Transferring Defined Contribution Pensions


Are you thinking of transferring your defined contrition pensions into a new personal pension plan? Well, it can be a complicated process if you’re not conversant with how to go about it. Moreover, there a lot of considerations to be made so that you’re fully aware of the implications. There are vital questions that you should ask yourself. The key thing that will determine whether a transfer is suitable for you or not is your individual circumstances. Here are the considerations that you will need cognizance of.

contribution pension transferring


You will need to determine whether the new scheme is more expensive than the current one. If it’s more expensive, check if the extra cost is justified and if you’re content with them.


Many pension schemes often come with added benefits such as Guaranteed Annuity Rate (GAR) and health benefits. Check if the new pension scheme has the same benefits so that you don’t lose out. Compare with the current pension scheme and establish if there are any benefits in the current pension scheme that you’ll lose as a result of transferring to the new one. If the benefits are the same, or more, then you can continue with the transfer. However, if you’re losing some benefits which are vital and this isn’t acceptable to you, then you need to reconsider the transfer.


Check if your current pension scheme imposes charges when you transfer out. These charges are normally exorbitant. You ought to check in advance to see if it applies in your case so that you can establish if you’re in a position to meet these charges.

Degree of Investments Risks

Each pension scheme has to invest your money in one form or another. They can choose a particular form of investment which is different from what you are used to. Investments also have different degrees of risks. Thus, your previous investment may have had average risk while the new one has added risks. Whatever the case, it’s up to you to determine whether you can handle the degree of risk associated with the new pension scheme. A fair word of advice would be to go ahead with the transfer if the new pension scheme has a degree of risk that you’re prepared to take. You can go ahead and seek advice from a financial adviser to assist in risk analysis.

Your Needs and Objectives

This is the key and most important consideration. If a certain pension scheme, say a stakeholder pension scheme, provides access to a wide range of funds and getting access to a wide range of funds happens to be your objective, then, by all means, go for it. Your needs and objectives are paramount. You should only proceed with a transfer if the new pension scheme aligns itself with your needs and objectives. Again, you can use a financial adviser to guide you through various options so that you can get that pension scheme that suits you.

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