Moving your pension is known as ‘transferring’ and you can usually transfer the money built up in your pension pot to another provider. You might decide to move this money into your employer’s workplace pension or transfer it into a personal pension like a self-invested personal pension (SIPP).
Transferring your pension can bring about benefits, but you should seek independent financial advice to ensure that you don’t lose any pension benefits or end up paying expensive pension exit fees.
Why Would you Need to Transfer a Pension?
There are several reasons why you might want to transfer a pension:
- You want to combine multiple pensions to make them easier to manage.
- You’ve found a pension provider that offers better perks or pension rates.
- Your current pension scheme does not give you the freedom to invest your money where you want to.
- Your current pension scheme is being closed.
- You are moving to a new employer.
- You are moving abroad and want to open a pension scheme in your new location.
- Your current provider doesn’t offer the retirement income options or funds you want when you retire.
Is Transferring a Pension a Good Idea?
Transferring your pensions can help you maximise your pension pot and make your pensions easier to manage. However, you must weigh up the pros and cons carefully to decide whether it’s the best option for you.
How much have you saved?
It can be difficult to keep track of how much you have saved when you have multiple pensions. Combining all of your pensions into one pot will make it easier to monitor your pension savings and take advantage of new investment opportunities as they arise.
According to Aviva, having all of your pensions in one big pot can also help you get excited about your pension and encourage you to pay more attention to your pension scheme. This will motivate you to save more money towards your retirement and future goals.
Could you see greater results?
Some traditional pension schemes have strict terms and only allow a few investments which can restrict your returns. Whereas, many modern pension schemes allow more flexibility and give people the freedom to invest in various opportunities.
Transferring your pension to a new provider can increase your potential for better returns and help you build your wealth before you retire.
Managing several pension schemes can be time-consuming and confusing. When you transfer your old pensions into one, you will only have to deal with one provider and will have much less paperwork to worry about.
How to Switch your Pension Provider
In most cases, you can transfer your pension to a new provider online in a few easy steps. You will need to know the following information to start a pension transfer:
- Pension name and type
- Policy number
- Pension value (an estimate is sufficient)
You should always contact your current pension provider to find out if any exit fees apply before you start the process of transferring your pension. You should also check whether you will lose any valuable benefits when you move your pension. For instance, some pension schemes offer death benefits or a guaranteed annuity rate which you may lose when you transfer your pension.
Keep in mind that some additional fees may apply when you transfer to a new pension provider. This may include initial set-up fees, annual management charges for the investments you choose, or admin charges. Factor these charges into account when deciding whether a pension transfer is the best option for you financially.
Finally, make sure that the new pension provider is regulated by the Financial Conduct Authority. This demonstrates that they are reputable and financially secure company, which is a must when it comes to your pension savings.
A Clear Overview with Prosperity Wealth
At Prosperity Wealth, we have many years of experience in retirement planning and we are delighted to have been awarded the Pension Transfer Gold Standard. This reward recognises our good practice, transparency and ethical standards around providing advice on Defined Benefit and Final Salary Pensions.
Get in touch if you would like to discuss pensions transfers or retirement planning and we will book you in for a free consultation with one of our experts.