Need Help with Pension Transfers?

Many of our customers are seeking on-going pension transfer advice from our Peterborough based financial advisors.

Here at Derngate Wealth we understand that pension transfers can be very complicated and can bring along many things to consider before going ahead. You must remember to think about your circumstances carefully.


For those that are considering a pension transfer into a new personal pension plan or self-invested personal pension (SIPP), we have planned out a few key questions that you need to take into consideration. Please note that whether a pension transfer is suitable or not will very much depend on your own personal circumstances and intentions.

There are specific risks you need to be aware of if the scheme you’re thinking about transferring out of is a workplace defined benefit pension scheme.

1.    What’s the difference between Stakeholder and Personal Pensions?

You will soon discover that personal pensions work out more expensive than stakeholder pensions, so if you do have an advisor, it would be a wise idea to discuss this through. Maybe your advisor will think that a stakeholder pension is not suitable for you, and if this is the case be sure to know exactly why.

Along with stakeholder pensions being cheaper, some now provide access to quite a wide range of funds. So if you are looking for some flexibility in your investment choices, there may well be a stakeholder pension to suit you.

2.    Will my new Pension cost the same as my current one?

If the new pension scheme is of a higher cost, you need to make yourself well aware and satisfied that these additional expenses are all for a good reason. For example, if the new pension is offering you access to more funds than your current pension, ask yourself can you live without them? You wouldn’t consider taking out a more costly mortgage or insurance policy without a good reason, so why consider this with your pension?

The new pension key features document that the pension provider will give you, will provide you information about all the costs. Be sure that the documents refer to the actual investments and funds you will be using. To be able to analyze any issues that may arise, you need to read all the documents you’re given thoroughly.

3.    Is it wise to transfer all my pensions into a single new pension?

If you are presently holding several pensions and want to put them all into one new pension, again, be very aware of any new or hidden costs. If you have an advisor, they should be able to explain them thoroughly to you.

You might be in for some luck if one of your existing pensions already meets your needs and intentions, as you will then be eligible to transfer all your pensions into one. So you may not need a new pension to put all your pensions together.

 4.    Will I lose out on any benefits?

It is a high probability that your current pension has valuable benefits that you would lose if you were to transfer out of it, such as a Guaranteed Annuity Rate option (GAR) or death benefits. A GAR option is where the insurance company will pay for your pension at a specific rate, which could work out much higher than the rates available in the market when you retire.

5.   If I transfer my pension will there be any penalties?

This all depends on the size of your fund so it is recommended to check if a penalty applies in your case. Some pension transfers could apply a penalty when you transfer out, and can be significant – sometimes several thousand pounds.

6.   Should I take ongoing advice?

This will all depend on your own personal situation and pension choice. You advisor will be sure to explain all of this. Some pensions will require ongoing reviews to maintain the balance of your portfolio, whereas others won’t.

It is also a possibility that the amount of risk you are prepared to take will change over a period of time. Question yourself if you have enough knowledge about investments and what decisions to make without the help of an advisor.

7.    Will the investments in the new pension be right for the amount of risk I’m prepared to take?

Please note that investments can go up or down, and either way it is very important the investments chosen are suitable for the amount of risk you are prepared to take with your money. You may want to let your advisor make recommendations for you, or you may decide to make all the decisions yourself.

Whether you choose on-going advice or just a one off visit, it’s necessary to inform your advisor so they can be clear about what they might charge you.

It’s prudent to have financial advice, even if you have had lots of experience in the investment field. So unless you are absolutely certain, it’s a good idea to seek professional advice. At Derngate Wealth, our Financial Advisors in Peterborough will be happy to help with your pension transfers and point you in the right direction to suit your requirements. Why not give us a call today.



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