If you are considering transferring your pension from one pension provider to another, you will need to conduct some research and make sure you prepare properly in advance. No matter which type of pension transfer you are considering or what reason lies behind your decision, you’ll need to understand how this process works before you begin.
In most cases, seeking professional advice and guidance is the best course of action you can take. Since pension transfers can sometimes be quite tricky to understand, and there are a lot of factors that go into this process, you want to make sure everything is being handled by professionals.
That being said, here are just some of the things you can expect where a pension transfer is concerned, as well as some factors you’ll need to consider.
Know the reason behind the transfer
The fact of the matter is that there are numerous reasons people choose to transfer their pensions. Here are just some of them:
- Job change
- You have multiple pension funds you wish to unite into a single one
- You want to transfer a workplace pension to a stakeholder pension (SHP)
- You want to transfer your pension to a self-invested personal pension (SIPP) so you can use it for investments
- You are in a defined benefits pension and you wish to have more freedom (like individuals with private pensions)
- You want to transfer your pension overseas
- Your current pension scheme is being closed
Once you determine the reason behind your pension transfer, you need to discuss it with your financial advisor. That way both of you will be on the same page and find a solution that best fits your needs.
Things to check with pension providers before you transfer
Knowing the reason why you want to transfer won’t be enough, however. You will also need to check a few things before you’re able to transfer your pension from one provider to the next. So, make sure that:
- The new provider accepts transfers
- Your current pension scheme allows transfers
- You inquire about any potential early exit fees
- Ask about the age at which you can take your pension (if there are any changes)
- Ask about any fixed or enhanced protection you may currently have, and see if you’d still be eligible to receive them
- Ask about potential taxes involved
By making sure you learn as much as possible about both the benefits you can expect to receive and the things you’ll be required to do, as well as any potential changes you’ll need to make, the pension transfer process will be much smoother.
The only thing left to do then is rely on your financial advisor and work with them to find the best possible solution. While it is possible to take care of this entire process yourself, we’d strongly advise you against it. No matter how thorough you are with your research, chances are you won’t become as proficient as a trained individual in this field. So, when making such an important decision, make sure you turn to the right professional for help and advice.