Things to consider before transferring a pension

Before you transfer a pension you should be aware of the implications this may have.  Please read the following sections so you know what information you should check before completing any transfer application.

CHARGES

Please compare the charges on your existing pension and compare them to the charges on the pension you are transferring to. Your current pension provider may impose exit penalties or charges if you transfer or stop contributions.  If your existing pension charges are lower than the pension you are transferring into, you should satisfy yourself that the service and features of the pension you are transferring into outweigh any increase in cost or are worth any fees/penalties incurred.

GUARANTEES

Your existing pension plan may offer different types of guarantees on your pension.  These could be in the form of Guaranteed Annuity Rates, Guaranteed Investment Returns, Guaranteed Bonus Rates or Guaranteed Minimum Values.  These guarantees would be lost on transfer, so you should satisfy yourself that the service and features of the pension you are transferring into outweigh any loss of guarantees.

LIFE COVER

Your existing pension plan may provide life cover or waiver of premium, which would be lost if you transferred the pension.  This type of insurance could be more expensive, more difficult or even impossible to purchase once you leave your existing pension plan.

PENSION TRANSFERS IN ILL HEALTH

There may be IHT implications for a person who makes a pension transfer in ill health as this could bring some, or all, of your pension value into your estate.  Should you pass away, details of any transfers made within the two years before your death need to be reported and HMRC will decide if IHT is payable. Please refer to the following link for more information: https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm17072

FINAL SALARY PENSION SCHEMES, SECTION 32 POLICIES

We do not accept Final Salary or Section 32 policy transfers unless Independent Financial Advice has been provided on the transfer.

OTHER CONSIDERATIONS

If you are transferring money from a Group Personal Pension Scheme, you should check with your employer if there are any implications for transferring 100% of your current pension. Your employer may prefer for you to retain a minimal sum and only do a partial transfer to facilitate with employer contributions continuing to be paid timely.

OUR DUTY OF CARE LIMITATIONS

Where we transfer policies without providing advice, we sometimes receive information that might indicate that the transfer may not be in your interests, e.g., if there is a transfer penalty.  In this instance, we will endeavour to consult with you further to confirm whether or not you wish to proceed.  However, please note that we will not provide any advice as to proceed or not and the responsibility for the suitability of the transaction, including investigating any charges, penalties or loss of guarantees, lies entirely with you.

You can contact us at any point for guidance on pension issues and if you wish to take Independent Financial Advice, we are happy to offer a free introductory meeting so you can assess the merits of Independent Advice before agreeing to pay a penny - so feel free to contact us today!