Transferring a pension into a SIPP

There are various reasons why you may want or need to transfer your existing pension into a self invested personal pension (SIPP) when planning for your future retirement. In most cases you can transfer your pension to a SIPP. However, there are numerous caveats, rules and potential risks to be aware of when you choose to do so.

In this article we’ll discuss:

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Transferring your pension into a SIPP

When it comes to your pension, it’s important to be confident it’s working hard to provide you with a comfortable life when you’re retired.

If you feel that’s not the case, or if your working circumstances have changed and you want to have a clearer idea of exactly what’s in your pension and how it works, you may be thinking about transferring your pension into a SIPP.

Since Pension Freedoms was introduced in 2015, SIPPs have become more popular and there has been an increase in the number of pensions that have been moved into SIPPs. That’s because most types of popular pensions, including existing personal pensions and defined contribution work pensions are able to be transferred into a SIPP pension.

Can all pensions types be moved?

Most types of pensions, including defined benefits and company pensions can be moved into a SIPP. However, not only do not all SIPPs accept transfers, there are numerous rules around some types of pensions, including NHS, police and teacher pensions that mean it might not be possible to transfer them to a SIPP.

However, where it is possible to transfer your existing pension or broader pension pot into a SIPP, the experts we work with will help you do so.


Can I transfer my company pension?

In many cases transferring a company pension into a SIPP is possible, yes. However, there are rules associated with different types of pensions. It’s also important to ensure the SIPP pension you’re interested in accepts company pension transfers.

Other details to check if you’re considering transferring your company pension into a SIPP are:

  • What benefits from your workplace pension can be kept and lost once you make the transfer.
  • The rules relating to transferring your company pensions to a SIPP.
  • Any costs including an exit fee, when you move your pension.
  • What the transfer value of your company pension will be if you move it to a SIPP.
  • If the SIPP provider you’re interested in accepts company pension transfers.

If you contact us, we’ll connect you with one of the expert SIPP advisors we work with, who can answer all your pension transfer related questions. They’ll also make sure that if you do go ahead with a company pension transfer, that you find the right SIPP for your needs.


Can I transfer my private, personal pension?

Yes, transferring your private, personal pension into a SIPP is something you can do. As before, you should check the rules of your existing pension, including any potential exit fees and the transfer value of your pension should you go ahead and move it to a SIPP.

It’s possible to do this yourself. However, it’s important to know exactly what pension benefits you will potentially lose and gain from your planned SIPP transfer. This can take time and the rules can seem unnecessarily complex.

If that’s the case when you come to look into transferring your personal pension to a SIPP, then it is worthwhile seeking advice from a pensions professional.


How to transfer a defined benefits pension

A defined benefits (DB) pension is also called a workplace pension, a final salary pension, or career average pension. If you’re interested in moving out of your DB pension into a SIPP, you should take some time to find out more about what the differences between the two are.

Of course, while the benefits of a DB pension can be excellent, a SIPP comes with its own array of positives, which is why many people consider transferring from one to the other.

As with all pensions transfer, you should always thoroughly investigate your options. In most cases, a pensions advisor will be able to answer all your questions and help you with the transfer, whether it’s from a DB pension to a SIPP, or a different option that interests you.

If your defined benefits pension has grown to a value of £30,000 or more invested, the government states that you must take regulated financial advice on any transfer plans, including to a SIPP.

That doesn’t mean you must use a pension or SIPP advisor to make the transfer. However, once you begin discussing your plans and options for your DB pension, it might feel like an easier and less stressful plan to let the professionals explain and take care or your transfer needs for you.

Should I transfer my DB pension if my employer offers incentives?

In some cases, employers offer their employees incentives to transfer from their DB pension into a different one, such as a SIPP. Those incentives can include an increase in the cash transfer amount, or the ability to take that transfer value top up as a cash lump sum when you move your pension.

Even if you are offered a financial incentive to switch out of your defined benefits pension, you don’t have to do so. For those who’ve had their DB pension for many years, it simply might not be worthwhile making the transfer to a SIPP or similar.

Whether or not you should transfer your defined contributions pension into a SIPP depends on your individual circumstances and the SIPP options you have.

However, everyone’s circumstances are different. That’s why it’s always worth your while to talk to a professional.


Can I transfer my teacher’s pension?

Due to the status of a teachers pension, it’s classed as an unfunded public sector pension, in most cases you cannot transfer it into a SIPP. If you’ve had your pension for two years or less, then transferring your teacher’s pension into a SIPP is usually possible. Although, you’ll have to find a SIPP provider that will accept such a move.

It’s also possible to move your teacher pension from one unfunded public sector pension scheme to another, without a loss of benefits. For those considering transferring their teacher pension into a SIPP, the government recommends advice is taken and insists upon it for larger pension pots.


Can I transfer my NHS pension?

The situation with your NHS pension transfer abilities is similar to that of a teacher’s pension; you can move it into a SIPP if you’ve had it for two years or less. After that point, government rules prohibit such a move. That’s because an NHS pension is an unfunded public sector pension. Other pension that fall into that category are:

However, if there is a way to help you open a SIPP and not lose the funds and benefits you’ve built up on your existing NHS pension, an experienced SIPP advisor will help you find it.


How to transfer property

As SIPPs are designed to be more flexible than other options, many full SIPPs can directly hold commercial property as an investment. The only way it’s possible to hold residential property in a SIPP is through an investment fund or REIT.

One way to transfer commercial property is to do so from one SIPP or pension fund, into another. However, although the property will have already undergone checks from your pension provider, the transfer of that property into a different SIPP, will likely require another thorough round of checks, too.

While that might be frustrating, it’s essential to ensure your SIPP’s performance is as strong as possible to provide you with a comfortable retirement income.

Another way to transfer property is through the transfer of ownership from a business to your SIPP. This can be complex and will again require a thorough assessment from your SIPP provider.

Both cases require time and effort. However, an experienced property advisor can ensure you find the right SIPP and provide guidance make the process much more straightforward.


Can I transfer shares?

Because you are able to hold shares in a SIPP, you can transfer shares into a SIPP in what is known as an ‘in specie’ contribution. However, not all shares can be transferred into a SIPP, only ones that are eligible for such a move.

Eligible share transfers to a SIPP tend to be straightforward, with the value of the shares at the date of the transfer treated as the amount of the contribution.


Can I transfer my “frozen” pension?

Yes, transferring your frozen, deferred or paid up pension into a SIPP is possible and can often be a sound financial decision. There are a number of details to find out before you begin the process of the transfer, however. They include:

  • Any exit fees from the provider of your frozen pension.
  • If your preferred SIPP accepts pension transfers.
  • The average annual return of your existing frozen pension.
  • Compare the annual fees of your frozen pension to your preferred SIPP.

This information can be found out by speaking with the provider of your frozen pension and those and any SIPPs you’ve identified as a potential option for your pension transfer. However, a pension advisor with experience of SIPP transfers will also be able to give you all this information and assist with any transfer, too.


Can I transfer my existing SIPP pension to my wife/husband?

It isn’t generally possible to directly transfer your SIPP to your wife/husband or someone else while you’re still working and contributing to the pension. Doing so would have tax implications at the least and in many cases simply isn’t possible, apart from in divorce proceedings which become complex.

There are other ways to build up your partner’s pension pot without a transfer. The transfer of a commercial property from your SIPP to one held by your spouse could be on option.


Can I transfer my Nest or protected rights pension?

There are a number of different pensions and pension pots that people have and many of you will probably be interested in transferring them into a SIPP.

Specifically:

  • You can transfer your Nest pension into a SIPP.
  • You can transfer your protected rights pension into a SIPP.
  • You can transfer a defined contributions pension into a SIPP.

They are various types of pensions, but, provided the SIPP provider you’re interested in accepts pension transfers, then you can transfer your Nest, protected rights or defined contributions pension into it.

There will likely be exit fees and other costs and charges to be aware of. You’ll also need to ask for a transfer value. This will help you assess the size of the pension pot you’re moving into a more flexible SIPP that you have more control over.

Can I transfer to another provider?

Yes, it is possible to transfer your pension from one SIPP provider to another. As with all pension transfers, you should take the time to find out the important details surrounding any transfer plans before you make the change. That includes:

  • Exit fees.
  • Compare annual costs and charges.
  • Whether or not the new SIPP account you’ve identified accepts pension transfers.
  • The tax implications of your planned SIPP transfer.

Are there any transfer cash back options?

Due to the exit fees that are often charged on pension transfers, including into a SIPP, some pension providers offer a transfer cash back incentive to take out a pension with them.

Hargreaves Lansdown are among the SIPP providers offering cash back if you transfer your pension to them. However, you should consider all the details of the SIPP account they offer before making any decisions on this.

It’s also important to know that in some cases, the cash back transfer incentive is tied to other caveats and may not be exactly as it seems.


FAQs

Can I transfer part of my pension?

It may be possible to transfer part of your pension into a SIPP, but the rules vary from pension-type-to-pension type, provider-to-provider and SIPP-to-SIPP.

Should I transfer my pension?

If you feel your pension pot could be more valuable upon retirement with a SIPP than your existing pension, you should seek advice on moving it.

What happens when I die?

With a SIPP you can nominate beneficiaries upon your death. Inheritance tax will be involved, but the SIPP benefits can be transferred to one or more named people.

What are the possible transfer charges?

There may be a charge for pension transfers, but costs and charges vary and depend on the type of pension you’re transferring from and into.

Can I transfer my UK SIPP overseas?

Yes you can transfer your UK SIPP into a registered and recognised pension account abroad.


Speak to a transfer expert today

If you have questions about transferring your pension into a SIPP and would like to speak to an expert to find out more, call us today on 0808 189 0463 or make an enquiry here.

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.

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

Author:
Tony has worked in a vastly diverse array of areas in the pensions industry for over 2 decades. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events. Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been "Hope for the best, but PLAN for the worst", and believes that the biggest impact that an adviser can have on a client's life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they WANT their retirement to be.

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