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Why move your pension?
It is in your best interests to regularly review any pension and investment funds you might have to make sure they are performing and on track for your financial goals.
Your circumstances will more than likely change over time, and should be reflected in your pension funds, particularly approaching retirement and in retirement. You may also have accumulated a number of different pensions from different companies and want to combine them. Or your current pension scheme may have closed. Also, if you haven’t reviewed your pensions for a while, there are newer, more modern funds available now offering better benefits.
What type of pension do you have?
Most modern pensions are defined contribution (DC) pensions, but if you’ve worked for a large corporation, or in the public sector, you may have a defined benefit (DB) pension. Defined contribution pensions are built up over time with money paid in by yourself and your employer, and the amount you have when you retire will depend on how much has been invested, how the investments have performed and how much you have paid in fees to your pension provider. Transferring defined contribution pensions is normally a straightforward process.
In contrast, a defined benefit pension pays out a guaranteed secure income (final salary). Your employer pays into the scheme and is responsible for ensuring there’s enough money at the time you retire to pay your pension income. Your retirement income will be based on your earnings and the number of years you have been with the company. There may be certain benefits to moving your defined benefit pension to a personal pension, in terms of flexibility and death benefits for your family, however you will be giving up a guaranteed income and most people will not benefit. There are also far more stringent advice requirements now in place for members of DB pension schemes wishing to transfer.
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Key considerations for transferring a defined benefit pension
Request our client education guide for all the key points to consider before transferring your DB pension. Our guide includes:
- The pros and cons of each type of scheme.
- A summary of the type of clients who might typically benefit or not benefit from a transfer but without personalised references to the consumer’s own circumstances.
- Information on the FCA view – which is that most consumers are best advised to stay in a DB scheme and our advice will be from this starting point.
- Circumstances when you will decline to do business.
- The difference between abridged advice and full advice.
Key considerations for combining or switching pensions
Consider the benefits and drawbacks. Key points to consider before combining pensions or pension switch:
- Compare pension scheme costs
- Will there be exit fees?
- Will you lose any benefits?
- Matching your attitude to risk.
- Will you need financial advice?
Transferring out of a Defined Benefit scheme is unlikely to be in the best interests of most people.
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
Get in touch
We always offer a free, no-obligation initial consultation over the phone or face to face (Covid restrictions allowing) to see if we can help*.
If you’d like to arrange a consultation, or have any questions at all, please call us on 0141 352 7800
or click on the ‘Contact Us Form’ link below.
*Any work you ask us to carry out as a result of this meeting will be fee based.