Pension Transfer Advice

Unlock your pensions

Ask yourself the question, ‘When was the last time I had a proper look at my previous company pension arrangements?” Many of us, once we have moved on from a former company pension arrangement, never quite get round to reviewing our pension position. Yet transferring your pension could create you more wealth. So what should you do next?

Take advice

Unfortunately, just about everyone is likely to experience this predicament at some point during his or her working life. If you fall into one of the categories below, then you should consult an independent financial adviser without delay. It can happen if:

You change jobs, leave the old pension scheme and want to join your new employer’s scheme.

You leave your company to become self-employed.

You are made redundant.

Your employer introduces a new type of scheme after a takeover, merger or privatisation.

Transfer minefield

Few pension schemes or plans are compatible and, in many cases, a transfer of benefits might involve schemes set up under different tax regimes.

The most common case that could lead to a transfer of your pension benefits is when you change jobs to join another employer.

If you were in a previous company scheme and made contributions for less than two years, you might be able to get your own contributions (not the employer’s) back, less a charge for tax.

After two years:

You can leave the pension benefit in the former employer’s scheme (known as a ‘deferred’ or ‘preserved’ pension).

You can take a transfer of benefits (the ‘transfer value’) to your new employer’s scheme.

You can take a transfer value to an Inland Revenue approved private individual plan, such as a personal pension – but remember, you will lose out on the guaranteed link to salary. Usually you should not consider this route unless the two main options above are not appropriate.