Pension Transfer Adviser in Cambridge

If you’re thinking about transferring or accessing your pension, and the value of your pension pot is more than £30,000 you should seek professional advice.

TYPES OF PENSION

Pensions fall into two main categories

There are two main types of pension schemes – Defined Contribution (aka ‘money purchase’ or ‘DC’) and Defined Benefits (aka ‘final salary’ or ‘DB’) .

Transferring benefits from one DC to another DC pension is reasonably straightforward because you are moving a pot of money from one pension provider to another offering the same type of arrangement. However, there are three main things you must consider:

  • The charges – are the charges higher or lower than the scheme you’re considering transferring and how much will it cost to make the transfer? Charges may also include any penalties involved.
  • Investment risk – the level of risk of the pension fund you’re invested in and the fund or funds you’re considering investing in. Are they suitable for your risk tolerance? And;
  • Guarantees or "Safeguarded Rights" – does the existing scheme provide any guarantees like bonuses or a guaranteed annuity rate (income) at retirement? Losing these may be very costly.
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Don’t be tempted to base your decision to transfer your pension solely on "past performance"

WARNING: Transferring benefits from a DB pension scheme to a DC pension involves taking on risks. You would be giving up guaranteed benefits in favour of benefits that are not guaranteed. The benefits will rely on future investment returns, interest rates and inflation, and the value of your pension may be reduced by charges.

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Our recommendation

We recommend you avoid firms who are actively promoting DB transfers

You should be very cautious about transferring benefits from a DB final salary or defined benefit (DB) pension scheme and we recommend you avoid firms who are actively promoting the idea of doing this.

However, there may be specific reasons or circumstances that mean a DB transfer could make sense. For example, poor health, limited death benefits, having no dependants, having to retire early, a restricted lump sum benefit etc. Therefore, you need to fully understand and weigh up your options versus the risks.

If you are considering a DB transfer get professional advice from someone who is appropriately qualified and registered with the Financial Conduct Authority (FCA) as a “pension transfer specialist”. This is potentially a high-risk area of advice, therefore, any advice you receive is likely to have commensurate costs attached.