Myths about transferring your pension

Myths about transferring your pension

You don’t have to be an expert to make the most of your pension. Thanks to the internet and modern technology, more people can learn how to maximise their pensions and make changes that reflect their needs. One way you can do this is by transferring your pensions to a provider better suited to you. The digital world has made transferring and consolidating your existing pensions a breeze. However, there are a lot of myths out there stopping people from making the most of their pension pots.

Perhaps you are looking for a better deal on fees than with your current provider, or maybe you have worked several jobs and have lots of pension pots scattered around. Whatever the reason, if you have been considering transferring your pension but don’t know how to distinguish fact from fiction, this little informative guide is here to help.

Below we take a closer look at common myths about transferring your pension, dispel them, and give you the confidence to make the right choices for you.

Myth #1: It costs too much to transfer your pension

Providers do impose exit charges. That is true. However, these exit fees are unlikely to be expensive. The reason: rules introduced by the financial regulator means the charges are limited.

It’s possible for other fees to be associated with a pension transfer, admittedly, but you shouldn’t only be focused on the short-term. If you benefit from lower annual fees with a new pension provider, you’ll cancel out the transfer cost and ultimately save money in the long term.

Myth #2: It takes too long

It’s fair to say a lot of people view pension transfers as long, arduous journeys – and they’re not prepared to go down that path. The good news is this scenario is miles from the truth. Okay, it’s not quite at the speed of a one-click purchase at Amazon, but you also won’t be waiting around until your actual retirement for the switch to be completed.

A cash pension transfer could take as little as 2-3 weeks (8-12 weeks if the transfer is in-specie). It’s also not difficult to get started. At iSIPP, all you have to do is supply us with the name and policy number from your pension provider, and we’ll get everything up and running. Plus, its all done online, meaning you can ditch the long forms and paper work and get your pensions transferred quickly and easily.

Myth #3: There is more risk when consolidating your pension into one plan

Putting all of your eggs in one basket? When it comes to investment guidance, you’re typically told not to do this.

With pensions, however, the story is different. Yes, by consolidating your pensions, you are placing them all into a single plan. Yet this doesn’t mean your money is sat in one place. In fact, major pension schemes will typically invest your pension across various financial assets.

This diversification, where your money is placed into the likes of bonds, property, and shares, puts your pension into different assets and spreads the risk. Essentially, it’s the same as having your money spread across multiple pension plans, but it includes two notable advantages. Firstly, a singular location for your pension makes it easier to track and manage. Secondly, you could potentially benefit from lower fees – helping you save money in the long run. With iSIPP, we give you the freedom to choose your own investments, meaning you can decide exactly where and how your pension money is invested.



Myth #4: A financial adviser is required for a pension transfer

Even if it doesn’t take that long or cost much to process, transferring your pension isn’t a small undertaking. It is a major change that requires some consideration. In fact many people think it is a requirement to get professional financial advice from a qualified adviser.

It is true that if you have either a final salary or defined benefit pension that includes more than £30,000 worth of safe-guarded benefits, there is an obligation to pursue financial advice prior to any pension transfer.

Yet in most situations, there is no requirement to seek independent advice. As long as you’ve done the necessary research and learned about the advantages and disadvantages of transferring. With iSIPP, whilst a financial adviser may not always be necessary, we still want you to be as informed as possible before going ahead and making a decision to transfer. That’s why we ask you to consult MoneyHelper, the UK government’s free money advice service, before making the transfer.

To Summarise

Hopefully, this guide has helped you understand pension transfers a little more, and removed any doubts you had. With iSIPP, pension transfers are simple and easy to do with low-cost annual fees. Why not take a look now at what transferring your pension to iSIPP could mean for you.




The content of this article is for general information purposes only and should not be construed as legal, financial or taxation advice. You should not rely on the information contained in this article as legal, financial or taxation advice. The content of this article is based on information currently available to us, and the current laws in force in the UK. The content does not take account of individual circumstances and may not reflect recent changes in the law since the date it was created. It is essential that detailed financial and tax advice should be sought in both jurisdictions and any legal advice, if required.

This notice cannot disclose all the risks associated with the products we make available to you. When making your own investment decisions it is important you understand that all investments can fall as well as rise in value and it is possible you may get back less than what you have paid in. You should also be satisfied that any investments you choose are suitable for you in the light of your circumstances and financial position. You should seek financial advice if you are not sure of what’s best for your situation.


Apply now


Subscribe to our newsletter