Why transfer your pension?

There could be several reasons why you may want to transfer your pension:

  • You have changed jobs and want to keep your pension funds in one place

  • Your pension scheme is closing

  • You want a better pension

  • You are moving abroad and want to bring your pension to the same country

If you think you could get a better retirement income by transferring your pension, speak to an independent financial adviser first to review your options.

How to start your transfer

You should contact both your existing and your new pension company to find out if:

  • You can transfer your funds across but you may need to pay a fee to your existing or new pension company when you do this.

  • It will affect the age you can withdraw your pension, as some let you access your money earlier than others, e.g. 55 years old rather than 60.

Here is what you should think about before transferring the following types of pension:

Defined contribution pension

If you are actively transferring your pension without the help of an independent financial adviser, each pension company usually asks for:

  1. Your latest pension statement

  2. Your pension valuation, although this is not always needed

You will usually be charged for transferring your defined contribution pension to another company. Find out what charges you could incur on The Pension Advisory Service website.

Defined benefit pension

You could get a better income from a defined benefit pension compared to a defined contribution pension because your employer guarantees you an income based on:

  • Your length of employment

  • Your career average or final salary figure, e.g. 30,000

If you transfer your defined benefit pension to a new pension company you could lose out, especially as you can only move your funds into a defined contribution pension.

If you are unsure if you should transfer your pension, speak to an independent financial adviser first.

Self Invested Personal Pension (SIPP)

This is a contract between you and your pension company, and you are solely responsible for transferring your money to your new pension.

Both your new and existing pension companies could charge you for opening and selling your pension investments, so make sure you find out the cost before transferring.

You will need to close each component of your SIPP to transfer it, for example, by selling a series of individual investments and using the money to open your new pension.

If your existing investments have not performed well, your pension could be worth less than the amount you had already invested once you have deducted the transfer fees.

Transferring to an overseas pension

If you transfer your pension to another country, you may get taxed up to 55% of the total value of your pension.

You have to make sure that the overseas pension company is a recognised overseas pension scheme, otherwise your existing company may refuse to transfer your funds across.

If the overseas company is not, you could lose up to 40% of your total pension fund in taxes.

How long does a transfer take?

It depends on how your contributions to your pension have been invested, for example:

  • Cash holdings can take up to 2 weeks

  • Equities can take between 4 and 6 weeks

  • Investments funds can take between 6 and 8 weeks

  • Foreign holdings can take between 10 and 12 weeks

If you do not know what makes up your pension, contact your pension company to find out how long it would take to transfer it out.