Should I Transfer My Pension?
Among the Pension Freedoms that have been granted, is the ability to transfer your pension (in all but a few circumstances). However, while it’s now easier to transfer your pension pot, the big question for anyone considering doing so is should you transfer your pension?
The answer is different for everyone as it depends on your unique circumstances. The good news is that the advisors we work with are experts when it comes to pension transfers, and can give you the right advice.
To help you answer those important pension questions, in this article we’ll discuss:
What pension transfer options are there?
There are a number of different pension types and each one offers slightly different management options and benefits. While this doesn’t answer the question of whether you should transfer your UK personal pension, if you hold one type of pension, it’s usually possible to transfer into a different pension by type or provider.
Current UK pension types include:
- A personal or private pension
- A Self Invested Personal Pension (SIPP)
- A Small Self Administered Scheme (SSAS)
- A company or workplace pension
- Defined contribution pensions
- Defined benefit pensions
- State pensions
Each of them have their own advantages and disadvantages and for those of you considering transferring your pension, it’s important to discover if the benefits of your existing pension outweigh the drawbacks.
How do I get advice on whether I should transfer my pension?
You should be able to find out more about your UK pension and whether you can and should transfer it, by accessing your account details. If you don’t have the paperwork easily to hand, then you’ll need to get in touch with your provider or employer, if they manage your pension for you, who will send through the relevant details.
However, even after you’ve received or found all the information that’s available on your pension, there could be a lot to look through. Some of the details can also be complicated and more than a little confusing.
If you’re unsure of the benefits, rules and fees of your pension, you could get in touch with an experienced pensions advisor, like those we work with. We can connect you with an expert advisor who can help you understand your pension and help you determine whether a transfer is in your best interest.
What are the benefits of transferring my pension?
The variety of pensions options now available means that a pension transfer may work well for you and could provide you with a larger pension pot for your retirement income.
For those of you who have a good understanding of the financial and investment markets, a pension transfer could give you more hands-on management of your retirement pot. Or, if you’ve worked for a few different companies and now have more than one dormant or frozen UK pension, a transfer should allow you to bring all your separate pensions into one fund.
Other potential benefits of transferring your pension are:
- You could transfer out of a pension with high management fees
- You can keep closer track of how your pension is performing if you choose to transfer
- The pension you transfer into could charge lower fees but provide better additional benefits
Be mindful of potential risks
While there are potential benefits that have you convinced that you should transfer out of your pension, there are also potential risks. Although you will keep the financial and some other benefits you’ve accrued while paying into your pension, you could lose some of them as well.
The fees to transfer out of your pension could also be high enough to notably diminish the total amount and make the question of whether you should transfer your pension fund or funds more difficult. It’s important to find out more about the potential risks of a pensions transfer and one of the easiest ways to do that is to speak with one of the experienced pensions advisors we work with.
Are there any pensions that can’t be transferred?
While most pensions are eligible for transfer and two or more different pensions can be put into a single pot, there are some pensions that can’t be transferred.
Since 2015, member of unfunded public sector pension schemes are no longer able to transfer their pension into any kind of defined contribution scheme or personal pension. That includes:
Although there are a couple of caveats. If you’ve been in the scheme for less than two years then you can transfer out of your defined benefits pension, with a cash equivalent calculated by the provider. It’s also typically possible to transfer your unfunded public sector pension from one scheme into another.
However, considering the benefits associated with a defined benefits scheme, including any one-off payment at retirement age followed by a guaranteed salary-linked pension, you should always seek professional advice, even if you plan on transferring it to a different but similar pension scheme.
How can I decide if I should transfer my pension?
Deciding whether or not you should transfer your UK pension isn’t always easy. Where the choice isn’t obvious or you’re not too sure what the benefits would be if you did transfer your pension or what the fees and charges involved are, you may think staying with your existing pension is the right option. But that’s not always the case.
If you are unsure about whether you should transfer your personal pension and if doing so would leave you better off, you can either do a lot of your own research to find out exactly what the difference between pensions is, and also what the costs involved are. Or you could speak with a pensions advisor experienced in pension transfers like the ones we work with.
They have all the information and knowledge you need to make an informed decision and to make sure that if you do transfer your pension, you’ve made the right decision for your retirement.
Speak to a pensions transfer expert today
If you are unsure about whether or not you should transfer your pension and would like to speak to an expert to find out more, call Online Money Advisor today on 0808 189 0463 or arrange a free, no obligation chat.
Then, just sit back and relax while we do all the hard work of finding the advisor with the right experience for your specific needs. They will then thoroughly assess your situation and pension or pensions before giving you any advice.