You Ask, We Answer – Do I need a financial advisor to transfer a pension?

24 Sep 2015 | COMMENTS: 0 | Author: Ryan Smith | we answer

Transferring your pension – the process of moving the value of one pension pot managed by one provider, to a different provider – should not be a decision you make lightly.

Before opting to transfer a pension, you must first identify the reasons why you wish to transfer.
Reasons for wanting to transfer may be:

  • Your current pension scheme is being closed
  • You’ve found a scheme that’s cheaper
  • You require more investment options, so want to move to a SIPP
  • You want to consolidate a number of pensions into once place for ease of management or lower fees for a larger pot.

While it is possible to transfer a pension yourself, we would always recommend seeking financial advice. There are a number of risks that can be fully explained by an advisor, to ensure you aren’t negatively impacting your pension pot’s value by transferring.

Risks include:

  • Exit penalties – many pensioner providers charge an exit fee when you want to transfer out of their scheme. Sometimes, the benefits you may gain from transferring could be devalued or negated by the exit penalties
  • Loss of guaranteed annuity rates – your existing pension provider may have guaranteed you an annuity rate. An annuity provides an income for life in exchange for your pot’s value. Rates are currently the lowest they’ve ever been, but an old, guaranteed annuity rate could be of much higher value than you can get elsewhere.
  • Lost bonuses – some providers offer bonuses to those who have been with them for a while or make regular contributions, in order to reward loyalty. By transferring to a new provider you would lose these bonuses.

If you still feel you’d benefit from transferring your pension, we can get you in touch with an FA that can guide you through the process as efficiently as possible.

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