Transfers

Why transfer a pension?

It’s likely that you’ve paid into more than one pension arrangement throughout your working life. Combining some or all of your pensions can make them easier to manage and bring additional benefits, such as:

– lower costs
– more suitable investments
– additional features that may not be available via the existing arrangement

Once you have transferred a pension, you cannot change your mind. It is important therefore that you have considered all the implications and carried out a proper comparison of both arrangements, before going ahead.

You may be happy to do this and decide on any potential transfer yourself. Alternatively, if you are unsure, we recommend that you discuss your options with a suitably qualified and experienced adviser.

Is your pension suitable to transfer?

Generally, it is fine to transfer a “Money Purchase” pension from one provider to another. These typically include Personal Pensions, Stakeholder Pensions, Defined Contribution Occupational Pensions and most auto-enrolment Workplace Pensions.

It is generally not advisable to transfer a “Final Salary” or “Defined Benefit” pension into a money purchase arrangement, as you will lose valuable guarantees by doing so. There are circumstances where this may be benecifial, but it is a complex area and you should certainly take appropriate advice before doing so. If you have a transfer value from a final salary scheme of more than £30,000, then you MUST take advice before carrying out a transfer.

Can you transfer other pensions into this scheme?

Yes, you can make transfers into this scheme.

If this is of interest, you should first write to your existing provider to obtain the information you need in order to make a proper comparison. The minimum information that you need is:

– current fund value
– current transfer value
– current value on death
– current investment funds & available investment funds
– details of all charges that apply to the policy / investment funds
– details of any guarantees that are contained within the scheme

With this information, you should be able to compare the features and benefits of your existing plan with those in this scheme.

NB: If you are not sure and you feel that you need help or advice in relation to any prospective pension transfer, you should contact a suitably qualified Independent Financial Adviser.

For most people, the main points to consider are:

Simplicity

Many people prefer to combine their pension funds, so that it’s easier to keep track of them. The risk of having “all your eggs in one basket” can be reduced by spreading your investments across a number of funds, or different investment managers, within the same pension arrangement.

Lower charges

Older pensions tend to have higher charges than modern schemes. You may be able to save money year-on-year by transferring funds into a scheme that has lower annual charges. This means that more money stays invested for your benefit.

Transfer penalties

Some policies contain penalties if you transfer-out before the original retirement date. You should check if this applies to you and if so, you should balance this against the potential advantages you may gain, such as lower on-going charges in the new scheme.

Investment choice

You should compare the range of investments offered by your existing scheme and those from the proposed new provider. A choice of investments from well-respected managers means that you should always have suitable funds to choose from as time goes on. Past performance is not a guarantee of future growth.

Contactual guarantees

If you have an older policy it may contain valuable features, such as a guaranteed annuity rate. If so, this could be more generous than the level of income that may be available from a new policy. You need to weigh this up against the potential for higher growth or greater flexibility within a modern contract.

Death benefits

If you die before taking your pension benefits, the full value of your fund is usually available to your beneficiaries. However, with some older polices this may not be the case – in some instances only your premiums will be returned, or there may even be no payment at all.