information guide to UK pension Transfers
Can I Transfer Any Pension?
Almost all types of occupational
and private pensions
can be transferred. There are some exceptions, however,
particularly for public sector workers.
• If you left a public sector pension scheme before
1st January 1986, you can't transfer
• If you are a member of a final salary pension scheme
that provides a pension that rises in line with inflation,
you can't transfer
• If you are within one year of your pension scheme's
retirement age, you can't transfer
The good news is that in all of the scenarios above, you
would almost certainly end up with a big reduction in your
pension entitlement if you transferred to a different pension
- so the rules are protecting you.
Pension Transfers: Common Questions / FAQs
Q: Can I transfer a pension into cash or an
A: No. Money in a pension fund can not ever be taken out
of it until you retire - and even then there are strict
rules controlling what can be done with the money.
You can only ever transfer money from one pension to another
The reason for this is (mostly) to do with preventing
Pension contributions are subject to tax relief - you don't
pay income tax on money you put into your pension. If you
could then transfer it out again to cash, the result would
be widespread tax evasion!
Q: Can I transfer my old pension into any new
A: Not necessarily. Pension schemes aren't required to
accept inward transfers and some do not.
Before you start a pension transfer, you should take
advice from a financial adviser (IFA) about your choice
of pension scheme and make sure your new pension will definitely
accept your transfer.
Q: Are there fees for a pension transfer?
A: You may be charged fees when transferring a pension
- in some cases these can be several percent of
the transfer value and should be considered before
deciding whether to transfer.
Even if your new pension offers better benefits, you need
to know if they will outweigh the fees you will pay.
Fees are usually deducted from your transfer value at the
time of the pension transfer.
Q: My existing employer's final salary pension
scheme is in deficit (short of funds). Should I transfer
out of it?
A: There is no one correct answer to this question. You
should take advice from an IFA about your options.
These are some of the factors you should think about:
• Why is the company scheme in deficit - is it just
a short-term glitch or is the company in trouble?
• If you transfer out at this point, you will be
likely to get a reduced transfer value, in proportion to
the scheme's deficits. If you stay in and the fund gets
back in the black again, you will get your full pension
entitlement back, too.
• In April 2005, the government introduced a new
scheme to protect people whose company pension schemes go
bust. Transferring out could mean you lose your entitlement
to this protection. (See the UK
government's Pension Protection Fund website for more
Q: My employer has offered me a cash lump sum
to switch from the company's final salary pension scheme
to a personal pension. Is this a good idea?
A: Final salary schemes are increasingly expensive for
companies to run, and not surprisingly, many companies are
closing them as fast as they can.
It's perfectly legal for your employer to make you an offer
like this - but remember that they are only doing
it to save money, not to help you.
If you are offered a cash incentive, remember that you
will have to pay income tax on this money - which could
reduce its value considerably.
If you have received an offer like this, you need to get
in touch with an IFA and have them analyse all the facts
and figures to see whether you will benefit from transferring
out of your employer's pension scheme.
Q: My employer has just gone bankrupt. What
will happen to my company pension?
A: You may have heard or read in the newspapers of people
losing their entire final salary pensions due to their employer
going into administration.
The good news is that the government now provide some protection
from this. The Pension Protection Fund was launched in April
2005 and will take over company's pension responsibilities
in situations like this, subject to some limits.
Whatever happens, you shouldn't be left with nothing, although
your pension may not be quite as much as you would have
When a company becomes insolvent (bankrupt), their pension
scheme will normally have to be wound up and closed.
If you are in this situation with a final
salary pension, you probably won't be able to transfer
your pension out once the company has gone into administration.
You will have no choice but to wait until the winding-up
process is complete to see how much you will get, but unlike
people in the past, you should be protected by the Pension
Q: I think I have some pensions I have lost
track of over the years. Can I find these and transfer them
into my current scheme?
A: You will need to take professional advice over whether to transfer
your lost pensions, but you can find them using the government's
Pension Tracing Service.
See all Pension