Company Pension Transfer
When you working at an old job you may have been contributing to a Company Pension policy. This could have been multiple employers or just the one.
These pensions could currently be frozen and put to better use by transferring them to a new policy.
What you need to know
- You were working for a company or companies in the past and were a member of their pension scheme(s) but no longer work there.
- You may also have various Personal Pensions of various types which you no longer pay into which can be combined if beneficial.
- You can transfer all or some of your past pensions into a new money purchase scheme.
- We can find out the current scheme benefits from Final Salary Schemes and transfer values for you. If it is beneficial to transfer these into a fund under your control we can advise and help you do this.
- You can access your Pension Fund from age 55.
Speak to someone today
If you would like to speak to someone directly today,
please give Howard a call.
Available Monday - Friday 9am to 6pm
Obtain your signed permission
Pensions are complicated and in our 32 years of experience need two face to face meetings at your home.
The first meeting so you know who you are dealing with, how we operate and to discuss what you have pension wise. We will run through our process and complete all of our initial paperwork at that meeting. We will also obtain all necessary permissions from you to get all the information and paperwork we require from each scheme concerned.
Agreement / Paperwork
Following the initial meeting we will contact all of your pension providers and obtain the necessary information and paperwork we require. Upon receipt we will prepare the necessary reports, receiving scheme paperwork if applicable and suitability report for our advice prior to our second meeting.
At the second meeting we will run through each of your schemes and our findings and the reason to transfer or not as the case may be and complete the necessary paperwork to complete the process. Following this we will prepare and submit all applications as necessary from our office and follow this through to a conclusion keeping you up to date as we go.
Following completion of the process you will be able to log into the providers website and see your values at any point plus we will keep an eye on things as per our servicing agreement.
Be advised that we do not cold call, we do not mail shot, we do not pester people, we do not force people to make decisions they do not want to. Everyone who we see is as a result on an enquiry led by them, meaning that the potential client has made the decision to look at and in most cases transfer their Final Salary Scheme or Personal Pension, or SIPP into a new arrangement be this a new Personal Pension or Annuity or Flexi Access Drawdown arrangement. Whilst we are not order takers, the point of this declaration is that we do not force or push people into making such decisions. We still go through a lengthy advice process to check viability, attitude to risk, product and fund selection and point out all of the pitfalls and benefits either way. In some cases we do not agree and this is pointed out to clients. We do not transact insistent client business.
Do you have a frozen Company Pension?
This is where you were working for a company in the past and were a member of their pension scheme but no longer work there. This scheme could be a Final Salary scheme or a Defined Contribution Scheme. This could be a single previous employer or several. Many people also have Personal Pensions of various types which we can also look into and combine if beneficial. If you transfer a final salary pension scheme into a money purchase arrangement such as a personal pension, or straight into a Flexi Access Drawdown plan, then you are giving up the scheme guarantees pre and post scheme retirement age and you assume the investment risk and annuity risk and there is no guarantee that you will be better off as a result. This is not for everyone of course and it may not be for you. Minimum age for a final salary transfer is age 50. This is dictated by our PI insurer unfortunately.
Some reasons you should use us to transfer your pension(s).
- Very Competitive Transfer Fee Structure
- Access to our initial advice and ongoing advice review process
- Only the best product providers used
- Flexibility of product and fund selection
- Extensive Industry Experience
- We are totally Independent, Directly Authorised Advisers.
- We are friendly and talk plain English and no waffle.
- No pressure selling from us.
Why would you transfer your pension?
Some reasons to transfer your final salary scheme
- You were a scheme member for over two years and wish to combine all of your pension pots.
- It's a long time until you retire. To leave your preserved benefits for many years represents a higher risk than you wish to take as you are not in control of it and anything can happen, so you want to transfer it for safety and control.
- You wish to be in control of all of your pensions and make the decisions. By transferring out of the final salary scheme into a personal pension pre retirement, you ring fence yourself from any future scheme issues.
- Scheme and regulator rules and regulations may change in the future which may not enable you to transfer your pension scheme.
- Legislation changes which may stop you transferring (case in point, teachers, nurses, fire fighters, government sponsored schemes post pension freedoms)
- Early retirement penalties if they apply to your scheme mean that you would receive far less than expected if you wish to retire early by remaining in the scheme.
- The scheme can change its rates which could be due to funding issues which means you could get less in retirement than you were expecting.
- The scheme may be closed to new members, administered by a third party company and reliant on investment return, current shrinking membership contributions and sponsoring employer contributions. This is then reliant upon the sponsoring employer solvency and commitment to pay into the scheme to support it, (case in point British Steel, Debenhams "Sir Phillip Greene" and many more. Never say Never).
- The possibility of the scheme entering the Pension Protection Fund (PPF) and you receiving less than you were expecting is always a possibility now days.
- You left under a cloud and wish to sever all connections with your former employers.
- The scheme is offering an enhanced transfer value and it looks like a good deal.
- You may wish to look at retiring from age 55 or phasing it in. There are early retirement penalties in the previous employer scheme.(Some schemes, not all, but some levy a 4% per year penalty for early retirement. (e.g. scheme retirement age 65 you want to retire at age 55 which is 10 years early so 10 X 4% = 40% reduction)).
- You no longer work for the employer. Your preserved pension is more than £40,020.00 (2019-2020 tax year) and if there is a chance the scheme may enter into the PPF before your retirement age of 65. Your preserved benefits will be reduced to the PPF cap and then reduced by 10%, so you wish to ensure that you protect your retirement benefits.(see next point for more detail)
- You think the previous employer could go out of business and you are worried that the Scheme Pension may end up in the Pension Protection Fund (PPF). From the 1 April 2019, the cap at age 65 has been set at £40,020.00 This is an increase of 2.6% from the 2018/19 cap which was £39,006.00. The increase reflects the level of wage inflation over the period. As the cap is applied before your compensation is reduced to 90% of our levels, the actual amount you would receive as a capped member retiring at 65 is £36,018.00 (source PPF website https://www.ppf.co.uk/news/changes-compensation-cap 19.08.2019). This means that in normal circumstance if your scheme enters the PPF at age 65 you will receive 90% of what you thought you would. If, however your pension is more than £40,020.00 and your scheme enters the PPF at your scheme retirement age your pension will be reduced to the cap and then by a further 10%. The PPF also operate further early retirement penalties. Check link for the figures (source PPF website https://www.ppf.co.uk/sites/default/files/file-2019-02/compensation_cap_factors_2019_4.pdf 19.08.2019).
- Check and see if your old scheme is in the PPF https://www.ppf.co.uk/schemes/index
- The scheme is underfunded and has a shortfall.
- You are single and do not wish the company scheme to provide a spouses pension at retirement and may get a better deal elsewhere.
- Your health could be an issue now or in the future as you are not in the best of health currently.
- The death benefit under the current scheme is not as good as transferring it out to a personal pension where it would be return of fund tax free on death.
- You are looking to take advantage of current high transfer values being offered by many schemes.
- You want to take the Tax Free Cash at age 55 from one or a combination of all of your previous pension schemes combined but do not necessarily require extra income.
- You could get a better deal by transferring out and purchasing an annuity on the open market.
Some reasons not to transfer your final salary scheme
- Your retirement benefits based on you service and entitlement built up while you were a scheme member are guaranteed at scheme retirement age commonly age 65.
- If your scheme was an opted out scheme then the entitlement from the opted out money carry certain guarantees. If you transfer these guarantees are lost.
- Your scheme benefits will increase each year from the date you left commonly by RPI or CPI with a maximum level of increase until you reach scheme retirement age and then your pension will increase each year in payment until you pass away.
- Payment of your pension is guaranteed in retirement.
- Your Spouse if married at the time benefits are taken is entitled to a spouse's pension in the event of your death pre and post retirement.
- Pre and Post Retirement you have no investment risk by leaving the scheme with the current provider.
- You have no annuity risk either because your entitlement is guaranteed by the scheme. In the event of the scheme sponsoring employer failing then it could be transferred into the Pension Protection Fund (PPF). The PPF will at 65 pay you 90% of the pension entitlement indexed in retirement. If you wish to retire early then early retirement penalties will apply in the PPF.
- If the scheme enters the PPF after you have drawn your pension at age 65 your benefit is unaffected as you were in receipt of benefits prior to that event.
- If your anticipated pension is below the PPF Maximum cap pre retirement then the cap will not affect you.
- The Financial Conduct Authority (FCA) deem it acceptable that in the event of a scheme sponsoring employer failing pre your retirement benefits with them and then subsequently the scheme ends up in the PPF an initial pension on a reduced basis of 10% is an acceptable outcome for you.
If you feel this could be for you...
- Do you know what that scheme is going to give you at retirement money wise as your current pension stands?
- Do you know when your scheme retirement date is?
- Can you retire earlier or access the money earlier than the scheme retirement age?
- Is the company still trading and taking new members into the scheme?
- What are the current Company Scheme benefits such as indexation of paid up members, indexation at retirement in payment, Guarantee Period, Spouses Pension, Death in Service pre and post retirement, How Much Tax Free Cash will you get at retirement. If you were to retire early, what is the cost in the scheme benefits and tax free Cash? There are lots of questions to ask your scheme. We can help with that.
- Would you be better off by transferring out and ring-fencing your fund?
- How long before you retire?
- Can you afford to retire? We can help with your retirement planning and help piece it all together.
- Have you applied for a state pension forecast yet? We can help with that.
- If you were to retire or access that scheme at say age 55 what would the scheme penalty be. (Assuming you are under age 55 currently)
- Are you over age 55 but under age 65 but could do with a cash boost from say the Tax Free Cash and or income from a pension Scheme you have?. We can help you.
- What is the transfer value of your benefits under that scheme? You may be surprised at the amount, many are. We can help you find out.
- If you were to transfer out what are the benefits, what are the costs and could it make a difference to you now or at age 55.
- We can find out all of this for you. You will need to contact us.
- If your scheme is an Unfunded Scheme or State Sponsored then you can’t transfer it. Legislation in April 2015 stopped all transfers out.
The Government announced Pension Freedoms in the 2014 Budget to start in the 2015/16 tax year. It means anyone aged 55 and over can take the whole of their pension pot as a lump sum, paying no tax on the first 25% and the rest taxed as if it were a salary at their income tax rate. An excessive withdrawal in excess of the Tax Free Cash could put you in the high rate tax bracket and is not best advised.
Final Salary transfers are frowned upon by the FCA but have been available for many years. Transfer activity has increased since the introduction of Pension Freedoms and this coupled to low interest rates and the way transfer values are calculated has pushed up transfer values from these schemes. Also there are long term scheme implications of affordability to take into account for the already under pressure final salary schemes.
Mr George Osborne introduced Pension Freedoms and he stated that it was our clients own money and many were sensible enough to make their own decisions which is in essence in the area of advise that we operate. This meaning that some clients have already made enquiries into options, some have scheme quotes before making enquiries to us, others already know what they want or have a keen interest to find out more. Some people have no idea what they have and want us to help find out and sort out the mess.
We are in a media world of negative news about all subjects which is the most sensational news to relay to the public via the media. We only hear about the bad things or press statements about bad things or warnings that the press and in some cases the regulator wants us to hear. Likewise we do not hear about the good things and all of the people who have benefited from transfers out of final salary schemes and as a result are very happy.
Because of regulator and Professional Indemnity Insurance restrictions we cannot transact a Final Salary Transfer for someone under age 50. Our view is that this is quite restrictive for all the many people under age 50 who want to transfer out but we are governed by our PI insurance providers terms and conditions and the regulators stance on trying to restrict the market for transfers. This, however does not apply to personal pension switches or SIPP switches into New Personal Pensions. If you are under age 50 and wish to transfer, please still apply and we will hold your information on file and when the stance changes or softens we will then be able to assist you.
What are the risks?
- The value of funds can increase as well as decrease in an invested contract.
- There is no guarantee that you will be better off as a result of a final salary transfer into an invested contract.
- Transferring a Final Salary Scheme you give up any scheme guarantees and assume investment risk and annuity risk but you gain control of the fund.
- Drawing income from an invested contract will deplete the fund if too much is taken and or if investment return is not sufficient to cover the income. A large market swing (seen in March 2020) could decrease your pension fund significantly, in some cases 25-30% until market recovery.
- There is no absolute guarantee that your Final Salary Scheme would not end up in the Pension Protection Fund where you could receive less than your may have been expecting.
- Smoothed funds are allocated a specific growth rate which is reviewed on a monthly and quarterly basis by the provider.
- If the market moves up or down by 10% over a 5 day consecutive period the core fund may be adjusted in value up or down in value which would either increase or decrease the value of your holding overnight. You would still receive your specified daily growth rate and this can be altered at the fund reviews by the provider.
- Pure Cash Fund is available but it offers no growth.
- There is a 28 day notice period to switch out or into a smoothed fund for fund stability when fund switching.
- There is no such notice period if you are taking income from your pension.