"Your Rough Guide to UK Pensions"

Get Your Free Pensions Quote Now
Annuities Best Buy Tables

Pension Basics

UK Pensions Easy Guide

How to Get a Pension

Pension Transfers

UK Pension Reforms

Pension Tips

Why Bother?

Pension Alternatives

Left it too Late?

Types of Pensions


Annuity Best Buy Tables

Occupational Pensions

Personal Pensions

Stakeholder Pensions

Stakeholder Discounts

SIPPs Pensions

Other Pension Types

Useful Tools

Your Three Golden Rules

How to Summary

Buyers Checklist

Pensions A-Day

Get a Quote Now

Pension Calculators

Jargon Buster

Common Questions

Useful Contacts

About Us

Who Are We?

Testimonials / Press

How we can help you

Help a Charity

Contact us / Feedback

MoneySorter Home

Pensionsorter is an appointed Representative of Rockingham Independent Ltd Authorised and Regulated by the Financial Services Authority FSA No: 427234

Increase Your Pension Pot... Here's a Way You Can... Click Here to Find Out More

Pension Transfers

Your basic information guide to UK pension Transfers


What is a Pension Transfer?

Why Transfer Your Pension?

How Do Pension Transfers Work?

Transferring From a Final Salary Pension

Transferring From a Money Purchase/Personal Pension

Can I Transfer Any Pension?

Pension Transfers: Common Questions

What is a Pension Transfer?

A pension transfer is the process of transferring - ie switching or changing - the value of your contributions that are in one pension scheme to another pension scheme.

For example if you have £50,000 sitting in one pension scheme and you want to transfer it to another pension scheme...|

Doing this ends your membership of the original pension scheme.

Understanding whether you will benefit from a pension transfer can be complicated and you should always take advice from an independent financial adviser before arranging a pension transfer.

In this section, we'll explain how pension transfers work, what the main rules are and what you need to think about if you're considering transferring one pension to another. We'll also look at some common questions about pension transfers.


Why Transfer Your Pension?

Everyone's situation is different, so you won't necessarily benefit from a pension transfer just because other people you know are transferring their pensions to new schemes.

However, there are situations where it does make financial sense to transfer your pension to a new or different scheme - here are a few possible examples:

• Your existing company scheme is being wound up

• You have a personal pension that has high fees and you would like to transfer it to one of the new breed of low-fee stakeholder personal pensions.

• You have loads of small pensions, perhaps from a variety of employers, periods of self employment and various Additional Voluntary Contributions (top-up) plans and you would like to amalgamate them all - perhaps in a SIPP (Self Invested Personal Pension)

• You would like to add your existing personal pension to an occupational pension scheme to benefit from lower fees/employer contributions. Only a minority of employers allow this.

You can't transfer any state pension benefit.


Whatever your situation, there is one golden rule of pension transfers that you must not ignore:

Take professional advice from an Independent Financial Adviser (IFA)

IFAs are regulated by the Financial Services Authority (the UK government regulator) and are required to give you impartial advice based on the facts and on your individual circumstances.

They will be able to understand your current and new pension schemes and will work out whether you will actually benefit from transferring your pension or whether you may end up losing out.

An IFA will also be able to suggest a suitable pension product for you to transfer your old pension into, if you need this (although there won't be any obligation).

Some IFAs specialise in pensions transfer work so always ask if your adviser is qualified to do this. Pension transfer work is complex so you don't want an IFA who spends 99 per cent of the time on mortgages, do you?


How Do Pension Transfers Work?

There are strict legal rules about pension transfers. You don't need to understand them all, but you should know at least the basics if you are considering transferring your pension.

The first thing you need to know is what type of pension you want to transfer from.

There are two basic types of pension.

It's important to understand these because the transfer value of your pension is calculated differently for each type.

1. Final Salary Pension Schemes

Final salary pensions guarantee you a pension that is a fixed percentage of your final salary - i.e. the salary you had when you retired or left the company.

Final salary schemes are also known as Defined Benefit pensions because the benefit (pension) you will receive is fixed in advance - regardless of how much your contributions are worth.

2. Money Purchase Pension Schemes

Your contributions to the pension scheme are invested and added together with money from others into a fund.

When you retire, the total value of your contributions is calculated. This money is then used to purchase an annuity, which gives you a guaranteed income for the rest of your life.

Money purchase pensions are also known as Defined Contribution pensions - because your contributions are fixed but the benefit (pension) you will get when you retire is not.


Read On

Transferring From a Final Salary Pension

Transferring From a Money Purchase/Personal Pension

Can I Transfer Any Pension?

Pension Transfer: Common Questions

All material UK Pensions Guide and Information © Moneysorter Ltd 1999 - 2008