Pension Consolidation - MAS 7 Questions

The Money Advice Service (MAS) has 7 questions it thinks you should ask an adviser before merging an old pension into another. If Green Financial are engaged to merge a pension into another, we always answer these 7 questions, in writing, for you.

Here is the info from the MAS site. The weblink is at the end of this post if you want to go there directly.

Pension transfers can be complicated and there are a lot of things to think about before going ahead. You need to consider your own situation carefully.

Is transferring a pension a good idea?

If you’re thinking about transferring a current pension into a new personal pension plan or self-invested personal pension (SIPP), we've set out seven key questions for you to consider. But remember, whether a transfer is suitable or not will very much depend on your individual circumstances and objectives. This information can’t cover everything you’ll need to think about but it can help you to start.

Seven key pension questions

1.    Will the new pension be more expensive than my existing one?
If the new pension costs more, make sure you’re satisfied that the additional costs are for good reason. For example, if the new pension offers you access to more funds than your current pension(s), ask yourself whether you need them. You wouldn't take out a more expensive mortgage or insurance policy without good reason, so why do it with your pension?
You’ll get information about the costs of the new pension in the Key Features Document that the pension provider or your adviser should give you. Make sure this document refers to the actual funds and investments that you’ll be using in your new pension. You need to read all the documents you’re given so you can clarify any issues you’re unsure about.
2.    Would a stakeholder pension meet my needs and objectives?
Stakeholder pensions can be cheaper than other personal pensions, so if you have an adviser, make sure they discuss this option with you. If your adviser doesn't think a stakeholder pension would be suitable for you make sure you understand why.
Some stakeholder pensions now provide access to quite a wide range of funds. So even if you’re looking for some flexibility in your investment choices there may well be a stakeholder pension to suit you.
 3.    Is it a good idea to transfer all my pensions into a single new pension?
If you currently have several pensions and are looking to put them into one new pension, make sure you’re aware of any costs. If you’re taking advice your adviser should be able to explain them to you.
You may not need a new pension to put all your pensions together. If one of your existing pensions already meets your needs and objectives it might be possible to transfer all of your other existing pensions into that one.
4.    Will I lose any benefits?
It’s possible that your current pension has valuable benefits that you’d lose if you were to transfer out of it, such as additional death benefits or a Guaranteed Annuity Rate (GAR) option. A GAR option is where the insurance company will pay your pension at a particular rate, which may be much higher than the rates available in the market when you retire.
5.    Are there any penalties if I transfer?
Some pensions may apply a penalty when you transfer out. These can be significant – sometimes several thousand pounds (depending on the size of your fund) so it’s important to check if one applies in your case.
6.    Will the investments in the new pension be right for the amount of risk I’m prepared to take?
You may want to decide for yourself how to invest your money, or your adviser may make recommendations for you. Either way it’s important the investments chosen are appropriate for the amount of risk you’re prepared to take with your money – remember, investments can go up or down.
If you use an adviser they will need to be clear about what fee they will charge, whether it’s for one-off or ongoing advice – find out more below.
7.    Will I need ongoing advice?
Depending on the new pension you choose it may be important for you to have ongoing reviews. Some fund selections need to be reviewed from time to time to maintain the balance of your portfolio.
It is also possible that the amount of risk you’re prepared to take could change over time, for example if your financial situation changes, or as you get nearer to retirement.
Your adviser should explain this, and whether it applies to the pension they recommend. If so they may be able to offer you an ongoing service.
Ask yourself if you have enough knowledge and experience of investment to make decisions without the need for an adviser.

Do you need financial advice?

It can be difficult to make suitable decisions without advice, even when you have all the information you need. So unless you are absolutely sure, you should seek professional financial advice.
If you decide to get advice, make sure your adviser gives you full answers to each of the questions raised above.
It may be helpful to print this guide out and take it with you to any meetings with an adviser and use it as a checklist to refer to when reading any of their written recommendations. If you decide not to get advice make sure you fully understand the risks and benefits of transferring your pension. 

Financial advice – charges

You will have to pay your adviser a fee for any one-off or ongoing advice service – and they must agree this with you upfront. New rules introduced at the start of 2013 mean advisers can no longer instead take commission out of any new products they sell to you

The above was taken from:
https://www.moneyadviceservice.org.uk/en/articles/transferring-defined-contribution-pensions
on the day of this post