Article Summary

Many people are still unsure whether they can transfer their pension or not. In contrast to assets such as cars or houses, where swapping them is a common practice, transferring a pension to another scheme in another country is not an everyday topic.

We at Cameron James are happy to educate and have a discussion with our clients on the management of their pension. As we did on our YouTube channel, where we discuss many things regarding the UK Pension Transfer industry. You can watch one of our YouTube video about transferring out your UK Pension to the USA below.

Can I Transfer Out UK Pension?

If you are part of the civil service or public sector pension schemes in the UK such as the NHS’ or Teachers’ pensions, your investment is ring-fenced by the government and cannot be transferred.

Outside that type of pension, there are two key areas you need to understand. You have private pensions and Defined Contribution (DC) schemes, typically SIPP or Old Employer schemes. The other kind is the Final Salary or Defined Benefit (DB) schemes.

Defined Contribution (DC)

When it comes to DC, the pension value is usually lower because they have not been index-linked like a Final Salary scheme., but you will always have the ability and the rights to do as you please with that pension.

You will need to see a financial adviser to get advice and pick the correct solution. However, the decision is ultimately yours to make.

Your financial adviser will put a report together for you, and you will decide on a yes or no basis if you wish to proceed with the transfer. It is as simple as managing the money in your bank account. You can decide what to do with it, when, how, and where to transfer it.

The only caveat is, it has to be transferred to a regulated scheme. That means either a SIPP or an International SIPP solution, which is FCA-regulated; or a QROPS scheme, which is regulated in the country of jurisdiction. Malta is typically the largest and the most well-known QROPS jurisdiction.

Final Salary / Defined Benefit Pension

In contrast to DC, the Final Salary or DB scheme works differently. Historically, it was not always like that, five years ago, you could transfer your Final Salary scheme if you wished to.

Now, the UK government has done a U-turn to make sure clients are protected from transferring away from a “gold-plated” scheme when it might be in their best interest to remain where they are.

As we have explained in another article/video, you need to start off from the assumption that a Final Salary pension transfer is not in your best interest.

So, Can You Transfer Your DB Scheme?

There is no straight answer on this. First, you will go through the advice process. If a client comes to us saying they want to transfer their Final Salary scheme, we will advise them straight away to not send any money. We will give them a clear explanation that it probably is not in their best interests.

If we do think it is in their best interest, or we can’t give clarification straight away, we will take them through our DB advice process. This will effectively produce a DB advice report which contains about 50 pages.

On page 27, it outlines whether you should transfer your pension or not and the rationale behind that decision.

Many clients find this extremely frustrating. They have worked 10 – 30 years and now someone else or the government is telling them what they can or cannot do with their money.

On the one side, we understand our clients’ concerns. It is their money, after all, and they want to do what they want with it.

On the other side, you have the Financial Conduct Authority (FCA). You should understand they are trying to protect people. They are not trying to be annoying, but are just trying to make sure people don’t transfer their pension to something unsuitable for them.

Obviously, there is a bit of conflict between clients’ interests and the FCA. Occasionally, the FCA establishes legislation which has an indirect impact which they did not predict.

For example, when they put in minimum charging for DB reports. This might not help clients who do not have sufficient money and do not want to pay for it. They do not take financial advice because they do not have the means.

If the report comes back and says the DB transfer is in your best interest, then it should be simple. We will be completing the paperwork, proof of address, proof of passport, and information about the new scheme.

There will be a lot of work that goes into that because they need to be certain. They must do the due diligence and then the FCA will sign off your report.

However, if the report says that the transfer is not in your best interest, most clients take that advice and call off the plan. Despite this, there are some clients who understand the situation and decide to proceed. It starts to open up litigation situations: why did a pension transfer company accept the pension from somebody who had been told not to transfer?

In that instance, you as a client will have to sign a lot of disclaimers to say, “I understand I have been advised not to transfer. However, in my words or in my handwriting, I inform my rationale and reasons that I believe it is still in my best interest to transfer”.

In this situation, you are categorized as an insistent client, and although we believe it is not in your best interest, we can act as an adviser for you.

Transferring your DB pension is not a simple work. It requires a thorough analysis and due diligence while adhering to the FCA’s guidelines and strict regulations on the transfer of your safeguarded benefits. Book yourself for a free initial call with one of our experienced IFA for a better understanding of your situation through the button on the right side.

Our Founder & CEO -
Dominic James Murray

I have been in the UK Pension Transfer industry for over 11 years, and have witnessed seismic changes in the UK Pension rules over the course of that decade. Most to the benefit of the UK Chancellor or to Chequer!

My 5 years as CEO of Cameron James, have certainly been the most rewarding. My goal, has been a simple one. Provide clients with transparent financial advice on a low-cost basis, for them to make informed decisions to protect their families best interests.

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