Can I Transfer my Pension to Another Person?
The term ‘pension transfer’ usually refers to switching your pension from one provider to another, but in this article, we will focus on the circumstances around transferring your pension to another person.
Pensions can be complicated. Because they are a crucial aspect of ensuring your financial security in later life, it’s essential you get the right advice about all your choices. Getting it wrong could create problems in retirement which, with some valuable planning, could easily be avoided.
In this article we will cover:
- Can I transfer my pension to another person?
- What are the tax implications of doing so?
- Can I transfer my pension to my husband, wife or civil partner?
- How to transfer your pension to your spouse
- Can I transfer it to my child?
- Can I transfer half my pension pot to my husband, wife or civil partner?
- Can I transfer my pension to my ex-wife or ex-husband?
- Ask an expert about transferring a pension
If you have questions and want to speak to an independent expert for advice about any aspect of your pension arrangements, call us today on 0808 189 0463 or make an enquiry.
Can I transfer my pension to another person?
You can only transfer your pension to someone else in exceptional circumstances.
A pension is personal and there is no legal structure to transfer your pension pot to someone else, except in the case of divorce or dissolving a civil partnership.
The only other circumstance when your pension pot can be transferred to someone else is in the event of your death.
Many personal pension arrangements allow anyone you wish to nominate to inherit your pension fund when you die. Although the person who benefits from your pension on death needn’t automatically be your husband, wife or civil partner, it is one of the only ways people can transfer pensions between spouses.
To transfer your pension to the person of your choosing in the event of your death, simply ensure that your pension provider has up-to-date details of your chosen beneficiary or beneficiaries, if you want to leave your pension pot to more than one person.
What are the tax implications of doing so?
Because pensions aren’t considered part of your estate when you die, a pension can be a tax efficient way to leave your assets to your children or spouse since they’re exempt from inheritance tax.
There are occasions when your beneficiaries might have to pay income tax on the money they get from the pension they inherit from you.
General tax rules for beneficiaries
- If you die before age 75: beneficiaries will not pay any income tax when they withdraw money from the pension
- If you die after the age of 75: beneficiaries will pay income tax on any withdrawals they make
Can I transfer my pension to my husband, wife or civil partner?
Although it isn’t possible to directly transfer your pension to your spouse, if you wish to reduce the tax you might have to pay in retirement, there are other things you could consider.
- Check your state pension entitlement and ensure you claim any credits which are due.
- Take advantage of the ‘marriage allowance’. This is a governed scheme for couples where one partner pays tax at the standard rate while the other is a non-taxpayer. The non taxpayer can pass over up to 10% of any unused allowance to the higher earner.
- While there is no way to transfer your pension fund to your spouse, you could consider using some non-pension savings to make an investment planned to be used as income for your spouse when they retire.
- You could put some of this money into a pension in your spouse’s name. This way you could get automatic tax relief at 20%. This should be claimed as relief at source by your pension provider.
If you’re interested in learning more about your options in the case of pension tax planning or measures you could consider to ensure both you and your partner will have sufficient funds invested for retirement, talk to one of our independent experts.
The advisors we work with have wide experience of pensions, tax issues and planning for retirement. Call us on 0808 189 0463 or make an enquiry and we’ll connect you with the right person to answer all your questions.
Are there any circumstances when you can transfer a pension to a partner?
As discussed above, the only way of transferring a pension to a spouse is in the event of your death, or as part of a divorce settlement or civil partnership being dissolved.
Many pension schemes allow you to nominate anyone you want to inherit your pension fund when you die.
To transfer your pension to your spouse, in the event of your death, simply ensure that your pension provider has up-to-date details of your chosen beneficiary and is aware of your wishes.
The person who benefits from a share of your pension needn’t automatically be your husband, wife or civil partner.
How to transfer your pension to your spouse
There are very few circumstances in which you are able to transfer your pension to your wife, husband or civil partner.
Talk to an expert advisor about when and how to transfer your pension to a spouse.
The advisors we work with are independent with experience across a broad range of pension products and can tell you whether it’s possible to transfer your pension pot to your spouse.
Call us on 0808 189 0463 or make an enquiry and we’ll put you in touch with the best independent pensions expert for your query.
Can I transfer my pension to my child?
As discussed above, the only time pension funds can be transferred from you to another person is in the event of your death, and sometimes in divorce settlements.
To transfer your pension to your child, it is necessary for you to make sure your pension provider is aware of your wishes.
To transfer your pension to your son or daughter on death, provide your pension scheme with details of what you would like to change so that your wishes can be carried out.
Can I transfer half my pension pot to my husband, wife or civil partner?
There are very limited circumstances when it is permitted to transfer any part of your pension to someone else, even when they are your partner.
The most common occurrence of when this can happen is in the event of your death and, in some cases, when pension funds form part of a divorce settlement.
To find out if it’s possible to transfer your pension to your spouse, talk to one of our expert pension advisors. Call us on 0808 189 0463 or make an enquiry and we’ll connect you with an independent advisor with market wide experience and knowledge of all the pension rules and regulations.
Can I transfer my pension to my ex-wife or ex-husband?
Although you are prevented from transferring your pension to your spouse in most other circumstances, when it comes to divorce it’s a different story.
There’s a duty on both parties in a divorce to disclose all their assets, including any pension arrangements. It’s important that pension pots are disclosed and evaluated independently to get accurate information about how much money is involved.
Prior to 2000, it wasn’t possible to transfer pension assets between ex-spouses. But now you can transfer a pension fund into an ex-partner’s name so they end up with a pension in their own right.
Three ways pensions can be split on divorce
- Pension sharing – your ex-spouse obtains a share (by court order) of one or more of your pensions. Since this option allows for a clean break, it’s often the preferred option. If you are retired and already drawing your pension, but your ex hasn’t yet reached retirement age, the sharing order can be deferred.
It’s also possible to receive a deferred sharing order on a lump sum payment. Deferred sharing options are only possible in the UK and do not apply in Scotland. In some cases, pension providers will charge a fee to split the fund.
- Offsetting – it’s possible to offset pension funds against other assets, most often property. If, for example, your ex wants to keep the house, you might keep your whole pension.
- Pension attachment or earmarking – this is when your ex gets a share of your pension (both income and the lump sum payment) when you start to draw your pension benefits. This is usually the least favoured option for divorcing couples because the party who doesn’t own the pension asset has no control over where the pension fund is invested or over when or how the benefits are taken. If you died before retirement, your ex could lose the pension benefits altogether. Pension attachment or earmarking arrangements require a court order.
Whatever your pension arrangements, if you’re going through a divorce, it’s wise to get expert advice early to avoid later problems or confusion.
Ask an expert about transferring a pension
If you’d like to speak to a pensions specialist about any aspect of your pension planning, give us a call or enquire here and we’ll connect you with an independent advisor who can provide you with the pension options available to you.
The advisors we work with are independent with wide experience across the whole market and a rich understanding of all the products on the UK market, as well as all the associated rules and regulations.