Tax treatment depends on your circumstances and is subject to change
Pension transfer, also referred to as pension switch, means transferring one or more schemes to a new provider. The principle is much the same as changing to a new bank account or energy provider.
Your pension could have a big part to play in how you live your life in the future. And if it is not currently working how you need it to, then simply sticking with what you have got could create issues further down the line.
Making small changes to your pension now could make a huge difference to your future. For example, let’s consider pension provider charges. Provider charges are just one of the fees generally associated with pensions. It’s important to understand all the charges you are paying. This is where a regulated financial adviser, such as Pension Access, can help.
The fees you are being charged is just one aspect. Pensions are complicated products with many different elements and it’s all about getting the right balance for you. For example, your pension could currently be shrinking, rather than growing, because of the way it is invested. Or, you might not be able to leave any remaining funds to a loved one when you die – which is far from ideal if this is what you want to do.
You can transfer all private pensions and most employee pensions. You do need to be careful if you are thinking about transferring a final salary company pension. These types of schemes generally come with guaranteed benefits when you retire, which you would lose. You cannot transfer out of unfunded public sector schemes which cover organisations and professions including the NHS, teachers, armed forces and the police.
Being completely frank, sticking with what you have got could seriously undermine your plans for the future. Alternatively, it could be absolutely the right decision for you. The issue is not knowing and when it comes to something as important as your pension, is this a gamble you are willing to take?
If you are doing some research around pension transfer, then you are probably looking at more than just one company. So, we have listed below some important questions to bear in mind.
When seeking the help of a financial adviser or looking into a pension provider, it is important to make sure they are regulated by the Financial Conduct Authority. This will make sure that your savings are safe and you receive the right advice from trained professionals. You can check if a company is regulated by using the Financial Conduct Authority register.
Some advisers will charge a flat fee for advising on and transferring a pension. Many others calculate fees based on a percentage value. The rules vary when it comes to final salary (defined benefit) pensions.
Certain pensions – especially final salary company schemes – come with a set of guaranteed benefits, such as a promise to pay you an income for the rest of your life. A financial adviser should make very clear to you any such benefits and advise on whether giving them up is the best thing for you to do or not. Ultimately, you should always have the right information, presented clearly, so that you can make a balanced decision.
The way your money is invested matters. It could be the difference between just getting by and having the freedom to do what you want to do in the future. If a financial adviser cannot clearly show how your savings will be invested and the impact this could have, then you should seriously consider not using them.
It is likely that your circumstances and goals will change over time. This is why it is important that your pension is reviewed at least once a year, so that it is always tailored to suit where you are at in life. It’s not worth settling for advice that promises grand changes in the short term but cannot back this up with thorough ongoing management of your pension.
We can help you to make the best possible decisions when it comes to your pension.
Taking pension money early is not right for everyone as it will leave you worse off in retirement. Also, tax treatment depends on your circumstances and is subject to change. That’s why it makes sense to get help from a regulated specialist.
