Personal Pension Transfers

All You Need To Know About Personal Pension Transfers

The Personal Pension Plan Explained

The Personal Pension Plan was established in 1985 as a way of ensuring that those employees who were not offered a company pension would still be able to save for their retirement through separate pension provision. A personal pension plan, also known as PPP, allows more flexible contributions to be made into a pension plan than those made through a company pension plan. Although the contribution levels are entirely up to the individual, tax relief is only allowed at a certain percentage of annual net salary, at specified stages. The personal pension plan is also seen as beneficial for those who are self-employed.

Personal Pension Transfer - The Basics

A personal pension transfer will involve transferring the funds from one pension provider to another. This means that all the contributions you have made so far can be transferred to another pension company and from that point onwards you will be making your contribution into the new pension provider.

Personal Pensions are normally transferred when people decide to change their jobs. This is often seen as the most beneficial time to undertake a personal pension transfer but financial advisers also warn that people should not just undertake the personal pension transfer without careful research and consideration. It also advisable to seek good professional financial advice in this matter. It should also be noted that people decide to make personal pension transfers when they are unhappy with the benefits or service of their current pension provider or when they believe that another pension provider may provide them with better benefits.

Personal Pension Transfer - When To Transfer

It can often seem difficult trying to weigh up the pros and cons of whether to transfer your personal pension or whether to stay with your present provider.

This is why one of the first places to seek reliable personal pension transfer advice is within the company itself. Try talking to the company accountant in order to establish whether or not it is possible to stay with the current pension provider and continue making the contributions. It may be possible to continue with your present scheme, for example, and then also contribute to a new scheme with your new employer. It is important that you enquire before you make a decision, so that you are as well-informed as possible.

Personal Pension Transfer Tips

• Ask for a "transfer value analysis", a computerised calculation, which will enable you to compare your current pension plan with an alternative pension plan.
• Make sure you fully analyse the financial position of your present scheme before you decide to go ahead with the personal pension transfer.
• You also need to fully analyse the risks of the new pension plan. There is always bound to be a certain amount of risk in personal pension transfer but you need to be happy with that level of risk and research it before you go ahead.
• Don't even consider making a personal pension transfer if you are ten years or less off retirement, unless the benefits of income drawdown (avoiding low annuity rates by keeping your pension pot invested) outweigh the benefits of a secure payout.
• Always take good professional financial advice before deciding on your Personal Pension Transfer.