Thinking of transferring out of the Plan? Here's what you need to know
Deciding what to do with your pension savings is a big decision, so it’s important to look at the bigger picture when you’re considering your options. The main options available to you are:
Have your benefits paid from the Plan.
Take a cash sum transfer to an alternative pension provider – known as ‘transferring out’.
In this article, we focus on what transferring out of the Plan means. Shortly, in another article we’ll explore the other options available to you if you have your benefits paid from the Plan, so keep your eyes peeled for that.
Transferring out means that you can choose where your cash sum is invested. When it comes to the time to start taking your benefits, you could:
Use an income drawdown arrangement to withdraw money as and when you need it. Or,
Use some or all of your investments to purchase an income for life (known as an annuity) from an insurance company that is tailored to your circumstances.
Transferring out of the Plan may give you more flexibility with how you can take your pension savings. However, depending on the options you choose, you would be giving up a guaranteed income that increases each year, and potentially a pension for your spouse too, if you die first. If you choose to transfer out of the Plan and purchase an annuity, the amount you receive might differ from your Plan pension too. You can find out how your pension increases are calculated in the Plan booklet, which is available on ePA.
Transferring out of the Plan is a big decision and we’d recommend taking regulated financial advice to ensure you’re making the right decision for your circumstances.
If, after considering your options and taking financial advice, you decide to transfer your pension benefits, WTW (your Plan Administrator), have to carry out scam prevention checks. It may mean your transfer out takes a little longer to complete, but these checks have been introduced for anyone transferring their pension benefits and are designed to keep you safe. WTW will conduct their due diligence and check for amber or red flags, which have been defined by the Pensions Regulator.
If an amber flag is identified, you may be required to have a pensions safeguarding appointment with MoneyHelper, usually via a phone call. If a red flag is identified, the Trustee are obligated to stop the transfer to protect you from a potential scam. If a red flag is identified, WTW will contact you to discuss this in more detail.
Where can I find help?
If you decide to transfer out of the Plan, it’s important that you understand what’s involved, and know how to take the relevant precautions to protect yourself from scams. You can read our article on staying safe from scams here.
To help you explore your options, there’s a short video on ePA that provides an overview of the choices available to you at retirement, including transferring out. You can watch it here.
Any decision about your pension requires careful thought, and financial advice from an expert can help. If you’re considering transferring out of the Plan and your transfer value is more than £30,000, you are required by law to take advice before you transfer.
To give you a helping hand, the Trustee will pay for eligible members to receive one round of advice from its appointed Financial Adviser, Origen Financial Services. You can find out more about getting financial advice from Origen, including the eligibility criteria, here. Or you might want to choose your own Financial Adviser, but you will need to pay for their advice yourself. You should ensure that your adviser is registered with the Financial Conduct Authority (FCA) to give advice on retirement options.
MoneyHelper, a Government-backed service, can provide you with free impartial guidance about pension schemes and retirement options. You can visit their website here.