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BLOG: Your five-point pension transfer checklist

Paloma Kubiak
Written By:
Paloma Kubiak

If you’re looking to tackle your life admin, and you want greater control over your finances, combining pension pots is a good place to start.

Today’s worker is likely to move from job to job, racking up an average of 10 employers – and pension pots – during their lifetime.

This can make keeping track of separate pensions difficult, which is why many people opt to consolidate their savings into one manageable pot. The main benefits include less admin, reduced fees and greater investment choice.

Penfold, the digital pensions platform, has seen a 341% rise in the number of successful pension transfers between 2020 and 2021. Since launch in 2019, more than 40,000 customers have signed up to Penfold and more than 4,000 have trusted Penfold to combine their pension pots.

Chris Eastwood, co-founder at Penfold, said: “Having all your pension pots together in one place gives you real peace of mind, making it so much easier to view how much you’ve saved and how much more you need to reach your retirement goals. However, difficult and confusing processes have prevented savers from finding and transferring their pensions, meaning they are missing out on the benefits that consolidating pots brings.”

If you’re ready to engage with your pension savings, Penfold shares this five-point checklist to get you on your way:

1) Check fees and charges

It’s important to compare providers’ fees as well as exit or transfer charges. Each pension provider will charge a fee for managing your savings and the difference can have a big impact on your pot.

A 35-year-old with a £10,000 pension pot invested for 30 years (based on 7% annual investment growth, 2% annual fee) could have a pot worth £44,452. If the money was with a pension provider charging a 0.75% annual fee, this same pot might be worth £64,994.

Exit and withdrawal fees can also dent your savings. Some providers charge percentage exit fees which is particularly bad for those with large pots. Others charge fixed fees which have a greater impact on smaller pots.

Another point to note is that if your employer is currently contributing to your pension, transferring out may mean you lose these payments.

Finally, some pensions (Defined Benefit) also offer special benefits or guarantees. These are more complicated to transfer, and you’ll need to speak with a financial adviser before making the move.

2) Contact your new provider

You need to send your pension details including the name of your old pension provider, your pension policy reference number, and an estimate of your total pot value to your new provider and ask them to start the transfer.

Remember, if you’re moving to a new provider, you’ll need to make sure your new pension is set up first before starting the transfer.

3) Lost pension pots

If you have lost track, there are ways to find them. Do you know the name of your old employer? Can you find some paperwork with the name of your pension provider or your policy reference number?

Don’t worry if not. The government’s Pension Tracing Service can help you hunt them down. You’ll need to give as much information as you can. You could also search for ‘pension’ in your email or call your old employer if it’s still in business.

Penfold has a ‘Find My Pension’ service to help track down any lost or forgotten pots. All you need is the name of your old employer and their team of pension experts will do the heavy lifting in finding and combining your pensions.

4) Investments sold to cash

As your pension savings are invested, the investments will need to be sold to turn your pot into cash, unless the receiving provider offers in-specie transfers.

Most pension providers will take care of this for you. The money is then transferred to your new pension provider before being invested into your new plan.

5) Watch out for pension scams

There has been a significant rise in pension scams, with more than £2.2m losses reported between January and May 2021.

It often starts with a cold call or an unexpected email about an investment or other business opportunity; taking your pension money before the age 55, and the ways you can invest your pension money.

Once you have transferred your money into a scam it is too late. Some people have lost their life savings and still face a worrying tax bill.

Ready to combine your old pensions? Discover how Penfold’s award winning pension makes it easy and faff-free.