There’s a lot at stake with your pension. You’ve spent many years – decades – pouring into it. That’s why it’s so crucial to be very careful when you’re considering what to do with it.
In particular, this is the case when you’re considering a pension transfer. However, working with a professional, qualified adviser in pension transfers will help you make the best decision for your own goals, needs and circumstances.
Everyone is different, but in general there are at least three important questions you should ask when considering a move in your pension:
#1 How do I feel about putting all of my pension pots together?
Some people will want all of their pension funds in one place, for the sake of simplicity. This is right for some people, but not for others.
Yes, putting your pensions together can make them easier to track. On the other hand, it’s important to work with a transfer specialist to establish the costs of doing so. For instance, it would be counter-productive to transfer out of a low-cost scheme into a higher-cost scheme.
However, it might well be that your lower-cost scheme doesn’t offer you the flexibility you need to achieve your retirement goals. Consolidating your pots, then, might be a good idea. The important thing is to work through your options with a qualified, experienced professional.
#2 What charges are involved with a transfer?
With some pension schemes, there can be some pretty hefty charges if you transfer out of it. The figures can run into thousands of pounds. Make sure you check the small print. If you are unsure where to look, we at O’Neill FS can look through it with you.
#3 What benefits are there to my current pension? Are they worth sacrificing for the benefits of other pension options?
It is possible that your current pension scheme has benefits which far outweigh those of another scheme. Or, it could be the other way around. It depends on your goals and situation.
For instance, it might be that your pension offers your partner a pension if you die before them, or perhaps you are entitled to a GAR option (Guaranteed Annuity Rate). For some people, these are the ultimate pension prizes, and a pension transfer would therefore not be worthwhile.
On the other hand, for someone looking for more control over their pension investments, the GAR benefit offered by their current scheme just might not appeal that much. The helpful thing is, by talking with a financial adviser about the different options before you, you can educate yourself about the best route to take and make the best, most informed decision.