Like with any financial product, people have become used to shopping around to get the best deal on their personal pension. The option to transfer your pension has become increasingly popular, to guarantee the best possible rate of return. However, there is so much choice available that it can be tricky to decide on the final defined contribution pension without expert financial advice from an Independent Financial Adviser.
Pension freedoms mean that, yes, you can move your pension at any time to a different provider. There is a lot of pension transfer advice available, and with many providers offering a vast array of products, it can be difficult to pick out which one is really for you.
There are also some risks involved. Although a pension transfer might seem attractive at first, it might not be suitable for everyone. Your current pension policy might come with benefits that it would be unwise to give up, such as a spouse’s income. There might also be costs involved in a pension move. Your current fund might have exit penalties for pension release, and pension transfer tax might also be payable, for example if you are transferring your pension fund to anything other than a registered UK pension scheme. These fees will clearly have a negative impact on your final pension value, and as they can be expensive they could negate any of the potential benefits of a transfer.
Most people would agree that pension freedoms have been a success – everyone has the right to choose the private pension that works best for them and their needs. But this has potentially made retirement planning much more complicated – and, worst of all, making a poor decision could lose you money.
An Independent Financial Adviser that is authorised and regulated by the Financial Conduct Authority is the best person to help. Remember, any expert adviser should be regulated by the Financial Conduct Authority (FCA) – that is your guarantee that they will always look out for your best interests. They will be able to assess your private pension and advise whether a pension transfer would be your best option, or whether it would be best to stick with your current pension policy. They will also consider your broader financial situation, such as any other investments you might have, to get the best possible sense of your retirement circumstances. Finally, they can advise on choosing your new private pension, based on your personal circumstances and the amount of risk you are comfortable with when choosing an investment.
Many people have never used an Independent Financial Adviser: we are generally more financially savvy these days, and you may be used to making your own decisions when it comes to saving and investing, mortgages, and so on. However, pension transfer is a hugely important decision that can have a big impact on your retirement planning, and an expert adviser will be able to help you navigate all the potential risks and confusing jargon to set you up to reap the benefits.
To get free, impartial advice on pension transfer and pension planning, contact us today on 0808 164 2664. Or, to find out more about Pension Works, click here.
This can be found on your payslip, P60 document or letters about tax, pensions or social benefits.
If you have (or have had) a pension that is described below then we can potentially carry-out a Pension HealthCheck.
Defined Contribution Pensions
These are ‘Pot of Money’ pensions where the benefits provided take into account the value of the fund at retirement. They can be personal pensions or Occupational Pensions. There are no guarantees as to what pension will be provided. This will be a reflection of contributions made and investment growth.
Defined Benefit Pensions
These offer the promise of a guaranteed pension at retirement which reflects the length of service with an employer. It will be based on either the Final Salary or Average Career Salary of the employee. Providing the company is still in existence, there is no investment risk for the pension receiver. This type of pension is becoming less frequent.
This is a generic term for pensions that are not workplace schemes.
Group Personal Pensions
Employer-sponsored schemes – each member has a personal pension plan, and their contract is with the pension provider. The employer’s role solely is to select the scheme provider, decide if there should be any restrictions on fund choices and take contributions from the employee’s pay and forward them with employer contributions to the pension provider.
A private pension arrangement or personal pension is taken out by a sole-trader or self-employed worker.
State Earnings Related Pension (formerly Graduated Pension and subsequently State 2nd Pension or S2P) was an additional element of State Pension for employees. The amount of pension was linked to the employee’s salary. SERPS was abolished in 2016 when the flat rate State Pension was introduced.
Private pensions are contracts between the pension member and an insurance company or another pension provider.
These are personal pensions where the member has a much wider choice of investments, including commercial property and single company shares.
Personal Pensions with a set of rules that impose amongst other things a maximum annual management charge (AMC), low minimum contribution levels (£20 per month) and an appropriate Default fund.
Private pension linked to an employer’s Defined Benefit Scheme but separate from the Scheme’s internal Additional Voluntary Contribution (AVC) arrangement – largely defunct since the rules were eased several years ago, allowing people to contribute to both personal and employment schemes as they wish.
Money Purchase Pensions
This is another name for Defined Contribution Pensions.
Unfortunately, we are unable to help clients who currently work for or have a pension from one of the following:
If you are unsure about the type of pension(s) you hold, please contact us on 0800 756 1288 or email email@example.com