Pension Transfer

By: EconomyWatch   Date: 5 October 2009

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Pension schemes are important in augmenting every individual’s long term and short term financial needs. In the dynamic world of finance, companies always explore various avenues to guide and attract people to invest their assets and pension amounts with them. People who invest in different pension schemes try to look for the best deal offered and subsequently, transfer their pension assets and other investments accordingly. Pension transfer is highly preferred as it ensures maximum returns and offers tax relief on retirement.

Pension transfer involves:

  • the pension account holder and
  • a fund transfer plan that is linked to a second pension services management firm.

More specifically, it induces swapping of one’s pension assets and altering the scheme’s contributions by directing it to a different pension scheme. Every transaction is regulated by the Financial Services Authority (FSA). 

Pension Transfer: Some important tips

The following tips will help those who want to find the best pension transfer scheme and take advantage of understanding the transfer process:

Suitable Pension Transfer advisor: The process and regulations of a pension transfer law is complex. To get the best advice, one must consult:

  • an advisory firm or
  • an independent advisor for all transactions

Advisors keep track of the latest changes in:

  • pension laws and
  • regulations

Evaluate Benefit and Growth Levels: Pension schemes have various levels of benefits and a period where one’s previous pension amount needs to mature in order to match the amount. This requires a due diligence to be evaluated on:

  • the benefits and
  • their ROI and
  • tax relief needs before signing on for a pension transfer.

Retirement Age and Nominations: To make a pension transfer less than 10 years before the specified retirement age, check if the potential pension scheme offers:

  • similar rights
  • returns
  • security of investments

It is also essential to evaluate the:

  • nominations
  • dependents and pension holder death policies

Fee Structure: Do not miss evaluating:

  • the management fee structure
  • annual fees
  • other statutory deductions

Switching from an existing occupational pension scheme to a different pension scheme is something to review and reflect on with care. The new scheme may fail to match the benefits that were provided by the previous employer contributions. A serious evaluation of pros and cons is required before going forward with a pension transfer scheme.


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