Transferring pensions - what to consider

Transferring pensions is when you decide to move your existing pension pot over to a new provider.

It’s usually a straightforward endeavour, and it’s a fairly common one too. There are several reasons you might want to do this yourself and a few situations in which it may be for the best.

There are however some important hurdles to consider, so if you’re thinking about making a transfer anytime soon, this handy guide should be able to fill you in.

Why you might decide to transfer your pension

If you are questioning “should I transfer my pension” it can be helpful to know the most common reasons why people do it. One of them is to obtain better value through a new scheme.

For example, the new provider might offer a better interest rate, greater flexibility when withdrawing your money, or a guaranteed annuity rate (an income in retirement).

Another reason to transfer is to consolidate your various existing pensions. Pension consolidation means combining your pension plans into one easily manageable pot.

If your pension scheme is closing or you’re changing jobs, transferring may be a viable option as well.

iSIPP can help you combine your pensions into one easy-to-manage scheme through pension consolidation. Bringing you pensions together with iSIPP will help you simplify your retirement savings and cut down the admin of having to deal with multiple providers. Plus it is completely online, meaning your pension can be managed anywhere, anytime.

Transferring from a defined contribution scheme

A defined contribution scheme is the most common scheme, and it refers to a pension that’s based on the amount of money you or your employer contribute.

After you find out the total value of your pension (you can get this info from your provider) you’ll need to apply for a pension transfer from your new provider. With iSIPP, the process is completely online making transferring your existing pensions even easier. Once we have the right details, we take care of the rest for you.

It’s important to make sure you understand all the pros and cons of transferring before you go ahead and make the move but if you think that you would like to transfer to iSIPP we would be happy to help.

Transferring pensions from a defined benefit scheme

A defined benefit scheme tends to be a workplace pension that’s based on how long you work for your employer. Unlike a defined contribution scheme, the amount of money you’ll receive is dictated by the plan rather than how much money you pay in.

It’s generally not worth transferring a defined benefit scheme, as you’ll likely lose out on the guaranteed income it provides in later life.

You might be best off getting a financial advisor to help you transfer a defined benefit scheme, and it’s important to note the benefits you may be giving up by doing so.

Transferring from an overseas pension to a UK scheme

While the rules and regulations can vary from country to country, it’s often quite easy to transfer from an overseas pension plan to a UK scheme.

If your UK pension provider can accept international payments, and your overseas pension is what’s known as QROPS (qualifying recognised overseas pension schemes), then you should be able to make the pension transfer easily enough.

It’s important to notify HMRC of the transfer and to discuss tax implications with your providers before doing so.

iSIPP accept transfers from QROPS, so if you are living and working abroad and looking for a UK based scheme that offers flexibility and control, iSIPP could be for you.

Be Cautious

Pension scams are on the rise, and fraudsters are becoming ever more sophisticated in the methods used to steal from people.  A common way criminals gain access to a victims money is to disguise themselves as a legitimate firm and arrange the transfer of your pension savings to them. However their are some ways you can spot a pension scam and check who you are dealing with. The Financial Conduct Authority (FCA) have a register of firms regulated by them. This includes details of the kind of business a firm is allowed to engage in. Secondly the FCA also have a warning list tool. Here, you can input the details of the offer being made and the tool will advise on how cautious you should be and steps you should take to avoid a scam. You can also read more about scams and how to avoid them through the FCA’s website here.

Pension consolidation

Pension consolidation is a big reason to transfer your existing pensions into a new scheme, as it can offer you a great way to take control over your savings, and may help you maximise your benefits later on down the line.

For example, if you have a scheme that offers you better benefits than another scheme you’re signed up for, transferring your pots over to the better value scheme could help your savings go much further.

Transferring to iSIPP means you can invest your savings to suit you and your goals. Plus with 24/7 access to manage your fund and a simple, competitive fees, it’s easy to see why people are turning to iSIPP when consolidating their pensions.

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.