Transferring Pensions, What is a Pension Transfer?
What is a Pension Transfer?
A pension transfer is basically moving/transferring some or all of the funds from one pension pot into another. A pension can sometimes be referred to as an annuity.
What is a Final Salary Pension/Annuity?
A final salary pension/annuity pays a set guaranteed regular income to you from your retirement age to the date of your death. The income you will be paid is worked out by the pension providers using complex calculations based upon your income from employment and number of years worked, together with your estimated life expectancy.
When calculating life expectancy, the pension providers will take into account any medical conditions that you may have and lifestyle factors, such as if you smoke. This is due to the fact that if you are a smoker, your life expectancy is assumed to be much less than a healthy non-smoker.
Is Transferring your Pension a good idea?
You may feel it is a good idea to transfer your pension if: –
- You are changing jobs.
For example, if you have more than one employer and you want to consolidate your pensions into just the one pot.
- Your current pension scheme is being wound-up or closed by your existing pension provider.
- There is a better deal to be had by transferring to another pension provider.
- If you have, or are considering moving abroad, you may wish to move your pension fund into a pension arrangement scheme to another pension arrangement in the Country that you are moving to/or have already moved to.
Can a Pension/Annuity Transfer be Mis-sold?
The Financial Conduct Authority (FCA) have recently been monitoring and reviewing all pension schemes much more closely than in previous years, due to their concerns about mis-sales of pensions/annuities, as well as the pension advice given to customers by their pension advisers.
What is a Mis-sold Pension/Annuity?
A mis-sale of a pension/ annuity can take place when the customer’s advisers did not properly advice or shop around for the best final salary based upon the individual’s circumstances.
A person who is a smoker, for example, would normally be viewed as having a shorter life expectancy than the average healthy non-smoker. Therefore, it would be expected than any pension fund/annuity paid to a smoker would be of a higher value to a non-smoker to factor in their shorter lifespan.
Unfortunately, not all pension advisers shopped around for different pension/annuities for their client, nor did they advise that other pension/annuities could been much more beneficial.
Not only does a pension/annuity mis-sale affect the individual pension holder, it can also affect their spouse or partner.
What if I am Worried about my Pension Transfer?
If you are worried about any of the advice you were given regarding your pension/annuity transfer or no options were discussed or given to you by your adviser about any existing medical conditions, then it is worthwhile getting this checked independently.
We would be delighted to assist you with this on our “no win, no fee” basis.
In the event we are successful, our fees are 20% plus VAT (equivalent to 2