Transferring a pension isn’t the right move
for everyone to make, as we all have to consider different circumstances when
making our decision. However as this article reveals, there are some situations
in which transferring your pension fund could turn out to be a very good move indeed.
The process of setting up a pension seems
to be rather simplified when you first look at it. You consider where to start
up your private pension, get everything set up and then start paying into it
every month. Job done – or at least you would think that was the case.
In reality people sometimes change their
plans regarding their pensions, and there can be some very good reasons why
this might happen. For example it is generally accepted that the best pension
to have is one that your employer provides for you. This is because they pay
into it as well as you, so every month you have two lots of payments going into
your pension pot.
However if you leave that job and move on
to another one, you will retain your pension pot from the first employer and start
a new one with your next one. You can keep your pension pot growing with the
first employer’s scheme if you wish, but nothing else will be going into it
each month. You may have the option to go for a pension transfer in this situation if there are benefits to doing
so. It is always wise to seek proper independent advice on this matter as no
two situations will be exactly the same. Don’t make a decision now based on
your own point of view as it could be the wrong one to make.
Since most of us change jobs and companies
through our working lives, it is not unusual to end up with several pensions
held with different companies and schemes. There are often advantages to
bringing several smaller pensions together and putting them all into one single
pot. For instance in some cases you can pay lower charges by having a larger
amount in one pot instead of having your pensions spread around in different
places. You need to work out your sums and assess what is best in your case
though before deciding what to do.
There is also the chance that old pensions
that you haven’t paid into for years could be achieving a very poor return for
you. When you leave a particular job it is easy to forget about the pension you
had there, even though you should still have the paperwork from it. In fact if
you suspect you may have a pension you haven’t thought about (or paid into) for
a while, now is the time to do something about it. If you find a pension like
this is performing badly you should almost certainly transfer it elsewhere.
However as we have mentioned before in this article, do seek professional
advice before doing this to make sure you have covered all your bases. You want
to make the right decision now to put you in a better financial position in the
future when you do eventually retire.
As you can see there is a lot to think
about and the idea of transferring a pension should not be taken lightly. The
more advice you get now, the better off you are likely to be in the future.
