Below is information designed to help you understand the ins and outs of pension transfers including its basic workings and why you may be better off financially if you transfer your pension plan. It involves information on transferring from one UK registered transfer scheme to another. However, we will not be covering transfers relating to occupational income drawdown plans.
The final article is a glossary of terms that will help you decipher all the transfer related jargon you may encounter.
Pension Transfers: What Are They?
A pension transfer simply involves moving the value of one pension scheme to another. It should be noted that once you leave a particular pension scheme, you lose all rights and benefits it contained.
Transfers ‘In Specie’
‘In Specie’ is just another way of saying ‘in actual form’. This means a transfer in specie involves the transfer of property or shares as they are. You do not have to cash in these assets when transferring them to another pension scheme.
Is Pension Transfer Advice Necessary?
Yes, you should seek assistance off a financial advisor because there is no guarantee that you will benefit from the pension transfer. This is because each person has different financial circumstances which means what benefits one individual will actually harm another. It is beneficial to transfer your pension when:
You are leaving a pension scheme where the charges are much higher than the new scheme.
A pension scheme is reaching a conclusion and increased transfer values are being offered.
A financial advisor will give you independent advice designed to give you the greatest benefit based on your current financial circumstances. Once given all your transfer information, they will be able to tell you if your new pension plan is superior to your old one.
What Pension Schemes Allow Transfers?
Do not begin the process of transferring until you are fully aware what benefits you will be losing. Defined contribution and defined benefit schemes are the two major occupational pension schemes.
Stakeholder and group personal pension plans are not deemed to be occupational schemes despite the fact they are considered to be defined contribution schemes. Not every type of pension plan is included in these articles.