How to transfer a British Steel pension
In the 1970’s British Steel employed 1.5% of the total workforce of the UK and their pension scheme was unrivalled. Now nearly half a century those workers have passed retirement age but the ones after them in the 80s and 90s are approaching that time but are looking at their options regarding their pension. Many of them get in touch with us to ask whether it is possible to transfer a British Steel pension, and in this guide, you’ll find the answer.
The following topics are covered below…
Can I transfer my British Steel pension?
A British Steel pension transfer has been fairly common in recent years. In 2016 and 2017 the old British Steel pension scheme had a reform.
There were three options given to scheme members…
- Transfer out to a new personal scheme
- Transfer to the new British steel scheme
Any pension not transferred out on, or before, the 26th January 2018 was automatically transferred to the Pension Protection Fund – where you are unable to transfer from. If you decided to transfer into the new British Steel pension scheme you are can now transfer out if you wish.
Should I transfer my pension?
You should think twice before transferring out. You’d be giving up guaranteed future pension income in return for income that is by no means guaranteed and could fluctuate depending on how you manage it. It would be prudent to seek out an expert pension advisor for the best advice for your circumstances. Make an enquiry here and we’ll connect you to one.
How do I find out my transfer value?
The sum of money that you could transfer out is known as a cash equivalent transfer value (CETV) or ‘transfer value’. To find out what the transfer value of your benefits would be, you ask the Pensions Office for a transfer value quote. This quote is valid for a guarantee period, which is normally up to three months.
Where can I transfer my pension to?
With a huge expat community from former British Steel employees in both Australia and Canada, here is some information on British Steel transfers to these former British colonies.
Transferring a pension to Australia
For anyone in the UK wanting to transfer a British Steel pension to Australia, there are key conditions that must be met for the transfer to be approved.
Generally speaking, the most sought-after type of Australian pension scheme is a SMSF (Self Managed Superannuation Fund). If a SMSF meets certain conditions, it will be recognised by HMRC and given QROPS (Qualifying Recognised Overseas Pension Scheme) status.
If an overseas pension plan does not have QROPS, the transfer may be rejected or subjected to a super tax of 40%.
Transferring a pension to Canada
In February 2017, all Canadian QROPS were removed from the HMRC QROPS list. So it is no longer possible to transfer your UK pension to a Canadian domiciled scheme.
Can I transfer to a SIPP?
A SIPP (self invested personal pension) is known now as a DIY (do it yourself) pension. By having a SIPP you are able to invest almost anything you want, making your very own pension choices and managing it yourself over time.
If you do not have the time, you are able to appoint an investment manager as a trustee to run your portfolio as you wish. SIPPs are geared more towards people who understand investments and investing. Having a SIPP is more flexible than having a more traditional pension but there is also more risk and responsibility on you having to make investment choices yourself.
Transfer to a small self-administered pension scheme (SASS)
Transferring your British Steel pension to a small self-administered pension scheme (SASS) could also be an option.
A SSAS is in the main a workplace/company pension scheme. Generally, a SSAS is set up by the company directors for themselves and other key or senior members of staff but can also be open to other employees.
Normally there are no more than 11 or 12 members in a SSAS. Contributions to a SSAS can be made by the individual and/or the company with both benefiting from tax relief.
Usually a SSAS is now the pension of choice for director-controlled companies due to its flexibility and tax breaks.
Transfer to a stakeholder pension (SHP) scheme
It may be possible to transfer you British Steel pension into a stakeholder scheme.
A pension plan that is flexible but aimed at people that are not confident in managing the investments themselves. If you were confident in managing your own investments, you may be better looking into a SIPP.
The other upside of stakeholder pensions in the relatively low costs set out by the government where you can not be charged more than 1.5% per year for the first 10 years and no more than 1% per year thereafter. Due to the simplicity of the stakeholder scheme you generally only have the option of low or low – medium risk investment options.
Get pension transfer advice from an expert
If you have questions about British Steel pension transfers or pensions in general and want to speak to an expert for the right advice, call us today on 0808 189 0463 or make an enquiry here.