Retirement Planning - Transferring Pensions

There are a number of different reasons why you may wish to consider transferring your pension schemes whether this is the result of a change in employment, poor investment performance, high charges and issues over the security of the pension or a need to improve flexibility.       

You might well have several different types of pension. The gold standard is the final-salary scheme, which pays a pension based on your salary when you leave your job and on years of service. Your past employer might try to encourage you to move your pension away by boosting your fund with an ‘enhanced’ transfer value or even a cash lump sum. However, this still may not compensate for the benefits you are giving up, and you may need exceptionally high rate of investment return on the funds you are given to match what you would get if you stayed in the final-salary scheme.

The alternative to a final-salary scheme is a money purchase occupational scheme or a personal pension. These pensions rely on contributions and investment growth to build up a fund a part of which can then be taken as tax free cash and the remainder converted to an income in retirement.

Often, during our working lives we build up several different pension schemes. Individually they not be worth a great deal but collectively may amount to a substantial amount. If appropriate to your particular situation it may make sense to bring these pensions under one roof to benefit from lower charges, to improve flexibility make fund monitoring easier and aim to improve fund performance. 

Effective retirement planning requires an expert knowledge of the detail of pension legislation and an ability clearly to understand your individual long-term objectives and expectations. An Independent Financial Adviser will be able to carry out an analysis of your current pension provision and advise whether it would be worthwhile transferring existing plans.

Article kindly provided to us by Richard Martin Financial Advisor Telephone: 01903 814848

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