Transferring a Pension to a New Provider
If you’re looking into a pension transfer to another provider this article will provide the information you need before starting the process.
We work with a number of specialists who will find you the most suitable pension provider to transfer your old pension to, and they can compare schemes in order to offer you the most competitive deal and find the best pension provider to transfer to.
In this article we will look at how to transfer one pension to another providers and answer the following questions:
- Can I transfer money from one pension to another?
- Can I transfer part of my pension to another provider?
- Should I transfer my pension from one provider to another?
- Will I lose my pension benefits if I transfer my pension fund to another provider?
- How do I transfer my old pension to a new provider?
- Is it worth transferring one pension to another?
- Where can I transfer my pension to?
- Can I transfer my pension to an overseas scheme?
- Should I transfer out of a defined benefit pension scheme?
- Can I transfer out of an ‘unfunded’ public sector pension scheme?
- Why speak to an expert to compare pension transfer providers?
Can I transfer funds from one pension to another?
Depending on the type of pension scheme you’re enrolled in, transferring money from one pension to another is usually possible up to a year before you are expected to start drawing retirement benefits, and also at the point of retirement.
In some instances it’s even possible to transfer to a new pension provider after you have started to draw retirement benefits.
Can I transfer part of my pension pot to another provider?
While not every pension provider will allow a part transfer, since the introduction of ‘pension freedoms’ in 2015, it is more commonplace.
Check with your current and potential new provider to find out if they accept partial pension transfers or alternatively, we can put you in touch with a pensions expert to answer any questions.
Should I transfer my pension from one provider to another?
There are a number of scenarios where you might want to transfer a pension to another pension provider, such as:
- You want to combine pensions pots to simplify your pensions.
- You want to reduce your costs and fees.
- You want a higher income from your pension.
- You want more investment choice.
- Your pension scheme is shutting down.
- You want or need different pension options to those offered by your current provider.
- Your pension provider doesn’t have access to the recently introduced Pension Freedoms.
- You’re moving abroad and want to switch to a scheme in your new home territory.
- The pension is in a fund that involves more risk than you’re comfortable with (or, indeed, not enough).
- Your pension is not performing as well as schemes elsewhere.
Will I lose my pension benefits if I transfer my fund to another provider?
There are some potential risks of pension switching to be aware of, such as:
- You might be charged transfer fees.
- You might lose any guarantees or additional benefits provided by the original scheme, e.g. death benefits or a guaranteed annuity rate (GAR).
- Your pension provider could apply a substantial penalty if you transfer your pension pot to another provider.
- You might forfeit early access to your pension if you had a protected retirement age of below 55.
- If you change your mind there is a 30-day cancellation period, but your original provider may not accept your funds back.
How do I transfer my old pension to a new provider?
If you’re thinking of transferring funds from one pension to another, firstly ask your scheme administrator or pension provider what the cash equivalent transfer value (defined benefit schemes only) is – the amount your pension pot would be worth if you moved to a different provider – and for a Statement of Entitlement.
The Statement of Entitlement sets out details of the transfer value and provides the new scheme with the details required for facilitating the transfer.
The transfer value from a defined benefit scheme is only guaranteed for up to three months – if you don’t start the transfer process within that time frame the actual amount transferred may be higher or lower than the amount laid on in the Statement of Entitlement.
The transfer value from a defined contribution scheme may fluctuate depending on any change in value of the investments held in your pension scheme.
We advise you seek financial advice from the pensions experts we work with or make an enquiry here, before transferring from one pension to another. In fact, this is a legal requirement for defined benefit schemes worth more than £30,000.
Is it worth transferring one pension to another?
If you’re looking for a better retirement, there can be some valuable benefits to be had when you transfer funds from one pension to another:
- Consolidating multiple pension pots gives a clearer overview of your investments and pension value.
- Less admin and paperwork to contend with – everything is in one place.
- Transferring a pension to another provider has the potential to provide greater returns on your investments.
- The cost of fees may be reduced.
- Transfer fees are usually avoidable if the transfer value is the same as the value of your pension pot.
- The link to trail commission – the annual payment made to the financial adviser who set up your pension – will usually be cut upon transferring your pension pot to another provider – this will be payable to the new advisor (if there is one).
Where can I transfer my pension to?
You can transfer money from one pension to another in a number of ways, such as into:
- A new employer’s workplace pension scheme.
- A personal pension scheme.
- A self-invested personal pension (SIPP).
- A stakeholder pension (SHP) scheme.
What is the best pension provider to transfer to?
This depends entirely on your needs, circumstances and what you hope to achieve by transferring.
It is important to get the right advice when looking into transferring one pension into another, as transfers are not accepted by all personal or employer pension schemes, or SIPPs, and you will need to compare the market to find the provider who is offering the best deals and incentives for somebody with your exact profile.
Whichever route you decide to go down, we can put you in touch with the pension experts we work with for the right advice – contact us for a no-obligation chat.
How do I compare pension transfer providers?
There’s no need to do all of the legwork yourself, and indeed, doing so comes with the risk of missing out on the best deals if you don’t have access to the entire market.
The independent pensions advisors we work with have whole-of-market knowledge and can compare deals on your behalf before introducing you to the best pension transfer provider for your needs and circumstances. Make an enquiry here and we’ll connect you to one of them today.
Can I transfer my pension to an overseas scheme?
If you want to transfer from one pension scheme to another that is overseas, you can do so if the new scheme is a Qualifying Recognised Overseas Pension Scheme (QROPS).
The transfer will function in the same way as a UK-to-UK transfer unless it includes contracted-out benefits, in which case there will be extra steps for the UK scheme to go through.
We advise seeking expert advice for overseas pension transfers – why not make an online enquiry today?
Should I transfer out of a defined benefit pension scheme?
There are pros and cons to transferring your pension out of a defined benefit (salary-related) pension scheme, although in most cases you are likely to be worse off, even with any incentives offered by your employer.
What incentives might an employer offer to transfer?
Your employer may offer you a variety of incentives to transfer out of your defined benefit scheme, such as:
- A cash payment in addition to the transfer value.
- ‘Enhanced transfer value’ – an increase in the transfer value of your pension scheme benefits.
It is worth noting that tax is payable on any cash incentive and the amount of pension you receive will be reduced compared to if you accept a transfer value incentive.
Your employer may also offer incentives to change the scheme benefits you receive, such as a pension increase exchange (also known as pension increase conversion) – a higher flat rate pension within the scheme if, after retirement, you waive increases above the statutory minimum.
What are the risks of transferring out of a defined benefit scheme?
If you transfer out of a defined benefit pension scheme the cash value may be less than the value of the defined benefit payments. There is a risk that the scheme won’t deliver the expected returns, because any pension payments will depend on the performance of the new scheme.
If the assets in your benefit scheme exceed £30,000, government rules require you to have sought financial advice and produce proof that the expert agreed it was in your best interest to transfer before the pension transfer takes place.
What are the risks of remaining in a defined benefit scheme?
By remaining in the defined benefit pension scheme you may run the risk of the employer going out of business and being unable to pay out any pension funds to you.
In this event, the Pension Protection Fund may be able to provide some level of compensation – although it is unlikely to match that which you would have received if your employer had satisfied your pension payments.
Can I transfer out of an ‘unfunded’ public sector pension scheme?
Since April 2015, members of unfunded defined benefit pension schemes (public sector pension schemes) are no longer able to transfer to defined contribution pension schemes, but can still transfer pension funds to other defined benefit pension schemes.
People in private sector defined benefit schemes or funded public sector pension schemes (e.g. local government pension) are still able to transfer their pensions.
Speak to an expert to compare pension transfer providers
In order to transfer to another pension provider it is wise to shop around and do your research. While it is possible to conduct your own research online it is advisable to speak to a pensions expert with access to the best transfer providers and deals.
You should speak with an expert before making a final decision. They have access to all the pensions providers and will be able to offer you the most up-to-date advice based on your individual circumstances.Call us today on 0808 189 0463 or arrange a no-obligation chat with us here.