As retirement draws closer and closer, finding your lost pension pots becomes a priority.
But finding your lost pensions is one thing. Deciding whether or not to transfer and consolidate your pension pots is another. Which one is more important? Very likely both.
Here at Raindrop, we make the process of finding and transferring your lost pensions straightforward. We're here to simplify pensions and help you plan for your retirement.
You may be thinking of transferring your pension savings into one pot. You can, but you need to carefully evaluate if it’s the right option for you as some pensions are more difficult to transfer than others. In this guide, we answer the most pressing questions about transferring your pensions, whether you do it yourself or with the help of a financial professional.
Should I transfer my pension?
If you are considering transferring your multiple pension pots into a single pension plan, you should carefully evaluate your options. The benefits of transferring your pensions into a single pot include:
- You have full visibility of your life savings when you transfer them into one pot.
- You may pay less in fees. It might be better value to pay the charges of a single pension provider rather than the fees of multiple pension providers.
- You will find it easier to manage than keeping track of multiple pensions across various providers
- You can have confidence in your retirement plan knowing that your pensions are combined and accessible in one place.
Whatever your reasons for transferring your pensions into a single plan, keep in mind that the value of your pension is not guaranteed as investments can go down as well as up.
There's no right or wrong answer as to whether you should transfer your pensions or not, as it depends on your circumstances.
How do I transfer my pension?
Transferring a pension is more or less complicated depending on the pension type. A defined benefit pension is considerably more difficult to transfer than a defined contribution one.
It is important that you check what types of pensions you have saved over the years before deciding whether to transfer and consolidate them.
Can I transfer a defined benefit pension, such as a career average or final salary scheme?
The main risk of transferring a defined benefit scheme pension is that you almost certainly lose out on a guaranteed income and your retirement income might be lower than it would have been if you stayed in the scheme.
If you've been saving into a defined benefit pension scheme for a long time, it may not be beneficial to transfer. It provides a guaranteed income for life when saving in this type of scheme. Would you risk losing the certainty this pension provides you with?
For a defined benefit pension with a value above £30,000 you are required to consult a financial advisor before you request a transfer of this type of pension.
Can I transfer from a defined contribution pension scheme?
It is easier and there’s generally less risk when transferring from a defined contribution scheme and, in most cases, you are able to authorise the transfer and consolidation yourself, without needing a financial advisor.
Transferring to and from this type of pension is fairly straightforward. You should ensure the fees you'll pay to your new pension provider won't be more expensive than they currently are. You should take into consideration any extra fees that may come with the transfer and whether you agree to those.
Again, there’s less risk involved in pension transfer when you consult a financial advisor who is knowledgeable in pensions and likely able to help plan for your retirement better.
Can I transfer my pension to another person, such as my wife or a family member?
Unfortunately, this is not possible because pensions are personal, similar to how individual saving’s accounts are. Only in two circumstances can your pension be transferred to someone else: in the event of a divorce and in the event of your death.
- In the event of a divorce, you might be entitled to a portion or all of your partner's pension pot as a pension is a financial asset. Whether you're entitled to it is determined by the court as part of the financial settlement.
Essentially, the court will treat the pension as a shared asset with your partner and will decide how this should be split equitably between you and your former-partner.
- In the event of your death, your pension savings will be transferred to your dedicated beneficiaries. The rules are different in terms of transferring your pension when you die, depending on whether you saved in a defined benefit or defined contribution scheme.
Can I transfer my work pension to a Self-Invested Personal Pension (SIPP)?
Most pension providers allow a pension transfer to a SIPP, as well as a transfer from a SIPP to another SIPP.
A SIPP allows you to manage your pension investments yourself, instead of having your pension provider invest your pension funds on your behalf.
You can authorise this transfer yourself without the help of a financial advisor.
Can I transfer my pension abroad when I decide to retire in another country?
If you choose to retire outside the UK, you should still be able to receive your personal and/or workplace pension.
However, a pension transfer could potentially be pointless, for example, if your pension provider agrees to pay your pension savings into a non-UK bank account. Talk to your pension provider before moving to a different country - usually moving to another country to retire is not an issue to receiving payments.
The same principle applies to the State Pension. You would be able to receive it if you move outside the UK subject to you being eligible to receive the State Pension.
If you do decide that you want to transfer your UK pension overseas, a financial advisor will help you navigate the transition as there are certain rules set by HMRC that you'll have to follow. You'll need to transfer your pension to a Qualifying Recognised Overseas Pension Scheme (QROPS), an overseas scheme that meets the criteria and rules of the HMRC.
It is also possible to transfer a pension from an overseas account to a UK pension provider, depending on the UK provider's rules and terms. It is a slightly more difficult and complicated procedure, as UK pension providers will have to check the account for anti-money laundering procedures and various other considerations.
It is also worth noting that the taxation of pension savings and the income taken from them is likely to differ from how pensions are taxed in the UK.
Is a financial advisor always necessary in a pension transfer or can I transfer my pensions myself?
A financial advisor can be very helpful in navigating the complicated world of pension transfers. You can benefit from their pension knowledge and experience in the industry and in making the right decision. But it is not always necessary to hire one when transferring your pension - it’s your decision to hire one.
You are only required by law to have one by your side when:
- you decide to take the entire defined benefit pension pot and cash it in, in one go.
- When your defined benefit pension is worth more than £30,000 and you want to transfer and consolidate it to a defined contribution pension pot.
Generally, a pension provider can give you peace of mind and show you what decision is best for you and your savings.
Pension transfers are a solution to your financial needs
And Raindrop can help you with that.
You will have a dedicated pension assistant who will find your lost pension pots and help you transfer your pension pots automatically into one consolidated Raindrop pension account, allowing you to be financially in control and stress-free.
With your authorisation, your pension assistant transfers and combines them into one single pot. The process can usually take 2-6 weeks, however in some instances it can be faster or take longer (it depends on your previous pension providers). This way you have easy access to your pension, you know exactly how much it's worth and your mind is finally at ease.
Find and transfer your forgotten pensions today.
Please note that if you chose to combine your pensions into one consolidated Raindrop pension account, your capital is at risk as with all investments. The value of your pension pot can go up as well as down. Tax treatment depends on an individual’s circumstances and may be subject to change in the future.