Pension transfers uncovered
Important information: The value of investments and the income from them can do down as well as up, so you may get back less than you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not normally be possible until you reach age 55. This information is not a personal recommendation for any particular investment.
It’s easy to build up several pensions with different employers over the years, but this can make it a challenge to manage and keep track of retirement savings. Many people find it easier to have all their pensions in one place, where you only have to deal with one company. Plus it can be cheaper, if the charges of your selected provider are lower than you’re currently paying.
The majority of pensions are moveable and you have the freedom in most instances to transfer your pensions to a provider of your choice. One option is to transfer your pensions to a Self-Invested Personal Pension (SIPP) due to the flexibility and convenience that this type of pension offers.
Of course, it’s not always in your best interest to move a pension and we cover the things you need to think about later on in this article. But first, let’s take a look at some of the reasons you may want to consider moving pension provider.
Why you may want to consider a pension transfer
There are a number of reasons why you may want to consider moving pensions into a SIPP.
One company to deal with
Having only one pension administrator means you’ll only have one set of paperwork and can view and manage your pension in one secure account management area. You’ll be able to more easily see how much you have, where your money is invested and how your investments are performing, enabling you to take more control of your retirement savings.
Easier to manage your investments
It’s important to have a well-diversified portfolio to help spread any performance risk. It could be that across your current pensions you hold a high percentage of investments in a particular fund, asset class or region. Being able to see your investments in a single place makes it easier to see how your investments are split, and if you feel you are over-exposed in a particular area then make changes to give you a more balanced portfolio.
Potentially wider investment choice
The investments you choose to hold in your pension can have a big impact on your pension’s performance. The investments in more traditional pensions can be more restricted than those in a modern SIPP, which give you a wide choice of investment options so you have more ways to make your savings grow.
Potentially lower cost
Cost is one of the few elements of investing that you can control through your choice of pension provider, and it’s never more important than when it comes to your retirement savings. A seemingly small difference in cost at the start of your savings journey can add up to a huge difference by the time you come to retire. Learn more about how pension fees breakdown and why they matter.
Flexible income options at retirement
We now have more choice and flexibility in how we access our pension than ever before. The usual age we can access our pension from is 55. You can choose to take tax-free cash, flexibly access your pension through income drawdown or buy an annuity to take a fixed guaranteed income - or indeed any combination of these. Some more traditional pensions only provide the option to buy an annuity, so if this is the case and you prefer to drawdown an income whilst keeping the rest invested then you will need to transfer. The income that you can get from an annuity also varies across providers, so if this is your preferred option it’s always wise to shop around. Learn more about pension income options.
The Government offers a free and impartial guidance service to help you understand your options at retirement. This is available via the web, telephone or face-to-face through government approved organisations, such as The Pensions Advisory Service and the Citizens Advice Bureau. You can find out more by going to pensionwise.gov.uk or by calling Pension Wise on 0800 138 3944.
Things to think about before making a transfer
Transferring pensions may not be suitable for everyone, and although in many cases it’s relatively simple to move they can be complex at times. As with all financial decisions there are important factors to consider and you should check these with your existing providers before transferring out.
Do any of my existing pensions contain valuable benefits?
One of the most important things to check is whether any of your existing pensions contain valuable benefits that will be lost if you transfer away. For example, final salary pensions, guarantees of income or investment returns, early retirement options, a greater entitlement to tax free cash than the standard 25%, life insurance, to name a few. If this is the case it’s likely that it won’t be in your best interest to transfer.
Will I be charged exit fees?
You should check to see if your current plans will impose an exit fee if you go ahead with a transfer. Fidelity cover up to £500 if any your current providers charge exit fees ( T&C apply).
How do the charges and investment options compare?
Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the benefits, charges and features offered.
Are any of my pension pots under £10,000?
If the amount you wish to transfer is less than £10,000 then you may be able to take it all as a ‘small pot lump sum’ with your existing provider. You can usually take the tax-free part as normal with the balance taxable at your highest rate of income tax. Taking your money in this way doesn’t trigger the lower money purchase annual allowance that restricts tax relief on your future contributions to £4,000. It also doesn’t use up any of your lifetime allowance (the upper limit on tax-advantaged pension benefits). If you transfer such small pots into one account which then exceeds £10,000 the option of taking it all as a small pot lump sum could be lost.
What if I change my mind?
If you transfer your pensions and then change your mind, your previous pension provider may refuse to re-instate your benefits. So check the cancellation period and whether your provider would be happy to take your money back within this period should you decide not to go ahead.
Pension transfer factsheet
Full details can be found in our pension transfer factsheet.
You can also view frequently asked questions about pension transfers to Fidelity on our pension transfer page.
Important information: It’s important to understand that pension transfers are a complex area and may not be suitable for everyone. Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the benefits, charges and features offered. To find out what else you should consider before transferring, please read our transfer factsheet. If you are in any doubt whether or not a pension transfer is suitable for your circumstances we strongly recommend that you seek advice from an authorised financial adviser.
How long can I expect a pension transfer to take?
Most leading providers use an electronic transfer system called Origo, which means your pension can be transferred electronically within about 10 business days.
In the event your provider does not use Origo then your transfer will need to processed manually and paperwork will be issued by post. Manual pension transfers can take 8 to 10 weeks to complete, but this does depend on the paperwork required to be sent between the two providers.
Guidance and tools
If you’d like more information, go to www.fidelity.co.uk/pension-transfer where you can find out more about Fidelity’s SIPP and commonly asked pension transfer FAQs. On our site you’ll find lots of guidance tools, retirement planning calculators and information to help. Our UK and Ireland call centre is also on hand to offer you guidance and support and answer any questions you may have. Just call 0800 028 1819. Lines are open Monday to Friday 8am to 6pm and Saturdays 9am to 2pm.
Isn’t it time you took control of your pensions?
If you’re finding it hard to keep track of your pensions, then now could be a good time to take control and bring them together in a Fidelity SIPP. Plus, get £50 to £1,500 cashback (exclusions, T&Cs apply).
Exit fees terms and conditions
In order to request exit fees re-imbursement you will be required to complete an exit fees re-imbursement form which you can download by clicking here, or request over the phone by calling us on 0333 300 3351.
Terms and conditions for re-imbursement of exit fees
This offer does not apply to any investments linked to an Adviser / Intermediary or third party.
Fidelity will reimburse the exit/redemption fees charged to a customer by their former provider/s when they move their investments (minimum of £1,000) to Fidelity Personal Investing, up to a maximum amount of £500 per customer.
An exit fee is an administration charge which is imposed by the former provider and arises directly as a result of processing the transfer or re-registration of the customer’s investments to Fidelity. Fidelity will not reimburse the customer for any loss of investment returns, loss of interest, dealing charges, penalties for transferring investments before their maturity dates or any other charges associated with your transfer or re-registration.
Where a re-registration or transfer is not possible and the customer chooses to sell their investments held through another provider and subsequently make new investment/s (minimum £10,000) through Fidelity Personal Investing, Fidelity will cover any account closure fees charged by the customer’s former provider (excluding any dealing charges) of up to £500 per customer. Fidelity will not cover any bid-offer spreads or any capital gains tax liability arising as a result of these transactions.
Exit and account closure fees reimbursement must be claimed within a 6 month period from date of transfer of the customer’s investments to Fidelity. Exit fees will be reimbursed for transfers and re-registrations and account closure fees will be reimbursed provided the conditions above are met. Products included: ISAs, Investment Accounts, EBS SIPP, Fidelity Personal Pension, Fidelity SIPP, Unit Trusts, OEICs, SICAVs, Exchange Traded Funds, Investment Trusts and Shares.
To qualify for the reimbursement, the fees from the customer’s former provider must have been triggered as a direct result of the transfer or re-registration to Fidelity Personal Investing, or the closure of an account where the customer has subsequently (within 6 months) invested at least £10,000 through Fidelity Personal Investing. If the customer is transferring investments to more than one provider from their former provider at the same time, Fidelity will only reimburse the fees which are incurred as a result of direct transfer or re-registration to Fidelity. Other fees or charges unconnected with the transfer will not be reimbursed.
The completed Exit Fee Reimbursement Form and documentary evidence of the charge will need to be provided in order for the exit fees to be reimbursed to the customer. To claim the reimbursement of any account closure fees, documentary evidence of the closure fee levied will need to be provided to Fidelity, along with confirmation that a minimum of £10,000 has been invested with Fidelity within 6 months of incurring such closure fee.
The documentary evidence referred to above, must be either a copy of the charge confirmation letter from the former provider or a statement showing the charge being deducted.
Payment will be made to the customer by BACS when a bank mandate is held on the account. Alternatively, payment will be made by cheque.