Pension Transfer Checklist

If you're considering moving your pension to another scheme, then it is essential to consult with an independent financial adviser before you do so, as they will be able to advise you on whether or not a transfer would be a good choice for you. If you decide not to get advice, make sure you fully understand the benefits and risks of transferring your pension.

Key Points You'll Need To Know

Before requesting a transfer, make sure that you know the answers to these following key questions:

Will You Lose Any Benefits?

Your current pension may have valuable benefits that you would lose if you were to transfer out of it, such as a Guaranteed Annuity Rate (GAR) option or death benefits.

Are There Any Penalties For Transferring?

Some pensions may apply a penalty when you transfer out; these fees may be significant - sometimes thousands of pounds, depending on the size of your fund - so it is essential to check this applies in your case.

Will Your New Pension Be More Expensive Than Your Existing One(s)?

A financial advisor or pension provider should supply you with a Key Features Illustration (KFI), which should explain the costs involved in a new pension - make sure that this refers to the actual investments and funds that you will be using in your new pension. If the new pension costs more than your old one because it offers additional services, then make sure that you will actually make use of these services. For example, don't pay more for a pension scheme because it offers access to more funds than your current pension if you don't intend to use them.

Have You Chosen The Right Investments For The Amount of Risk You Are Prepared To Take?

As we all know, investments can go up or down, and it is therefore essential that the investments chosen for your pension scheme are appropriate for the amount of risk you are currently prepared to take with your money. You may want to decide for yourself how to invest your money, or you may prefer to ask an adviser to make recommendations for you. If you do seek the advice of an expert, make sure that they fully explain the potential benefits and risks of different funds and investments.

Would a Stakeholder Pension Meet Your Needs and Objectives?

A stakeholder pension is usually the cheapest type of pension, and should always be considered as a possibility. However, if your adviser doesn't think a stakeholder would be suitable for you, make sure that they discuss the reasons why, and that you understand them.

Should You Transfer All Your Pensions Into a Single New Pension?

If you're looking to consolidate your pensions, you may not need a new pension scheme if one of your existing pensions already meets your objectives and needs. You may be able to transfer all of your other existing pensions into that existing pension.

However, if you do decide to transfer your existing pensions into a brand new one, make sure you are aware of any costs involved in doing so.

Will the New Scheme Require Ongoing Advice?

Depending on the pension scheme you choose, you may need ongoing financial reviews or advice; for example, some fund selections may need to be reviewed from time to time to maintain the balance of your portfolio. In addition, as your circumstances change over time, then the amount of risk you are prepared to take could also change; for example, if your financial situation changes, or as you get closer to retirement.

Your financial adviser should be able to explain whether you'll need ongoing help with the pension you have chosen, and whether you'll need to make additional payments for this which, if paid for through the pension, will increase the cost of the new scheme.