer in and/or out of AFPS with relative impunity whether or not you have earned an IP/EDP and not just to QROPS (which are being clamped down on hard right now). There are Club transfers and Non Club transfers if you want to consider a more convention onshore route. Club transfers relate to shuffling your 'pot' into another public sector scheme such as NHS, police etc and Non Club, erm.. arent!
You have to have left the service first and there are time limits that apply - bear in mind that the receiving scheme may not want to receive benefits. If you leave now, you can apply for your benefits to be transferred up to a year before they become payable or up to 6 months after leaving Service - there is an age limit if 64 (I'm pretty certain). Your transfer value is also going to be actuarially adjusted (downwards!) by factors such as Bond yields, gender, age etc so if an officer has a final salary 'pot' of say, £500,000, then he/she should not expect a similar amount going across into the new defined contribution scheme.
On the surface of it, getting out of a scheme such as AFPS which faces uncertainty seems a good plan. But there are some serious drawbacks, such as losing a guaranteed value (not always
more, but at least its guaranteed) so there are factors which are taken into account before arriving at a transfer value. However, as far as the FSA is concerned and from a regulatory and compliancy perspective, I would almost have to place on file a note from the client's doctor declaring him/her insane if I ever advised transfering out as an appropriate course of action. And
then, the FSA would ask me why I engaged with an insane client!
There are plenty of financial services organisations out there which would simply transact the transfer business and run. My default setting would always be not to and argue it from there. However ropey AFPS is looking, however increasingly diluted the benefits seem to be these days (and I can see
many very vital, valid and valuable reasons for diversifying retirement investment options as soon as possible - especially for younger servicemen and women), AFPS should remain at the core of the overwelming majority of any retirement funding strategy.
http://www.mod.uk/NR/rdonlyres/5908B...ngbenefits.pdf
Ministry of Defence | About Defence | What we do | Personnel | Armed Forces Pensions Compensation and Veterans | How to transfer benefits in and out of the Armed Forces Pension Schemes
As ever, take properly authorised and regulated advice that you trust before taking such a large step.
Edit - A SIPP is useful if you want to diversify into more esoteric investments or if you want to, for example, buy a business property but a common or garden type Personal/SH pension is just as valuable - and cheaper - for most people and they usually have more than enough investment options, functionality and sophistication. You can always trade up into a SIPP when/if your fund size/personal needs warrants it. The underlying investment is the most important thing to address - ABC Fund which is performing in a certain way in a SIPP is identical to how ABC Fund performs in a Personal pension.