In most cases, transferring your workplace pensions is possible. To be certain, you should check the details of the company pension or pensions, you’re considering transferring, paying special attention to the terms and conditions section.
When transferring your workplace pension, you must make sure you read all the details relating to a transfer carefully. That’s because while you may be eligible to transfer your company pension to another scheme or schemes, some exclusions, limits and charges may apply.
It’s also important to know that if you have a pension pot of £30,000 or more, the government insists you take financial advice before transferring into or out of a workplace pension.
Workplace pensions with transfer restrictions
There are some workplace pensions that have transfer restrictions on them. One such pension are those which are classed as unfunded public sector pension schemes.
* A police workplace pension
* NHS pensions
* A teacher workplace pension
These are ‘defined benefit’ schemes that generally include benefits that are harder to transfer, such as ‘final salary’, death benefits and other features. Due to the nature of these government-supported schemes, the only options that may be open to the holder is to transfer it to a similar defined benefits scheme.
However, charges may apply and even though you might wish to have all your workplace pensions under one scheme, you could lose some benefits built-up in your previous scheme if you do opt for a transfer.
Where can I transfer my company pension to?
For the many employer or workplace pensions that are eligible to be transferred, there are a variety of options as to where you can transfer it to.
A company pension can typically be transferred into:
* A private, personal pension
* A Self Invested Personal Pension, also know as SIPP
* Another company, or workplace pension, including a SSAS pension
* A stakeholder pension
* You can also switch pension providers when you transfer your workplace pension
In addition, if you hold other, possibly older workplace or company pensions, including an Employer Pension Fund, or EPF, a transfer is also possible.
However, while you can transfer your existing workplace pension to a different pension option, the process of doing so tends to be more complex than if you were transferring a personal pension. Because of this, it makes sense to seek professional financial advice before you make any decisions.
When it comes to the older and less common workplace pensions, an experienced advisor, such as those we work with, can take out the time and stress such a transfer might create.
Where is the best place to transfer my company pension to?
There’s no one-size-fits-all answer. The reasons for this is because the best workplace pension transfer decision for one person isn’t always the same for another.
The type of pension that works best, depends on a variety of details and personal circumstances.
* Your age
* The size of your pension pot
* Any additional benefits of your existing workplace pension prior to transfer
* Your personal financial situation
* Attitude to financial risk
* Ideal plans for retirement
* Exactly what type of company pension you want to transfer from
* The rules of your existing workplace pension or pensions
* The rules of the pension you’d prefer to transfer into
* If you’re changing providers
* How much time you have to manage a personal pension
For some, transferring your workplace pension into a SIPP could be the best option. For others, a transfer to a private pension provider who will manage all the details of the transfer and future investment decisions is the best place.
Or, if the workplace pension on offer with your new employer is particularly generous and flexible, a transfer to that scheme could be the best decision.
Should I transfer my workplace pension?
In many cases you can transfer your company pension as long as you take appropriate advice and abide by the pension transfer rules. However, just because you can make a transfer doesn’t always mean you should transfer your workplace pension.
There are a variety of different details to consider and find out more about, to help you decide whether or not to go ahead with a workplace pension transfer.
If you’re considering transferring your existing or old workplace pension to a private or personal pension, or SIPP, you’ll want to bear the following considerations in mind:
* Charges relating to managing your workplace pensions compared with the personal pension or SIPP
* Transfer rules, relating to both transferring out of your workplace pension and the pension you wish to transfer into
* Exit fees and pension set-up charges
* Any penalties for exiting your current company pension
* Any benefits from your current or previous workplace pension and whether or not they are fully transferable
* What the cash equivalent transfer value of your company pension is, if applicable
* Which provider is used for both or all your workplace pensions; if some are the same, then the process could be easier and cheaper
If you plan on transferring your workplace pension to a SIPP, you must be completely clear about the charges your new pension could be subject to. As well as set-up fees, there will also likely be charges relating to investments you make and change within the SIPP.
The same is true if you transfer from one company pension to another company pension, the charges can vary widely. In addition, where you have more than two existing workplace pensions and some are managed by the same provider, it may make sense to combine those while leaving the other workplace pension or pensions where they are.
How do I transfer my workplace pension?
Workplace pension transfers tend to be more complex than private or personal pension transfers, and in some cases, funds need to be sold before a transfer can be made. In others, a variety of processes must be approved and completed by trustees before an employee or company pension transfer can even begin.
In addition, even if you’ve done all you can to check the costs involved with your workplace pension transfer plan, there’s still a chance that further costs could apply due to the complexity of the process.
How to transfer a company pension – a typical timeline:
* Locate the details of your existing workplace pension
* Ensure the new scheme accepts incoming company pension transfers
* Contact your new employer if you plan to transfer your old company pension to your new company pension scheme
* Or, if you opt for a personal pension, send all relevant details to the provider of your new personal pension or SIPP
* Ensure you give the proper notice period and your new pension proper has all your personal and contact details
However, in some cases, even if you’re willing and confident enough to make the workplace pension transfer yourself, you won’t be permitted to do so. That’s because some pensions schemes require the input and approval of a qualified and registered pensions professional.