Let’s get one thing out of the way before we continue our series on pensions. It’s all about talking with an independent financial adviser. We’re giving you the best general advice that we can, because we think that you’re awesome and you really do deserve to have this type of information. However, you really do need to make sure that you’re always getting the best specific information possible. Professional advice is really where it’s at. Even though you’re going to be essentially paying for it one way or the other, you still need it. This is your future that’s being discussed here. Relying on general advice is something that can really cause you harm if you’ve overlooking something. Since we don’t personally know you it’s something we just have to get out of the way here.
Now then, back to what we were actually going to discuss today… pension transfers. Yes, it’s true — there might come a time where you’re going to want to transfer your contributions from one pension pot to another one. If you just have fifty thousand pounds lying around, you’re probably going to want to move it somewhere else…but why?
There are a few reasons for that. Let’s say that you have a personal style pension that’s got a lot of fees attached to it. You would probably save some money moving it to a Stakeholder pension — but you have to crunch the numbers for yourself. You also might want to consolidate your pensions because you have them all over the place from switching jobs or moving around in a different way.
Did you know that there are actually two different types of pensions, when you really get down to it? You have the final salary pension schemes. These are the ones that people really love, because you are basically guaranteed a fixed portion of your final wage. These are also referred to as defined benefit pensions. They’re not as common as they used to be… now that there are money purchase pension schemes afoot.
You have to keep in mind that you will not be able to transfer all pensions all the time. For example, if you are within a year of retiring, you’re not going to be able to transfer your pension around. These laws are designed to keep predators from preying on you when you need the money the most. Also, if you have a final salary pension, chances are good that you really don’t want to transfer your pension. Make sure that you really do sit down with the IFA — this is part of their job. Finding an IFA that handles virtually nothing else but pensions is a good thing. Every IFA will have a specialty that they really focus on. This will help you get the help that you really need. Good luck!