Reasons to transfer a pension
As circumstances change you may want to transfer your pension. Some common reasons include:
- You’ve collected a number of pensions from different jobs and want to consolidate them in one place
- You’ve come across a scheme that offers better value
- Your current pension scheme is being closed
There’s a number of options out there that can offer you a solution - including PensionBee - but it’s important to examine a few things first before you transfer.
Things to check before you transfer
Do you have a defined benefit pension or a defined contribution pension?
Pensions come in two different forms in the UK. Depending on where you’ve worked you’ll either have a defined contribution pension or a defined benefit pension. Most modern pensions are defined contribution pensions, but you may have a defined benefit pension if you’ve worked for a big corporation or in the public sector.
Defined contribution pensions are basically tax-efficient savings accounts for retirement. The amount you have in your pot depends on how much you’ve paid into the pension, how the investments have performed, and what fees you’ve paid to the pension provider. Transferring these pensions is usually relatively straightforward.
Defined benefit pensions are different. They tend to come with a final salary guarantee, which is essentially an agreement to pay you a retirement income based on your earnings and your length of membership in the scheme. These schemes can prove lucrative if you’ve been in them a long time, so it might not always make sense to transfer out. In fact, if your defined benefit pension pot is worth £30,000 or more you’ll need to take independent financial advice before you transfer. At PensionBee we’ll also always send you the full paperwork to review before you commit to a transfer.
Is there an exit charge?
Some older pension plans have high exit charges, sometimes more than 10% of your total pension savings. The good news is that the government is set to crack down on these excessive fees though, so you might want to hold off transferring until these new caps come in. If you transfer your savings to PensionBee, we’ll let you know if we find that any of your old pensions have exit fees of over £10.
Please be aware that we cannot guarantee to find exit fees. We are reliant on clear information from third parties and do not check certain policies considered very low-risk, including where you ask us to waive our usual checking processes in your Account or over email.
Other things to look for
Elsewhere, it’s also wise to consider the following:
- What is the reputation of your new provider? How do they fare when it comes to customer service?
- How involved do you want to be in making investment decisions? With some plans you can choose your own investment funds, whilst others are a pre-picked mix of shares, bonds and cash.
- How much are the fees of your old pension compared to the one you’re transferring to?
- How easy is it to contribute to your new pension? What are the policies around contributions?
Transfer your pensions to PensionBee
With PensionBee you can manage your retirement saving online in one place, and use our pension calculator to set yourself a retirement goal and see how much you should be saving. You can set up regular contributions and make one-off payments quickly and easily from your online account.
Join PensionBee now and take control of your pension saving.
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
Last edited: 09-02-2021