There are many reasons you would consider a transfer out of a workplace pension scheme. In the event of this occurring, you should know where you stand before you make a decision.
Why you would transfer out of a workplace pension?
You may want to transfer out of a workplace pension scheme, or it may happen because of a change in your circumstances or your employers circumstances.
This can include:
- You’re changing or leaving your job
- Your current pension scheme is being closed
- You want to transfer to a better pension scheme
- You have multiple pensions with different employers and want to consolidate them
- You’re moving overseas and want to move to a scheme in that country
What happens to your benefits when you transfer out of a workplace pension scheme?
When you opt out or stop making contributions to a scheme, you do not lose the benefits you have built up as a result. These still belong to you and you can choose what to do with them. Your scheme administrator or pension provider can advise you on your options.
Where can I transfer my pension pot?
Most schemes will usually allow your benefits to be transferred to another pension scheme. This could be to:
- A new employer’s workplace pension scheme
- A personal pension scheme
- A self-invested personal pension scheme (SIPP)
- A stakeholder pension scheme
You don’t have to make your decision on transferring your pension straight away. You can generally transfer your pension pot at any time up to a year before you are expected to begin drawing your pension. Also, some schemes allow you to transfer your pension after you have started to draw pension benefits.
Finally, if you do decide to transfer out of a workplace pension scheme, make sure you are aware of the risks involved.
Self-invested personal pensions
If you opt for a SIPP, make sure you are fully aware of the risks so you avoid financial mis-selling. Mis-selling occurs when you are given advice unsuitable for your situation. If the investment made on your behalf was a higher level of risk than you were made aware of, or you were guaranteed high returns which didn’t materialise, it may have been mis-sold.
Find out more about mis-sold SIPPs in our blog.
If you have been mis-sold a SIPP, you may be eligible for compensation. Get in touch with our team of legal experts to discuss your options today.