Pension Transfers - 10 Key Points To Consider
4) If you have problems with your transfer…
If your scheme trustees fail to meet the six month deadline then you are entitled to an updated value calculation which will then be paid to you with interest. If you still have trouble then you may contact The Pensions Advisory Service at www.pensionsadvisoryservice.org.uk and they may be able to assist you.
5) Be aware you may not get what you ask for…
You need to be aware that the company which provides your new pension scheme is not legally obliged to accept your transfer value. If this happens there is not much you can do except ask for them to reconsider this decision.
In most cases this won’t make any difference and the only other option you are left with is to transfer out to a personal pension or buy-out policy/Section 32/contract (A buy-out policy is a one off transfer used to transfer pension entitlement from an Company Pension Scheme to a stand-alone policy - you cannot make further contributions after the transfer is in place). Again it’s wise to ask for independent financial advice if you are faced with these choices.
6) Be aware you may get less than what you were promised…
If you were a member of a money purchase scheme then figures quoted in a Transfer Value Statement can fluctuate - the figure given you in the transfer value may not have been guaranteed. If that is the case you will not be able to do anything.
If you were a member of a final salary scheme you must accept the transfer value within the three months allotted for acceptance - if not the figure may be reduced and there is nothing you will be able to do.
If you accepted within the three months but were given less than quoted and you are unable to get your scheme trustees to pay the missing amount after you contact them, then contact The Pensions Advisory Service at www.pensionsadvisoryservice.org.uk to ask for their guidance.
7) Be aware your scheme may be in deficit, and therefore again your transfer value will reduce…
This happens when the scheme actuaries deem your pension scheme to be in deficit.
If this is the case your transfer value may be reduced because the scheme trustees will only be able to provide values which reflect the ability of the scheme assets to be able to pay the transfer value quoted. You will then get less than you may have been expecting, because the transfer value reduces.
If you find this to be the case then one alternative is to sit tight and not transfer in the immediate instance, but reassess the status of the scheme in a year or two’s time, when by then the scheme may have recovered sufficiently to be out of deficit and able once more to pay healthy transfer values for those wishing to transfer.
This sort of decision needs to be based on a thorough understanding of the overall financial status of the company and it’s future prospects though. You will also need to try and discover why the company has a deficit - if it is on rocky financial ground, it may never recover at all.
Additional reasons your transfer value may be lower than you feel is acceptable…
a) The wrong pensionable pay figure was used in the calculation of the deferred pension.
b) A transfer from a previous scheme was missed or overlooked.
c) Additional Voluntary Contributions may have been missed too.
Please continue reading this article on page four… >>>