Can I Transfer a Pension Already In Payment?

You can transfer a pension pot even if it is already paying a pension but the transfer must be on a like for like basis and you must transfer all of the pension pot.

Failure to meet these conditions will make it an unauthorised payment and tax will be due from both you and your scheme administrator.

Can I Transfer Out Of A Defined Benefit Pension Scheme?

Yes. Transferring out of a defined benefit pension scheme means giving up your benefits in the scheme in return for a cash sum which is invested in another scheme.

It is possible that you could be worse off by transferring out of a defined benefit pension scheme, even if your employer incentivises you to leave. You should seek advice and consider your position carefully before making any commitments.

What Are Pension Transfer Scams?

Be aware that claims that you can obtain tax-free cash from your pension before the age of 55 are highly likely to be unscrupulous and could leave you with very large fees and a huge tax bill. These payments, except in very tightly defined circumstances, are classed as unauthorised payments as far as HMRC is concerned.

What Is Pension Transfer Value?

If you choose to move out of your workplace defined benefit pension scheme, the trustees must convert the benefits built up into a cash sum known as the transfer value or cash equivalent transfer value (CETV).

You can then take this amount and invest it in:

  • another pension scheme
  • a personal or stakeholder pension
  • a buy-out contract (otherwise known as a section 32 contract)

What Are Pension Transfer Incentives?

You may be offered a transfer incentive to transfer out of a defined benefit pension scheme. It could be:

  • an enhanced transfer value
  • a cash payment on top of the transfer value

These offers should be considered carefully since they may not be as attractive as they appear. You may be offered a choice between transferring the whole of the enhanced value into another pension scheme or to take the incentive as cash. If you do take the cash it’s worth remembering that:

  • you may have to pay tax and National Insurance (NI) on it
  • you will receive less pension than if you has used the enhancement as part of the transfer value

In most circumstances it would, in the long run, be beneficial to use the enhancement as part of the transfer. Our advisers can assist in explaining the implications of enhanced transfer values or cash payments.

In Archive