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    Pension Transfer Guide

    Pension Transfer and Fund Performance AdviceSometimes an individual wants to transfer the pension pot he or she has built up in one pension or several pensions into another one. This is known as a pension transfer.

    There are many reasons why you may want to consider a pension transfer. For example, if your current pension scheme is being wound up and you need to transfer you pension pot in to another scheme. Equally, you may want to consolidate your pension savings in one scheme offering low administration fees. Or, you may want to have all you pension savings benefitting from your employer’s contributions. You may also be concerned about the investment performance of your pension fund or worried about the future of the pension scheme and so want to transfer your pension pot.

    Depending on the circumstances, a pension transfer may be beneficial, such as moving funds in a personal pension with high fees to another one where the fees are lower. However, sometimes a pension transfer would not be advantageous and you could loose out financially. It is important to realise that not everyone’s circumstances are the same and what works for one person may not work for another.

    As the rules regarding pension transfers are so complex and a pension transfer may not be a good idea financially, those considering a transfer should always get professional financial advice before arranging a pension transfer.

    How a pension transfer works
    Generally speaking, most personal pensions and occupational pensions can be transferred, although this may not be the case for members of a public sector pension scheme.

    The process for transferring a pension is slightly different for final salary and defined contribution schemes.

    For final salary schemes you should request a Statement of Entitlement from the scheme administrators. Within three months you should receive transfer value for your pension. This will be guaranteed for the next three months, and if you plan to act on the transfer you must do so in writing within this guaranteed period. The scheme administrator will then process your transfer, which can take up to six months.

    The process for Pension transfers for defined contribution schemes starts with a request from the administrator for a statement of transfer value. This will be based on the current value of your pension pot. A transfer value of defined contribution scheme is not guaranteed and could fluctuate depending on the investment markets . You will need to send a written application to the scheme administrators if you decide to proceed with the transfer. They then have six months to process the transfer.

    Important points to consider with a pension transfer
    You should only proceed with a pension transfer if it will benefit you and your circumstances. Be sure to get advice before undertaking a pension transfer.

    You will be charged fees for your pension transfer and should take these costs into consideration when deciding whether or not to proceed with the transfer.

    Funds built up in a pension pot can only be transferred from one scheme to another one (or Section 32 buyout– see below), they cannot be transferred to cash or a deposit savings account.

    You should not transfer from a pension were your employer is still making contributions.
    Not all pension pots should be transferred. For example, members of final salary pension whose payment increases are linked to inflation (such as some public sector workers) should not transfer this pension.

    Not all pension schemes will accept inward transfers from other schemes. A financial advisor will be able to make sure that the pension you want to transfer will be accepted by the scheme you’ve chosen to transfer it to.

    If you are 12 months away from the pension retirement age you will not be able to transfer a pension.
    In some cases, you can transfer a pension in a Section 32 buyout policy, which may give you greater flexibility over how the funds are invested. However, you cannot make contribution to this policy and you will not receive payments from your Section 32 buyout until you retire.