Strategic Pension Transfer Planning
Make informed moves to protect and grow your retirement fund.
Pension Transfer: Reassessing Your Pension Strategy
When you think of retirement, you think of good times free from stress and the freedom to live your life. For the most part, this dream is underpinned by a healthy pension fund.
To ensure your pension remains healthy, it’s important to have it reviewed regularly. And while you might be happy with it, you might need to transfer your pension. Pension transfers can present themselves for one of many reasons: a new job, a move abroad or a wish to improve your financial planning. Should you look to move pension, it’s important to do so under the guidance of an experienced pension specialist, such as GSB Capital, who understands the complexity of pension transfer rules.
Our financial advisors know when to transfer a pension to another provider, whether that’s to obtain a tax-free lump sum or gain higher returns elsewhere. The experienced team at GSB Capital Ireland has your best interests at heart and hold membership with the Chartered Institute for Securities & Investment.
Pension Transfer Options
At times throughout your life, there may be a need to transfer your pension, that is, to move your pension fund from your current provider to a new one. The most common reason for this is changing jobs and the want to manage or consolidate your pension savings. When you move to a new employer, you’ll have several options for what to do with your existing pension.
Leave your pension with your old employer
Whilst this is the easiest option, it might not be the best serving in the long run. Issues could arise over time, even with minor things such as your address and contact details. On a larger scale, it will be difficult to keep track of multiple pension pots should you start a new one with a new employer.
Transfer your old pension to your new employer
When transferring your pension to a new employer, contact your current provider and obtain your pot value. Once you have this at hand, assess your new employer’s scheme. Do they have a scheme you wish to be part of, or would a PRSA serve you better? Before switching, first review your current pension, assess investment options, any fees and scheme performance.
Transfer your pension to a PRSA
Moving your pension into a PRSA is relatively straightforward, although company schemes can complicate things. That’s because you can only transfer benefits from a company scheme if you were a member of it for less than 15 years and are doing so because the scheme is closing or you’re leaving the job.
Transfer your pension to a PRB
A Private Retirement Bond (PRB) brings all your funds together in one pot that gives you greater visibility and control of your pension. A PRB gives you access to funds at the age of 50 and also gives you more options upon your retirement, such as:
- Withdrawing a once-off tax-free lump sum up to 25% of the pot’s value
- The option to purchase an annuity with the remainder of the pot
- Transferring the rest of the pot to an Approved Minimum Retirement Fund or Approved Retirement Fund
At GSB Capital, our advisors can help you decide what option best suits your needs.
Pension Consolidation
Do you have several pension pots set up that sit with previous employers? If so, pension consolidation might be for you.
Pension consolidation involves pooling these pots into one pension. Doing so makes it easier to assess investment opportunities, manage your money and transfer everything in one swift bulk should you change jobs again. Consolidating your pensions will also give you greater returns over time, meaning you will have more money saved for your retirement.
Simplifying your pension like this takes the stress out of checking each pot, but pension consolidation does have its downsides, too. For instance, you will lose out on long-term income if your previous pension was in a Defined Benefit Scheme. You may also incur exit fees and transfer penalties, while there could also be costs around setting up your new pension. Market value adjustments may also affect your savings, and it’s likely you will have to adapt to a new fund management style.
One of our clients here at GSB Ireland, Tomasz, had three separate pensions spread across the UK and Ireland, with a combined value of €160,000. Finding it difficult to track and manage his retirement savings effectively, Tomasz approached GSB Capital whose financial advisors assessed his pensions and identified inefficiencies in their investment allocations. We helped Tomasz consolidate all three pensions under a single provider in Ireland, and thanks to strategic adjustments and favourable market movements, Tomasz’s pension funds grew to €190,000 in his first year. Read the full case study here.
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Sam is a Qualified Financial Advisor with an MSc in Finance and membership in the Institute of Bankers. He uses retail banking and risk expertise to create strategies aligned with GSB’s values and evolving market trends.
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QROPS: Transferring Overseas Pensions
When transferring overseas pensions to Ireland, you will encounter what’s called a Qualifying Recognised Overseas Pension Scheme (QROPS). A QROPS facilitates the transfer of a UK pension if it meets criteria set out by Her Majesty’s Revenue and Customs.
The UK pensions that can transferred to Ireland under QROPS are Defined Benefit Pensions, Defined Contribution Pensions, Self-invested Personal Pensions (SIPP) and Self-administered Pensions (SSAS).
Moving your pension comes with benefits, too. For instance, it’s more convenient to have your pension in your country of residence rather than a distant jurisdiction. This move can be made without the worry of a tax charge, while QROPS also allows you to avail of your new employer’s scheme and other investment opportunities. Elsewhere, Brexit has created currency uncertainty that you won’t need to worry about if you move your pension to Ireland. The only time you may encounter issues is if your pension is not a QROPS. If this is the case, your UK pension scheme may refuse to fulfil the transfer, or you may have to pay at least 40% tax on the transfer.
The safest way to transfer your pension is by speaking with an experienced pension advisor. At GSB Capital, we provide cross-border pension advice and manage the process for you, removing any potential stress.
GSB Capital’s Pension Advisory Process
When it comes to your pension, it’s important that you understand all your existing schemes and benefits. At GSB Capital, we begin all new relationships with an initial consultation where our retirement planning specialists will determine your financial needs and goals to develop a robust, personalised plan. Not only that, but our financial advisors will analyse your existing pension fund, contribution and retirement savings.
Next, GSB Capital will provide impartial advice on what’s best for your long-term plan. This includes a tailored, comprehensive retirement plan that accounts for your unique needs and circumstances and considers risk management strategies.
Once you have decided on your favoured pension plan, GSB Capital will support its execution. You can then resume your regular contributions in accordance with your pension strategy. Our financial advisors will conduct routine monitoring and evaluation of your pension plan to ensure the strategy is yielding the desired results.
Pension Transfer FAQs
There are several instances when moving a pension to a new provider makes sense. For example, you might find a scheme that offers higher value, giving you a more comfortable pot to draw from come your retirement. It may also be that your existing scheme is closing. Furthermore, there may be better investment opportunities with another provider, or maybe you’re moving abroad. Whatever the reason, it’s best to move your pension under the guidance of a trusted advisor.
Yes. If you have accumulated pensions from several roles and want to consolidate them in one place, you can. After all, you could be paying fees and charges on each pension. Transferring pensions into one pot will cut these costs and give you greater return in the long run. During pension consolidation, you will need to be mindful of exit fees as some providers charge these. You will also need to be aware of and decide what scheme you want to join, such as a Defined Contribution Scheme or a Defined Benefit Scheme.
There are several risks to consider when transferring a Defined Benefit pension. Firstly, investment returns of the Defined Contribution Scheme might suffer, hindering your retirement income. Secondly, a Defined Benefit pension provides a guaranteed income, whereas a Defined Contribution Scheme will offer a lump sum that may have been affected by market changes. Lastly, a Defined Contribution Scheme is intended to be used for your retirement, so it doesn’t allow for early withdrawals. With a Defined Benefit pension, some schemes allow for early retirement, although your income might take a hit.
If you want to move your UK pension to Ireland, it must first meet the conditions of a Qualifying Recognised Overseas Pension Scheme (QROPS). What this means is that your pension meets criteria set out by Her Majesty’s Revenue and Customs. Under QROPS, you can transfer the following UK pensions to Ireland: Defined Benefit Pensions, Defined Contribution Pensions, Self-invested Personal Pensions (SIPP) and Self-administered Pensions (SSAS). When looking to move your UK pension to Ireland, we advise you first speak with an experienced pension specialist.
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