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.
How to get help:
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.