Can I transfer my pension myself?

The answer to this question is ‘yes and no’.

It depends on many factors including the type of pension, its value and attributes which may be gained or lost upon transfer. And, of course, your individual circumstances.

Part one, let’s address Defined Benefit (DB) or Final Salary pensions.

If you have one of these and the transfer value (which is sometimes known as the Cash Equivalent Transfer Value CETV) is below £30,000 then yes you can choose a pension provider yourself to transfer this into.

If the transfer value is in excess of £30,000 then the Financial Conduct Authority (FCA), have mandated that advice must be taken before a transfer takes place.

This makes perfect sense. Having spent a lifetime at work where both you and your employer have contributed into this valuable asset very careful consideration needs to be given to whether a transfer is suitable.

What’s more, the starting point from the the FCA is that a DB transfer for most people will not be suitable.

How will you know what is the best option?

A qualified Pension Transfer Specialist will take you through a 3 stage process, Triage, Abridged Advice and Pension Recommendation to find out what is in your best interests.

By using cashflow planning, they will compare the benefits of your existing scheme with your own personal objectives. If these can be met, then you should be advised to remain in your scheme. If not, then further investigations can be made into options to transfer.

Part two, can you transfer Personal Pensions, Self Invested Personal Pensions (SIPPs), or Group Personal Pensions?

These are types of pension where you and/or your employer pay money into funds which buys units of investment, which in turn creates a fund value. They can be called Money Purchase or Defined Contribution (DC) Pensions.

For these types of pension, yes you could transfer your pension yourself.

There are a number of things to be mindful of:

• Do any of these types of pension have a bonus payment which you could lose if you transfer?

• Are they invested in the type of fund which could either reduce the transfer value or enhance the value at the retirement date of the plan?

• Or, is this enhancement or bonus available upon transfer? This type of fund is called ‘With Profits’.

There are some historic pension funds which provide a guaranteed annuity at the retirement date of the plan. The value of this annuity needs to be compared with current annuity rates. Often this will be a lot higher than current rates and if you did transfer this guaranteed rate would be lost.

Certain types of pension, depending on how old they are, can provide something called Protected Tax Free Cash. This means the tax-free cash amount is more than 25% of the fund. If this type of pension is transferred again this may be lost.

Therefore, whilst it is possible to transfer all of these pensions mentioned above there are valuable benefits which could be lost.

How will you know whether the funds you are going to choose are suitable for your attitude to risk?

Attitude to Risk is how you think about money and how you may feel when if you see your fund decrease in value if stock markets go down. How you would feel about volatility when you see the value of your pension fluctuate in the short term?

There are lots of different pension providers around, and you need to be sure to choose which one will be the most suitable and give you all the flexibility and freedom you need when you want to start taking your pension.

There are over 3000 funds to choose from to invest your pension fund into.

Not all funds perform in the same way and the key to achieving the best possible return is to have a mixed or diversified set of funds. It also worth bearing in mind that the returns of the funds need to be reviewed to ensure the best possible funds are selected.

There’s a lot to consider. Unless you are highly experienced in the investment field there are so many pitfalls transferring your own pension.

Of course there will be a cost to seeking Independent Financial Advice, though a good advisor will not only steer you away from the pitfalls; they are also likely to give you better longer term returns on your pension at a risk level you live with.

Draw up a shortlist of advisors. Ask them lots of questions. Check out their fees (these can usually be taken as you go along from your investments). Then consider if it’s really in your interests to DIY.

Interested in finding out more?

Seeking a second opinion on your financial future costs you nothing.

Simply call our friendly team on 0121 355 4455 or drop us an email to appointments@oaklandswealth.com to arrange a confidential chat.

Oaklands Wealth Management, founded by Helen Blackburn in 2004 advises

clients around the Midlands on retirement planning, pensions & investments.

Her firm holds British Standard BS 8577 for client service & investment process.

Minimum investment is £500,000 (£650,000 for pension transfers).