Pension Transfer Basics

Any decision to make a pension transfer will depend greatly upon your individual circumstances and objectives, and so if you're thinking of transferring a pension, it's essential that you seek professional advice from an Independent Financial Adviser (IFA). They will be able to will work out whether you will benefit from transferring your pension or whether you may end up losing out; they will also be able to suggest a suitable pension product for you to transfer your old pension into, although there is no obligation to take them up on this advice.

Why Transfer Your Pension?

There are a number of reasons why people choose to transfer their pension, some better than others. There are some situations where it make financial sense to transfer a pension to a different scheme:

• You would like to add your existing personal pension to an occupational pension scheme to benefit from employer contributions and/or lower fees.
• You have a personal pension that has high fees and you would like to transfer it to a low-fee personal pension.
• Your existing occupational scheme is being wound up.

Eligibility

Almost all types of individual and occupational pensions can be transferred, although there are a number of exceptions. For example, if you fall into one of the following categories, you cannot transfer out of your pension:

• If you are a member of a final salary pension scheme that provides a pension that rises in line with inflation.
• If you left a public sector pension scheme before 1st January 1986.
• If you are within one year of your pension scheme's retirement age.

Transferring out of one of the above pension schemes would almost certainly result in a huge reduction in your pension entitlement, so the rules are there to protect you from doing so.