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All your pension assets – all in one place
Over a working life it can be easy to build up multiple pension plans as you change employers or set up different products. Keeping track of different pension plans can be time-consuming. Plus, when it’s time to start taking an income from your savings, it can be hard to keep on top of what has been paid out, what funds are left and how your portfolio is invested.
Consolidating pensions into a single plan, such as the James Hay Modular iSIPP may be the answer. But it’s vital to ensure that transferring a pension to another provider won’t mean losing valuable benefits and that the costs and terms of the new scheme compare favourably with the original plan. If in doubt, please seek guidance from a regulated financial adviser.
Consolidating with James Hay
James Hay can accept transfers from any other pension scheme, including both personal pensions (including other SIPPs) and occupational schemes. We cannot accept transfers where the pension fund has already been used to buy an annuity.
We aim to make it simple to transfer other plans into the Modular iSIPP:
- There is no charge for making a cash transfer, however £50 per plan will be charged for any in-specie transfers.
- A transfer can be in cash or by moving the investments held provided the assets being transferred are permitted in the Modular iSIPP and the transferring scheme agrees.
- The Modular iSIPP can accept both pensions that have not yet been used to take an income, and pensions that have. (Please note: capped and flexi-access drawdown cannot be held together in the Modular iSIPP).
- If the total held in qualifying investments in the Modular iPlan, including the value of any transferred pensions, is more than £200,000, the £179 SIPP annual administration charge is waived.
Is transferring the right thing to do?
Transferring pension plans into one plan can make it much easier to follow your investment progress, keep track of money taken out, and plan withdrawals in line with the pension lifetime allowance A limit on the amount of pension benefit that can be drawn from pension schemes – whether lump sums or retirement income –without triggering an extra tax charge. The lifetime allowance was introduced in 2006 as £1.5 million but has been reduced over time to £1,030,000. When the lifetime allowance was introduced in 2006 and in subsequent years when it has been reduced, those with benefits valued in excess of it have been able to apply for ‘protection’ to protect the value of benefits they have built up (and that may also build up in the future) from tax charges. You can read more about these different types of protection on the HMRC’s website and your own tax status.
If the fees on previous plans were uncompetitive, consolidating into one plan may also potentially reduce the ongoing costs you pay.
But not all pensions may be suitable for transfer – for example:
- Defined Benefit occupational schemes A pension plan where the income received is guaranteed, based on an individual’s salary and number of years of service. For example, some DB pensions may pay 1/60th of salary for each year of service so after 30 years, a worker would be entitled to a pension that is 30/60ths (or half) of their salary before retirement. Many companies have replaced their DB pension schemes with defined contribution plans because the cost of providing the promised pension is considered unsustainable. Also known as a final-salary pension scheme. (also known as final salary schemes) offer a guaranteed income based on your salary and sometimes other safeguarded benefits, which will be lost if you transfer out.
- Some defined contribution employer schemes may have access to a guaranteed annuity rate (GAR) A feature offered on some defined contribution and older personal pension plans, where a pre-guaranteed rate of income is offered at retirement. The guarantee may rely on taking out a certain type of annuity contract or exercising the guarantee by a certain age or date. A financial adviser will be able to advise if yours offers a GAR and if it offers good value compared to current income options. that could pay a higher guaranteed retirement income than that available on the open market.
- Some occupational schemes may include life cover An insurance contract that, in return for regular premiums, pays out a lump sum if the insured person dies. Some pension schemes may include life cover. that could be lost on transfer.
- Enhanced rights Where a pension scheme offers better-than-standard terms, such as allowing a tax-free lump sum of more than 25% or giving access to the pension fund before age 55. Enhanced rights are most commonly a feature of occupational pension schemes. If someone is thinking of transferring out of a pension scheme, it is important to check that any enhanced rights won’t be lost. Making a block transfer with other scheme members can, in some circumstances, allow enhanced rights to be retained. to a tax-free lump sum of more than 25%, or to take money out before age 55, may be lost unless the transfer is made as part of a block transfer An arrangement where two or more occupational pension scheme members choose to transfer into another scheme at the same time. Where a formal block transfer is made, enhanced rights from the previous scheme (for example, entitlement to a tax-free lump sum of more than 25%, or to take money out before age 55) may be retained. with other scheme members.
- If the existing scheme has lower charges or a wider investment choice or high exit charges Costs charged by some pension plans or investment funds if an investor chooses to transfer their money to another provider. Some pension schemes say they levy exit charges to cover the costs of moving funds elsewhere. , it may be inappropriate to transfer.
Getting advice and guidance
If you are transferring from a final salary scheme or any other scheme with safeguarded benefits, we will insist that you first receive advice from an appropriately qualified financial adviser of your choice who is regulated by the Financial Conduct Authority (FCA) The UK’s chief regulatory body for financial services. Firms that sell or advise on pensions and investments in the UK must be authorised by the FCA. Firms that are FCA-regulated offer investor protection and a complaints system if things go wrong . The adviser must recommend the transfer before we will go ahead. Equally, if you are unsure about ANY transfer to us, we strongly recommend that expert advice is sought.
James Hay cannot provide advice. If you would like to speak to a financial adviser but do not have one, please visit www.unbiased.co.uk or call 0800 023 6868 to find a regulated adviser in your area.
If you are planning to take money out of your pension in the near future, you are also entitled to free, impartial guidance from Pension Wise. You can receive Pension Wise guidance online, over the phone or face to face. Visit www.pensionwise.gov.uk or call either 0800 138 3944 or 0300 330 1003 (from outside the UK +44 20 3733 3495), if you wish to use this service.
James Hay cannot accept any transfer from final salary schemes or other pension schemes with safeguarded benefits unless you can provide documentation of advice from an FCA-regulated adviser that recommends the transfer.
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