When things change
Transferring your pension
Leaving your pension scheme occurs when, for example you leave your employer, if you decide to opt out or stop making contributions. If you leave your pension scheme, the benefits you’ve built up still belong to you. You normally have the option to leave them where they are or to transfer them to another pension scheme.
If you leave your pension scheme, you do not lose the benefits you have built up. They continue to belong to you and you have several options for what to do with them. Your scheme administrator or pension provider should tell you which options apply to you.
Most schemes will allow you to transfer your pension pot to another pension scheme, which could be a new employer’s workplace pension scheme, a personal pension scheme, a self-invested personal pension (SIPP) or a stakeholder pension (SHP) scheme.
You don't have to decide straight away – you can generally transfer at any time up a year before the date that you are expected to start drawing retirement benefits. In some cases, it's also possible to transfer to a new pension provider after you have started to draw retirement benefits.
- UK transfers
- Overseas transfers
- Transfer incentives and pension increase exchange
- Things to think about
- Moving abroad
Getting advice before transferring
If you're a member of a defined benefits pension scheme, and the value of your benefits is more than £30,000, you will need to take advice from an regulated financial adviser to check that the transfer value you are offered represents good value and that the transfer is in your interests - you may be giving up guaranteed pension benefits, especially if you're transferring to a defined contribution pension scheme.
Transferring from a Defined Benefit scheme
If you're thinking of transferring from a defined benefit scheme, you should ask your scheme administrator or pension provider for a cash equivalent transfer value (CETV), also known as a transfer value.
Transferring from a Defined Contribution scheme
If you're thinking of transferring from a defined contribution scheme, you should ask your scheme administrator or pension provider for a transfer value. This is the amount that your scheme will pay across to the new pension provider in lieu of your benefits in the scheme. Once you have transferred, you'll have no further rights under the old scheme. You may also lose any additional benefits that the scheme provides, such as life cover. You should also check to see if there are any charges arising if you transfer, or if you will lose any valuable guarantees.
Transferring to a new employer
If you transfer to a new employer’s defined benefits pension scheme, you may be offered additional years membership of the scheme in return for the transfer value. These would increase the pension that you build up in the scheme.
If you decide to transfer, you need to notify your scheme administrator or pension provider in writing. They will often have a form for you to complete. They will then liaise with the scheme that you want to transfer to. In some circumstances, the new scheme could refuse to accept the transfer.
Changes to transfers from Public Sector schemes
As of April 2015 members of unfunded public sector pension schemes are no longer able to transfer out to defined contribution pension schemes, although transfers to other defined benefit schemes may still be permitted. The Local Government Pension Scheme (LGPS) is a funded arrangement so transfers from this scheme to defined contribution pension schemes are still permitted.
Where can I find out more?
If you need more information, please contact us. A pension specialist from our team will be happy to help with whatever pensions-related question you have. Our help is always free.