Can I transfer my workplace pension

Since 2012, workplace pensions have been mandatory, provided a few key conditions are met by the employee, i.e., they need to earn over £10,000 a year, work in the UK and be between the ages of 22 and the state pension age.

This is great news for anyone wishing to grow their pension pot and maximise their retirement income, especially since your employer is legally required to pay a certain amount of money into your pension each month. At the moment, the minimum is 3%, but plenty of companies offer more than this.

While getting automatically enrolled on a pension scheme can be a big benefit, it may complicate your life a little should you want to transfer it in the future. Pensions don’t have to be complicated, not when they’re such an important part of your future. Here is some helpful hints on transferring a workplace pension.

What is a workplace pension?

Workplace pensions are set up by your employer, and they are designed to help you save for your retirement. Part of your wage goes into your workplace pot, but your employee also has to contribute on top of this, and so too does the government (they pay you up to 20% extra on contributions you make in the form of a tax refund), effectively meaning you make money every time you contribute.

Workplace pensions most commonly take the form of a defined contribution scheme (the most common) and the defined benefit scheme.

The latter is usually determined by the amount of time you’ve spent with a company, and it tends to be a guaranteed amount of income sponsored by the organization you work for. This is where it differs from the contribution scheme, as it is not affected by the money you pay in.

Transferring a defined benefit scheme may result in losing any benefits associated with it, and some schemes like the NHS and civil service schemes can’t be transferred.

The defined contribution pension is much more flexible, however, and this will likely be the one you’re currently on. If you’re unsure as to what you stand to lose or gain from transferring your workplace pension, make sure you seek professional financial advice before making any big decisions.

Can I transfer my workplace pension schemes to iSIPP?

At iSIPP, we’re firm believers in pension consolidation, and we can supply you with the means you need to relish its benefits.

You can transfer your workplace pensions to iSIPP, and we’ll offer you the flexibility and control you need to make the ideal investment choices for you. Your employer can also contribute to your iSIPP if they agree and you would like them to, however it is important to note that an iSIPP is not a workplace pension scheme.

Benefits of consolidating your pensions

Pension consolidation involves combining all of your pension pots into one easily manageable location, effectively allowing you to maximise pension benefits and get the most out of your money.

If you’ve had a few jobs throughout your life, there’s a good chance you have more than a few pension pots lying around. Combining them into one pot may be able to help you improve your investment performance, reduce fees, and cut down on paperwork.

Plus, it’s much easier to keep track of where your money is and how it’s performing while it’s invested.

Consolidating your pension could also give you a clearer overview of your savings, enabling you to get a better idea of how much money you’ll have in retirement, hopefully avoiding shortfall (ending up with less money than you expected) in the process.

Conclusion

Before you make any big decisions regarding your pension, it’s important to seek out trustworthy financial advice. Otherwise, you could end up worse off. You can find out more about pension transfers and whether transferring an existing workplace pension to a SIPP is right for you at MoneyHelper, a government backed service for all your financial related needs.

Disclaimer 

The content of this article is for general information purposes only and should not be construed as legal, financial or taxation advice. You should not rely on the information contained in this article as legal, financial or taxation advice. The content of this article is based on information currently available to us, and the current laws in force in the UK. The content does not take account of individual circumstances and may not reflect recent changes in the law since the date it was created. It is essential that detailed financial and tax advice should be sought in both jurisdictions and any legal advice, if required.

This notice cannot disclose all the risks associated with the products we make available to you. When making your own investment decisions it is important you understand that all investments can fall as well as rise in value and it is possible you may get back less than what you have paid in. You should also be satisfied that any investments you choose are suitable for you in the light of your circumstances and financial position. You should seek financial advice if you are not sure of what’s best for your situation.