Updated: November 20, 2019

Deferred Pension Transfer

Want to transfer a deferred pension into a new scheme? Find out how to do this in our guide.

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Richard Angliss

Author: Richard Angliss - Finance Expert

Updated: November 20, 2019

Many people delay taking their pension in a bid to gain a higher potential retirement income, later down the line.

That being said, pension scheme members can be tempted to transfer their pension after seeing other schemes that offer lower fees or better benefits.

If you’re wondering whether you can transfer your deferred pension and what the potential implications could be on your overall income, then this article is for you.

We’ve included the information you need to know about deferred pensions as well as where you can turn to for advice.

What is a deferred pension?

A deferred pension can be defined as one where you have stopped paying into the scheme, but you are not yet receiving a pension.  Another definition is that some people delay claiming their pension, based on the premise that the longer you wait to claim, the more money you will receive in payments.

How do I defer my pension?

Your pension will automatically defer until you claim it, although, it’s important to inform your pension provider of any changes to your address, health or marital status as this can affect or delay your pension payout.

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Should I transfer my deferred pension?

As with any investments, there is a risk. If you transfer your pension to another scheme, the value of your investment can go down as well as up, meaning that there is a chance that you could lose money.

Furthermore, your current pension scheme provider may charge you an exit fee.

However, if you defer your pension, there is a potential for your savings to continue growing as your money will be invested for longer.

In order to make your decision clearer, you will need to calculate how much your pension will potentially be worth in each scenario.

Things you need to know before you transfer

Ask your current pension provider the following questions before you transfer your deferred pension.

  • Are there restrictions on which pensions you can transfer?
  • What is the ‘transfer value’ of my pension?
  • Are there any fees for transferring my pension and if so, how much?
  • Will I lose the right to take out my money at a certain age?
  • Will I lose any benefits?
  • Will I lose the right to take a tax-free lump sum of more than 25% of my pension?

Calculate my deferred pension transfer value

So, exactly what is a deferred pension transfer value?

Your transfer value, also known as a ‘cash-equivalent transfer value’ or ‘CETV’, is the amount your pension pot would be worth if you moved it to a different provider.

It is calculated using a number of variables which may include:

  • Your age
  • How close you are to retirement
  • The investment strategy of the pension scheme you’re currently in
  • Life expectancy
  • Inflation

Calculating your transfer value can be difficult with so many variables to consider, especially if you are unsure about the current inflation rate or your scheme’s investment strategy.

Should I use a deferred pension transfer value calculator?

You may have come across deferred pension transfer value calculators online. These are designed to provide quick quotes which can be helpful for those looking for a rough guide or estimate.

However, these calculators may not always provide a clear or accurate reflection, so speak to one of the independent pension experts we work with, who can take all of the variables into consideration and calculate it for you.

They can also take the time to look at all of the options available to you and then provide you with a summary of the advantages and disadvantages of each recommendation.

Where can I transfer my deferred pension?

Your retirement income will depend largely on your pension, so before you transfer it, always seek advice from a financial expert as well as a pensions professional.

Depending on your circumstances, you may be able to transfer your deferred pension to:

To discuss which option may be best suited to your situation and needs, talk to one of the advisors we work with.

Transferring a deferred pension to a SIPP

SIPP, or self invested personal pension, offers a great opportunity for more control over how your pension fund is invested.

While it’s possible to transfer your deferred pension to a SIPP arrangement, rules for doing so differ greatly between providers and the kind of account which you can invest into.

Due to the varying rules from different pension providers and the costs involved in transferring pensions into a SIPP, it’s advisable to seek expert advice ahead of committing to a decision.

The experts we work with are independent financial advisors with access to all the pension providers in the UK. Make an enquiry and we’ll match you with an expert in SIPPs and all the ways you might benefit from transferring your deferred pension to one.

How to transfer a deferred pension plan

Transferring your pension can seem daunting but with the help of an experienced pensions expert, the process can be made a lot smoother.

Here are the steps to take if you are considering transferring:

  • Find a pensions expert
  • Have your pensions expert compare the market and check whether it’s in your best interest to transfer
  • Find a new pension scheme that will accept the transfer of your pension
  • Calculate your transfer value
  • Inform your current provider that you want to switch

Your pensions advisor can also check your contract thoroughly for any fees or charges that you may incur.

Talk to an expert

If you need more information or would like to talk to a professional about how to transfer your deferred pension, please contact us for a free no-obligation chat.

One of the pension specialists we work with will be happy to help answer whatever questions you have and our advice is always confidential.
Call on 0808 189 0463  and a member of the team will be in touch shortly.

Ask a quick question

We can help! We know everyone's circumstances are different, that's why we work with brokers who are experts in pensions. Ask us a question and we'll get the best expert to help.

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Richard Angliss

Richard Angliss

Finance Expert

About the author

Richard Angliss has made a career in financial services which stretches over 40 years.

His early career was spent learning about the various financial products and applying them to prudent advice, working for one of the largest life assurance and investment firms. After that he joined the financial services arm of a very well-known firm providing independent advice to their 8 million customers.

For the last 20 years he has been involved in building software solutions that help Advisers and clients work together to achieve good financial outcomes and helping to set up three independent advisory firms. He also has written many articles for financial services publications and provided commentary for newspaper journalists.

At an early stage in his career he realised the great satisfaction that comes with being able to help people achieve their goals and protect their families. “Regulation of financial services has hugely impacted on ensuring people get appropriate advice. The issue these days is access to that advice and just as importantly regular reviews to make sure that everything stays on track”.

With the growing development of online resources such as Online Money Advisor he sees a great future for people to access advice to make their pension and investment work harder for them.  Plus, of course, to ensure they have insurance products in place that will be required when unforeseen events happen.

He knows getting that balance right is crucial to prudent financial planning and the wellbeing of individuals and their families.

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