Transferring your pension

A pension transfer is when you move your pension pot from one scheme to another. You may be able to transfer all of your pension pot or just part of it, however, not all pension schemes will allow you to transfer only part of your pension pot. Before making any sort of pension transfer, you will also need to ensure that the scheme you wish to transfer too will accept the transfer.

Reasons you may want to transfer your pension

You may want to make a transfer to or from your pension scheme if:

• your pension scheme is being closed.
• you have found a better pension scheme.
• to consolidate pensions from more than one employer, bringing them together into one pension scheme.
• you're going to live overseas and want to move your pension to a provider in that country.

What you should consider before transferring your pension

Before you initiate any transfer of your pension pot, you should consider if:

• your existing pension scheme allows you to transfer part or all of your pension fund.
• the scheme that you wish to transfer your pension pot into will accept the transfer.
• you'll have to make payments to the new scheme and if so, how much.
• there will be any charges for making the transfer.
• you'll lose any right you had to a protected pension age when you transfer your pension pot.
• you'll lose any fixed or enhanced protection you have when you transfer.
• you'll lose any right you had to take a tax free lump sum of more than 25% of your pension pot under the pension scheme before 6 April 2006.

We would strongly advise getting advice before making any decisions about transferring your pension.

Please contact us and one of our pension advisers can give you independent advice on general pension rules and regulations.

Pension transfers and tax charges

In order to avoid these tax charges, there are conditions that must be. These conditions include:

• where you transfer your pension pot to.
• whether or not the pension pot has already started paying your pension.

Where can you transfer your pension pot to?

You can transfer your pension pot to:

• another registered pension scheme.
• a qualifying, recognised overseas pension scheme (QROPS).
• the Pension Protection Fund (PPF) or Financial Assistance Scheme (FAS).

If your transfer doesn’t meet these conditions then the transfer payment will be an unauthorised payment. This will result in both you and your scheme administrator will have to pay tax on the transfer.

Pension liberation - being approached to unlock or access your pension

Unfortunately, there are some companies using misleading information to offer personal loans or cash incentives, enticing savers to unlock their pension pots early. This is known as “pension liberation”. In most cases, these companies will tell you that there is a legal loop hole they are able to use so that you will not have to pay tax. There is no legal loophole.

If you have any suspicions that a person or pension scheme may be engaging in a pension liberation scam, you should contact Action Fraud on 0300 123 2040.

Transferring pensions already in payment

You can transfer your pension pot even if it's already paying a pension. However, there is a condition to this being allowed. This condition is that the transfer must be on a ‘like for like’ basis - so the type of pension you will receive after the transfer must be the same as the type of pension you were receiving before the transfer.

In this situation, you must transfer all of the pension pot that is being used to pay your pension. If your transfer doesn’t meet these conditions then the transfer payment will be an unauthorised payment. This will result in both you and your scheme administrator will have to pay tax on the transfer.