Questions to ask when transferring your pension

When looking to transfer your pension, what should you ask your provider?

Many people choose to transfer their pensions to a new provider if they are looking for pension consolidation, want more investment choice, or if their current pension fund is not offering the best value for money. Combining all your private pensions into a single pension fund could have several advantages, including being easier to manage and keep track. Modern pensions may also give you more choice of investments, which is potentially useful if you want more control (although remember that investment value can go down as well as up).

However, there are some key questions to ask your provider – not only for the personal pension you are leaving but for the new provider of the personal pension you hope to invest in. It is often a good idea to consult a Financial Conduct Authority (FCA) regulated Independent Financial Adviser to assist in this, particularly if you will be relying on your pension funds in retirement.

Can I transfer my pension myself?

This can be a straightforward question – many providers will help you transfer your defined contribution pension but could depend on the pension value. You might also not be allowed to transfer a pension from which you have already started to take an income. Finally, some public sector pensions (e.g. Teachers’ Pensions and the NHS) cannot be transferred and if you have a final salary pension over £30,000 you must seek independent financial advice.

Will I lose any bonuses or benefits?

Some personal pensions come with benefits that you need to think about carefully before giving up. They might, for example, offer loyalty bonuses, and the right to a tax-free lump sum. Other benefits, depending on your pension plan, might include the right to access your pension early, or benefits such as a guaranteed annuity rate, or enhanced life insurance or death benefits. A defined benefit pension, for example, not only guarantees your pension income but may offer benefits to your spouse such as continued payments after you die. Always ask what benefits your old policy has before requesting a transfer.

Will I have to pay more?

Although there might be benefits to pension transfer, you need to check whether your current pension fund has exit penalties. You may also be charged fees for transferring. These costs can sometimes add up to thousands of pounds, which means that the overall value of the benefits you receive will be much lower. Pension transfer tax is also payable under some circumstances – if you are transferring to an overseas scheme or transferring your pension pot to anything other than a registered UK pension scheme.

Will my new pension offer the best deal?

It’s important to make sure that your new pension is offering you the best deal possible. Before making the commitment, you should check for any hidden fees and charges, and if you are getting the best interest rate. Again, an Independent Financial Adviser (IFA) should help you to carry out these checks; the IFA may also perform the calculations for your retirement planning.

What if I change my mind?

Most pension transfers offer a 30-day cancellation period. However, you will need somewhere to reinvest your money – be aware that your old pension policy might not take your money back.
A pension transfer is a decision that needs thinking about carefully. An authorised and regulated by the FCA Independent Financial Adviser will help you to negotiate all the potential pitfalls of a pension transfer and work out if it is the best way forward for you.

To get free, impartial advice on pension transfers, contact us today on 0808 164 2664.

Or, to find out more about Pension Works, click here.