Indeed it is not uncommon for an individual to hold a number of different pension plans such as a Final Salary Scheme, AVC, Freestanding AVC, Stakeholder Pension, Executive Pension Plan, Self-Invested Personal Pension (SIPP), Small Self-Administered Scheme (SSAS), and so on.
Each of these has in the past been subject to differing rules, contribution limits, charges and withdrawal limitations, and this has changed many times as successive Governments review their pension plans and the alternatives.
In April 2015, the tax rules were changed to give people greater access to their pensions. Pensions can now be drawn down and are taxed at your marginal income tax rates (with the exception of the tax free lump sum) rather than having to buy an annuity. Indeed substantial inheritance tax benefits are now attached to pensions, although there have also been some negatives added such as a reducing Lifetime Allowance Limit and a reduction in the yearly pension allowance for some.
If you’re thinking about transferring a current pension into a new personal pension, stakeholder pension, or self-invested personal pension, there are a number of key questions for you to consider.
But remember, whether a transfer is suitable or not will very much depend on your individual circumstances and objectives.
- Do my existing pension investments reflect my current risk profile and objectives?
- Will the new pension be more expensive than my existing one?
- How is my pension performing?
- Have I nominated a beneficiary on my death?
- Is it a good idea to transfer all my pension pots into a single new one?
- Will I lose any benefits if I transfer?
- Are there any charges if I transfer?
- Do I need to draw my pension?
- Will I need ongoing advice?
This list is by no means exhaustive but it gives you an idea of the type of questions which you should be asking.
The area of pensions is complex and, despite being in the industry for 33 years and being a financial planner, I too sought advice from a pension’s expert for my own pension planning. The planning will address all the questions above and more.
Ask yourself if you have enough knowledge and experience of pension investment to make decisions that will affect how much income you have in retirement, without the need for an adviser.