Transferring Pensions

Q: What is a pension transfer value?

If you\'re making the decision to transfer your pensions into a single pension pot, you may have heard of a transfer value or cash equivalent transfer value (CETV). These terms are used interchangeably and often refer to a Defined Benefit (‘final salary’) pension. A pension transfer value is the amount your existing pension provider will quote you for transferring your pension to another provider. Although quoted as a lump sum, this amount will be used to purchase a Defined Contribution pension. Calculating the transfer value involves several factors and may reflect the financial position of the scheme, your own service record with the employer and other factors such as interest rates. Sometimes schemes offer enhanced terms to encourage members to leave but in all cases is can be difficult to determine whether the CETV represents good value. The financial regulator, the Financial Conduct Authority, believes most people should not transfer benefits out of Defined Benefits pension schemes. A transfer extinguishes all rights and benefits you may have with scheme meaning a loss of a guaranteed income from the schemes normal retirement age. Often benefits can be accessed early if you are considering early retirement, but would mean a reduced level of guaranteed benefits.

Effectively managing your pensions is a crucial part of planning for a happy retirement. If you are considering a pension transfer, it's crucial to make informed decisions to ensure that you get the most out of your pension. Our independent financial advisers can provide expert guidance and help you navigate the process.

Reasons for transferring a Pension

With people now tending to have numerous jobs throughout their career, it’s increasingly common to end up with multiple pensions. The main reason for transferring pensions is to consolidate them into a single pot in order to make them far easier to manage and ensure you know your overall pension ammount. Other reasons include;

Changing jobs or moving overseas
Current scheme is being closed or wound up
Existing provider is unable to invest where you’d like them to
Moving to a pension scheme offering better value or benefits

We understand that every individual has unique financial goals and circumstances. Our job is to help you consider what you what to achieve and develop a financial plan that will help secure your financial future.

Information - Investment involves risk. The value of investments can fall as well as rise. You may get back less than you originally invested.

Are there any reasons to not transfer my pension?

There are a few reasons why transferring pensions may not be in your interests.

Forfeiting guaranteed income

If you’re currently under a workplace pension - such as a Defined Benefit pension scheme or some Defined Contribution schemes - you risk losing a guaranteed income as well as any other included benefits like life insurance policies or premium waivers. Some older personal pension or Retirement Annuity Plans included a guaranteed annuity rate (GAR) in the plan which could be higher than current rates.

Forfeiting investment guarantees

Some older individual arrangements may have investment guarantees that would be lost on transfer and may also be more likely to incur exit fees or penalties as a result.

Incurring exit fees

Another thing to consider are exit fees or penalties incurred when transferring pensions. Outlined in your contract, your provider may implement a flat rate fee or percentage fee on the total value of your pension.

You are still contributing to an employer’s workplace arrangement

In some cases it is possible to arrange a partial transfer where the investment choices under the scheme don’t meet your needs. However you should not take action that would mean losing the benefit of your employer’s contribution.

Benefits of working with Ascot Lloyd to transfer your pension

Our advisers offer expert advice on pension planning, which includes guidance and assistance on successfully transferring a pension.

Your pension transfer options would be part of a holistic financial plan which would be build having spent time getting to know you and aligned with your wider retirement goals. Our advisers operate independently, meaning we can act on our duty of care to remain unbiased when offering advice regarding your pension and investment products.

We regularly review your financial plan and manage your pension income to ensure you’re getting the most out of your investments.

With so many factors to consider during retirement planning, let our independent financial advisers help you make an informed decision.

Looking for more pension transfer advice? Talk to one of our advisers today.

Book a free callback to understand your options and get started on transferring your pension with Ascot Lloyd.

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Frequently asked questions

Can I transfer my pension to another person?

Although pensions can be transferred between different schemes, they cannot be transferred to another individual unless in the event of death, divorce or civil partnership settlement. A pension also can’t be gifted as it does not form part of your will or estate.

Most personal pension schemes allow you to nominate one or multiple beneficiaries to inherit your pension when you pass, however you will need to complete an ‘expression of wish’ statement with your provider.

What is a pension transfer value?

If you're making the decision to transfer your pensions into a single pension pot, you may have heard of a transfer value or cash equivalent transfer value (CETV). These terms are used interchangeably and often refer to a Defined Benefit (‘final salary’) pension.

A pension transfer value is the amount your existing pension provider will quote you for transferring your pension to another provider. Although quoted as a lump sum, this amount will be used to purchase a Defined Contribution pension.

Calculating the transfer value involves several factors and may reflect the financial position of the scheme, your own service record with the employer and other factors such as interest rates. Sometimes schemes offer enhanced terms to encourage members to leave but in all cases is can be difficult to determine whether the CETV represents good value. The financial regulator, the Financial Conduct Authority, believes most people should not transfer benefits out of Defined Benefits pension schemes. A transfer extinguishes all rights and benefits you may have with scheme meaning a loss of a guaranteed income from the schemes normal retirement age. Often benefits can be accessed early if you are considering early retirement, but would mean a reduced level of guaranteed benefits.

Can I transfer my pension to an overseas pension scheme?

Yes, you can transfer your pension to an overseas scheme. However, the overseas pension scheme must be a ‘qualifying recognised overseas pension scheme’ (QROPS). If the pension scheme is not a QROPS, your pension transfer may be declined, or you may be subjected to a 40% tax fee on the transfer.

Bear in mind that tax rules can change and their impact on you will depend on your circumstances.

Transferring pensions