Updated: April 07, 2024
Transferring A Pension Into A SIPP
Learn the rules about transferring any type of pension into a SIPP
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If you’re opening a self-invested personal pension (SIPP), you’re likely interested in taking more control over your retirement savings. You might decide to consolidate your pensions so that all your pension savings and investments are in one place, to make them easier to manage.
Though this can be advantageous, pension transfers must be done carefully. Not all pensions can be transferred into a SIPP and it’s important to check that you won’t lose any benefits in the process. Below, you’ll find information that’s crucial to know before you begin.
Can you transfer your pension into a SIPP?
Yes. A SIPP is a type of personal pension in its own right, but other types of pensions can be transferred into it if you want to consolidate the funds you’ve built up elsewhere.
Which types of pensions can you transfer into a SIPP?
Most of the common pension types can be transferred into a SIPP as long as the scheme accepts transfers. If you have pensions with safeguarded benefits worth over £30,000 you would need to evidence you’ve received advice from a pension transfer specialist beforehand.
If you can’t transfer in your pensions, it’s likely because it offers some sort of guarantee that a SIPP cannot, such as a guaranteed annuity rate, guaranteed income, or guaranteed minimum pension benefits. Here’s some more information on the common pension types.
Workplace pensions (defined contribution)
A workplace pension, or company pension, is arranged by your employer and provided by a workplace pension scheme such as NEST (the National Employment Savings Trust) or TPP (The People’s Pension).
Almost all workplace pensions are defined contribution (DC) pensions, meaning that you (and your employer) contribute to your pension pot through your working life and that pot provides your income in retirement.
You can transfer a NEST pension, TPP pension, or any other company pension to a SIPP. However, some company pensions include benefits that SIPPs don’t, that you’ll miss out on if you transfer.
So, before you transfer, you should find out:
- Will you lose out on any benefits by transferring?
- Will you need to pay a fee for transferring?
- Will you pay more in ongoing fees for your SIPP than the workplace pension?
- Does the additional freedom and control justify any additional cost?
- Is advice from an IFA required before you can proceed with the transfer?
Private personal pensions
Instead of being arranged by your employer, a private personal pension is one that you arrange yourself. Private personal pensions come in various types, including stakeholder pensions and SIPPs. All of these are defined contribution pensions.
You can transfer your private personal pension into your SIPP. Just as with a workplace pension, you should find out:
Defined benefit pensions
A once common, but now rare, type of workplace pension is a defined benefit (DB) pension, sometimes called a final salary pension or a CARE (Career Average Revalued Earnings) pension.
While you may be able to transfer a DB pension to a SIPP, whether or not you should is another matter.
With a DB pension, the income you receive in retirement is not dependent on how much you contributed during your working life or how that money was invested.
Instead, it’s based on how many years you worked for your employer, what your final salary was and the accrual rate of the particular scheme you are a member of.
Some defined benefit schemes will calculate your entitlement each year based on your salary at that time, and you will accrue benefits annually.
The income is also linked to inflation, which means that the spending power of the income will remain consistent throughout your retirement.
You can read more in our guide to defined benefit pension transfers.
Public sector pensions
NHS, police, firefighter, armed forces, and teacher’s pensions all fall into the category of ‘unfunded public sector pensions.’
This means that the contributions you make now fund the pension payments of retired public sector staff. When you are retired, your pension payments will be funded by contributions from current staff.
These pensions cannot usually be transferred into a SIPP. The downside of these pensions is that you have very little freedom and control over how your money is invested. The upside is that they pay out a generous income that’s guaranteed for life.
There are certain circumstances in which you can transfer a public sector pension. To find out more, read our guides to NHS, police, army or teacher pension.
Protected rights pensions
A protected rights pension is an almost obsolete type of pension. If you have one, you can transfer it to a SIPP.
The process is the same as for a workplace pension or private personal pension.
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How to transfer a pension into a SIPP
There are three easy steps to transfer your pension into a SIPP:
- Choose and open a SIPP. Find the best SIPP provider for you, check that they accept transfers, and set up your SIPP.
- Get advice if you need it. If you have any doubts about whether transferring your pension is the right thing to do, don’t go any further until you ask an expert.
- Authorise the transfer. Contact your SIPP provider to request that they initiate the transfer and give them authority to do so.
How long does it take?
Most pension transfers take under 30 days. If your pension transfer is complex (for example, if you’ve requested that your existing investments are moved from one pension to the other rather than the cash value being transferred), it can take longer; around six weeks.
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Can you transfer a frozen pension?
Yes. If you have an old, dormant pension from a previous job (often called a frozen pension), you can transfer it into a SIPP in the same way as you can any other workplace pension.
How to transfer shares into a SIPP
If you hold shares within your existing pension and you’d like to hold the same shares in your new pension, you have two options:
- Sell the shares, move the money, and buy the same shares again, or
- Move the shares from one pension to the other as an ‘in specie’ transfer (provided the shares are eligible for this move)
The former is the more common choice. If you would prefer the latter, you should make a request to your new pension provider. Note that this type of transfer will likely take longer to process.
Speak to an independent advisor about transferring your pension
Decisions around pension transfers are complex and risky. You’ll encounter names and terms that are unfamiliar to you. You may need to learn more about your current pension, and about pensions in general, that you currently know.
It’s a lot easier if you have a professional who you trust to give you advice and answer all your questions. If you don’t already have a pensions advisor, we can connect you with a specialist in SIPP transfers to work closely with you and protect you from making the wrong decision. To find out more, just call us on 0808 189 0463 or enquire here.
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FAQs
Yes. If you’d like to transfer your SIPP to another provider, the first step is to notify the new provider and authorise them to initiate the transfer. Note that some providers charge a transfer fee for this service and your existing provider might charge an exit fee.
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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.
Tony Stevens
Finance Expert
About the author
Tony has worked in a vastly diverse array of areas in the pensions industry for over 20 years. 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.
