This is a question I was asked about when transferring your pension in their 30s
Question: I have 65k in a private pension, I recently joined the civil service and have been offered a transfer into their DB pension scheme at a value of 8k.
I’m in my early 30s and I’m looking to contact a financial advisor but just want some basic advice first on what to consider in this situation, I’ve very limited knowledge on pensions so any help would be appreciated.
I will not comment in too much detail but give some tips that you might find useful for the situation.
Answer: The FCA stance is that you shouldn’t need to transfer out DB pensions and it is a pain and will be costly in the U.K. reports cost 500 GBP and offshore 3000-4000 GBP.
What you can get if you don’t want to get full advice from an IFA is you can get a Yes/No answer on whether the IFA thinks you should transfer without too much detail. This doesn’t cost as much but it does depend on the IFA firm or person offering this service.
Another tip is that the pension regulator lets you use 500 GBP (3 times) for financial advice.
I can’t comment to say you should transfer it out but based on the brief details you have made but some benefits could be:
- You are young so you can get could growth on the DB scheme if transferred out
- Negatives (general)
- You give up a guaranteed income
- No returns on investing are guaranteed.
For a DC pension and one that I see several do is once you have left the company they the pension into SIPPs.
You have relatively low cost platforms these days and this can give you more control over the investments. For a simply DIY option lifestyle funds are target dated are pretty reasonable that are used by many as a one-stop shop.
Summary
This was a question that I received as an email through the website. If you have a question about transferring a pension, then please do email me and I will be happy to help, you can email me at info@investmentsforexpats.com.
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