“It is absolutely essential, when considering a pension transfer, that the correct assessment has been carried out on your existing pension. You will also need a review of the pension product or wrapper to which you are moving.”
Gareth Flanagan, Principle First Financial Advisers
Pension Transfers
Transferring a pension is a complex task. We strongly recommend to our customers that they take pension transfer advice from one of our qualifed experts, before making any decision.
For some customers, certain hidden aspects of their current pensions situation may mean that not making a pension transfer is the best option. Each situation is different, depending on the structure of your existing pension, your age, and the additional benefits included in your pensions deal. Everybody’s situation is different.
Why not let one of our experts give your pension a free, no-obligation review today.
Click here now for Pensions Advice or call 0800 678 5929
There are two common situations in life when transferring a pension may become a consideration.
Pension transfer might be considered when moving job from one company to another.
It could also be considered by those prudent enough to work with their financial adviser to monitor the performance of their current pension fund, and who have identified that it is performing below par. Shifting to a better-performing fund in this situation could improve your retirement income by thousands of pounds a year.
In either case, transferring a pension is a complex and risky issue, and one which should be contemplated only with good pension transfer advice by a qualified specialist.
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In considering whether transferring your pension would leave you better off than before, the first step is to request a ‘transfer value analysis’ from your pensions adviser. As this is a complex and time-consuming calculation, there may well be a fee to pay - but it will be money well spent.
If you currently have an occupational or company ’salary-related’ or ‘defined benefit’ scheme, you should be particularly wary of transferring your pension. These schemes do, after all, have a built-in guarantee of a fixed pension income, which you are unlikely to find in another type of scheme. Bear in mind that the income from many other pension schemes will depend on how the investments of your savings perform, so that you lose your guarantee of a certain level of income – and you would, in effect, transfer the investment risk from the scheme on to yourself. If you do decide to transfer, however, the benefits you have in the scheme will be converted into a monetary figure known as a ‘cash-equivalent transfer value’, which you must then invest in your new scheme.
You should also check the financial position of your current scheme. If it is in surplus, i.e. has more cash in the fund than liabilities, it may well be worth considering freezing your pension and leaving it there.
If, however, the results of the transfer value analysis give you the go-ahead, and you decide to make the transfer, there are also a number of regulatory issues to be considered. Primarily, you should decide when you want to retire. If you are planning on early retirement, it is worth checking if your new scheme would facilitate your requirements.
Click here now for Pensions Advice or call 0800 678 5929
In general, you should certainly be very cautious in looking at pension transfer into a private scheme, if any of the following applies to you:
- if you are in an occupational pension where both you and your employer are contributing
- if you are in a public sector pension scheme (e.g. the nurses’ or teachers’ scheme) or a ‘pseudo-public sector’ scheme (e.g. the Water scheme), as these offer generous benefits unlikely to be found elsewhere
- if you are in a ‘defined benefit’ scheme such as mentioned above, where your retirement income is guaranteed, as private schemes generally have no guarantee and are relatively risky
- if your pension scheme includes death benefits
- if your current scheme has only a small amount accrued, as the costs of transfer are considerable
- if you have less than 10 years left before retirement
In all these situations, a consultation with a qualified financial adviser is a wise, and even essential, precaution.
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