Description

A single contribution Personal Pension arrangement funded by a transfer from another pension arrangement, usually an occupational scheme but may be Retirement Annuity, FSAVC or another Personal Pension which itself originated from an occupational scheme.

Examples of Use

• Anyone with benefits in a previous pension arrangement or policy.

Advantages

• Potential for improved investment growth.
• Puts benefit under personal control; no longer need to deal with previous employer/trustee.
• May allow a greater range of options at retirement i.e. timing, annuity design, phasing or drawdown.
• Retirement allowed from age 50 (55); previous scheme may restrict early retirement options.

Disadvantages

• Cannot take Protected Rights before age 60.
• Loss of any scheme guarantees.
• Loss of any discretionary benefits and favourable early retirement and ill health provisions in previous scheme.
• Possible loss of guaranteed annuity terms

Points of Interest

• Particular care should be taken when considering a transfer from a Final Salary/ Defined Benefit Pension Scheme as this will involve giving up defined pension benefits and replacing them an arrangement where the eventual pension will depend upon investment performance.
• Transferring from occupational pension schemes can change the format of benefits for example the tax free cash at retirement and the benefits on death before retirement may be different.
• This is an extremely complex area of financial planning and it is essential that professional advice from an appropriately qualified individual is taken.