Is it a good idea to transfer my pension?

Jonny: Hello and welcome to Pension Awareness 2024. How are you all doing? Lovely to see you again.

So today we've got a big question that we're going to answer and that is, is it a good idea to transfer my pension? Well, we always get asked this one and it's one of the biggest questions that we get asked. So we're going to answer that today.

We've got Sarah with us from Royal London, and we've got Justin with us as well. How are you both doing?

Sarah: Doing really well, Jonny, really well. How are you?

Jonny: I’m well. I'm well. I’m really excited about this week. Really, really excited.

So I've got some notes down here. So I just wanted to say a big thank you as well to our partners this year, Royal London, who are partnering with Pension Awareness. We put them on screen now and you'll see them.

Sarah: So can we cheer for ourselves?

Jonny: Yeah, you can cheer for the, so, yeah, yeah,you can see him in the background, Royal London. Well done. Brilliant.

So, like I said, before we get started, I wanted to show you the website. So this week you are able to go onto our website, you run it now and book. We've got more shows, you know, we've got more shows than just this one.

Sarah: Loads of shows.

Jonny: Loads. We've got nine shows this week.

Justin: Wow.

Jonny: So you can go onto our website and book on there. And yeah, look at all the others, you might be even signed up to other shows, book them all, book them all. Um, so make sure you go to that site.

James, can we go to the website big so we can see it on screen? That'd be great. So here, if you go down, you'll able to see the timetable, you see all the shows here.

Biggest question we get asked, after, ‘Can I combine my pension pots?’ and ‘Can I transfer my pension pots?’ is, ‘Are the shows recorded?’ and yes they are! You can go to the Catchup area on this website now. So James, could we just show the guests where the catch up area is? Yep. Just in that tab there you can see here, um, well, Sarah, from last year's show. At the end of day you'll see the, the show's been put there and they're not just gonna be on for this week, they'll be on for the next 12 months. So make sure you use that.

Not only that, the website has the article section. So we've got some really good articles on there so make sure you have a look at them too.

So where are we starting with this show then? What we say, what we're talking about first?

Sarah: Well, we're talking about pension transfers, but Jonny I think it's time for you to just leave us alone and Justin and I will get on with it.

Jonny: Right, you did this last time.

Sarah: Off you go. Alright, go, go.

Jonny: I'll take my stool with me.

Sarah: Take your furniture.

So yeah, we are going to be talking about transferring your pension - Is it right for me?

I'm Sarah Pennells, I'm the Consumer Finance Specialist at Royal London and I'm joined today by my colleague Justin.

So Justin, I know you answer to most things, but what's your job title and what do you do?

Justin: Well, hello everybody. I'm Justin Corliss. I'm a pension expert at Royal London. So I write and talk about how pensions work. And today we're gonna be talking about pension transfers because that's one of the things that we are most often asked about.

Sarah: And Justin, you use the term ‘transfer’, but people may have heard Jonny talked about ‘consolidating pensions’.

Justin: Yes.

Sarah: And people may have thought about switching or merging or just bringing their pots together. Are all these terms referring to the same thing or is there a difference between them?

Justin: Yeah, all of these terms mean the same thing. If we're talking about transferring one pension pot to another pension pot. Now these types of pensions and owners as defined contribution pensions, but do you know, whatever you call it, it's about transferring one pot of pension money that you and perhaps your employer have added to and putting it into another pension pot.

Now, at Royal London, we've undertaken research recently with 4,000 UK adults who were under pension age, but who did have a pension and while just over a third it was 35% said that they have transferred their pension to their new employer scheme when they moved jobs, 56% said that they have never done this. So I guess that begs the question, why would you want to transfer your pension? And I really think that it helps to think of the working lives that many of us have these days.

Most of us don't have a job for life anymore. Maybe you don't want that, but actually the more jobs you have, the more difficult it can be to keep track of all of the pensions that come along with that.

Now I've had around six jobs in my lifetime. A lot of you will have had many more than that. But actually the more jobs you have and most people who are now automatically enrolled into their workplace pension scheme , pretty soon after they start with their new employer, that can mean lots of pension pots to keep track of.

Sarah: Now it is important to say that we are not saying that just because you have lots of pensions that you should transfer them. And in fact, there are some people who can't transfer even if they want to.

So let's look at an example. Justin. Say, say you're a firefighter, say you work for the NHS or you're a teacher could you transfer your pension in that situation?

Justin: No, these, these people can't. Normally if you work in the public sector, you can't transfer your pension to a defined contribution scheme. And the reason behind that is that public sector pensions don't build up a pot of money. So if you work in the public sector today and you're a member of the pension scheme, then the contributions that you and your employer make towards that pension today go to pay the retirement benefits of today's public sector retirees. So it doesn't build up a fund of money that you can transfer.

Now, there is one notable exception to that and that's if you work for local government, okay? So if you're in the local government pension scheme, that does build up a fund of money and you can transfer out of that if you wish.

But, and this is a pretty big but, that doesn't mean that you should transfer if you are in the local government pension scheme or quite frankly, a private sector defined benefit pension scheme and…

Sarah: Jargon alert

Justin: Jargon alert indeed, sorry. But occasionally we, we have to. And that can be either a final salary pension or it could be some other sort of salary related benefit.

It's generally assumed to be a bad idea to transfer your pension. And the reason behind that is that defined benefit pensions make a promise to keep on paying you a pot of money or a regular income for the rest of your life. It's kind of like keeping on getting your salary except you'll get less of course. And if you have a spouse or in some instances a partner who is alive longer than you, then they'll have to keep on paying a regular income to them as well.

And one of the key things here is that it is your employer's responsibility, not you to make sure that there is enough money to keep on paying those retirement benefits to you and perhaps your spouse or partner for as long as you all live, not your responsibility. And that's a really valuable benefit to have.

However, there will be some people who do have these defined benefit pensions and they are thinking about transferring them. If you'd like to know more, there is a guide that will help you understand the key things you need to consider, the key risks that you need to be aware of. And that's on the Money Helper website. That's an independent website that's backed by the government.

Sarah: So having just told you a bit about people who can't transfer in this live show, we're gonna focus on things to think about if you can transfer. So that's really people who've got these defined contribution pensions. So again, apologies to the jargon, this is the kind of pension that you build up a pot of money while you are working and then you can turn that pot of money into an income will take lump sums from it when you retire.

And that research that Justin mentioned a moment ago, we also found that people on average have had 2.4 pensions during their lifetime. Now, I don’t know about you Justin, but I've never bought 0.4 of pension. But I guess, that’s averages for you,

What was interesting though was that younger people, so those in their kind of early twenties up to about mid-thirties, they'd already had almost three. They had 2.9 pensions on average. So I think it just shows you a bit about the changing sort of work environment. And of course, you know, the more pensions you have for some people it can be a bit harder to keep track of.

But I guess Justin, one of the main reasons why people might want to transfer is because of the charges they will be charged. So basically being able to pay less by transferring. But the question falls from that, you know, how do charges work? What is it that people need to look out for?

Justin: Yeah, it's a very good question. Now all providers will apply a yearly charge for managing your pension. It's known as the annual management charge. You might sometimes see it referred to as the AMC and that is usually taken either monthly or annually from the value of your pension savings.

Now, I know this can be a little bit complex, but comparing, being able to compare charges on your pension plan is really important. Now you can find this information in a variety of different places. First of all, um, there is the documentation that you received when you first joined your pension scheme. It's called the ‘Key Features’ document. That will have information about charges on it. There is the annual statement that your pension provider sends you each year that will have information about charges on it or if your pension provider has an app, that will have information about charges on it as well.

In fact, if your provider does have an app, and of course if you are comfortable with using apps, then it's usually a pretty good idea to download that app because it's likely to have lots of additional information in there that you are likely to find useful.

Now if you are a member of a workplace pension scheme, then the default fund, which is where most people have their money invested must apply an annual management charge of 0.75% or less of your total pot savings. Now that default fund, that's where everybody is put when they're first automatically enrolled into their pension fund. So what does a charge of less than 0.75% actually mean?

Sarah: I mean percentages, isn't it?

Justin: Well it is, isn't it? You know, percentages don't mean a lot to many of us. We would probably prefer to see this expressed as a pounds and pence amount. But actually being able to compare the percentage charge of one scheme with a percentage charge of another scheme is really important to be able to get a fair and equal comparison. So if you had a charge of 0.75% and let's say you had £10,000 pounds in your pension scheme, that would mean that you would pay no more than £75 pounds as your annual management charge.

Now a lot of modern pensions will charge a similar amount to that, but you could have older style pensions that charge a lot more than 0.75%.

In fact, that's one of the great things about workplace pensions is that they're generally quite transparent. And by that I mean it's relatively easy to be able to see what that annual management charge is. So there you go. That's the annual management charge and that is designed specifically to help people understand what charges they're paying on their pension even if they're not pension expert.

Sarah: Or indeed pension geeks.

Justin: Or indeed pension geeks indeed.

Sarah: So now say you have a workplace pension, one of the questions that we get asked is, if I was to transfer an old workplace pension, could I end up paying more in charges? And the answer is quite possibly, which is why it's really important to check out the charges, both of the old pension and the new one because you could pay more or you could indeed pay less.

Now, Justin was talking about the charges on a default fund. And one of the things is that you will pay the same charges, not 0.75% or less no matter how much or how little you have in your fund. And in fact, you'd pay that on any money you transferred in as well as your monthly contributions.

Now, because you pay this same charge, this is really useful for people who don't have huge pensions. So that could be somebody who's younger, it could be someone who's started saving for their pension fairly recently, or it could be someone who's had a career break.

Now it's different though if you have personal or individual pensions because what pension providers often do is they'll have one charge up to a certain amount and then they'll tier the charge. So you may pay a lower percentage charge if you have a pension pot above a certain size with that provider. So I think the best way is James, if we can have our first slide to just explain this. So let's look at the situation where you have four different pension pots with four different pension providers. Two of them have £10,000 pounds in one has £40,000 pounds and one has £50,000 pounds. So you've got £110,000 pounds in all, but with different providers. Now, let's assume they all charge the same amount and they all tier their charges at the same rate. So they're charging 0.7% if you have up £200,000 pounds in your pension pot and not 0.5% if you have over a hundred thousand pounds.

So James, next slide please. I was like saying that, but okay, so in that case you'd be paying 0.7%, that's £110,000. That works out at £770 a year that you would be paying on your pensions.

Now, last slide for this section please. If you were to combine these pensions, then you'd have your £110,000 all with the same provider. At that point, you'd qualify for this lower tier charge of 0.5%. So you'd be paying £550 a month a year rather. So that's a saving of over £200.

Now the rates at which a pension company will charge and the point at which they start tiering those charges can vary from provider to provider. So it's really important to do your research. You need to just investigate what you were paying previously and what you pay if you were to switch. And remember that you don't have to move all your pensions at once. You can, um, if you have got say three pensions, two of them are charging a higher amount and one of them is charging less, well then you could move the two more expensive pensions and leave the cheaper one where it is. It's entirely up to you.

Justin: That's right. It's really important to know. Now, another reason that you might want to transfer are the options that you get when it comes to retirement.

Now, some pension providers, um, but maybe don't offer a great deal of choice about how you can take your pension at retirement. They might only offer you the option to take out all the money that you've got in that pension plan in one go. And that could mean that you end up paying a lot more tax than you should do. Or they might only let you take something called an annuity.

That's where you take all your pension benefits and you convert that into a regular income for the rest of your life.

Or they might not offer something called draw down or income drawdown. Now ignore, ignore the terminology. All that drawdown means is that your pension plan stays invested in that pot. You can take your tax free cash and then maybe a little bit of money monthly if you as an income if you are, uh, no longer working. Or you might prefer just to take all of your tax free cash and not draw any monthly income because, uh, you are still working and you don't need an income from that pension at that point.

Or you might just want to take lump sums every now and again, maybe because you have one of those defined benefit pensions that we mentioned earlier and that satisfies your monthly income need, but you still need a little bit of money for, you know, extra things, holidays, birthdays, that sort of Christmas presents.

Thank you. That's kind of you. Um, yeah, uh, Christmas presents as well. Um, so there are a few things that you, that you could want also, um, just bear in mind that some providers might not offer your family the

uh, choices if you were to die and that could be really important to you as well.

Sarah: And then this is frankly the faff factor. If you have several pensions, then is that a genuine reason for wanting to transfer? You have them some dotted around with different providers. I think Justin it's really kind of quite a personal decision, isn't it?

Yeah, because it depends on how you find kind of life admin and financial admin. And for some people having different pensions with different providers, that's actually gonna be quite difficult to find it maybe harder to kind of see that overall picture of where there are time is. Whereas having them all in the same place means they kind of feel really confident about what they've got and it really helps them to start thinking about their retirement planning as well.

But for other people, that just will not be a barrier at all. It doesn't bother them. In fact, in this research that we've been talking about, we asked those people who had transferred their pension why they did so, and around half of people said it was, well, the faff factor they said for easier pensions management. But it's the same thing really. Um, it is worth saying though, if you are somebody who finds it a bit difficult to have pensions dotted around the place, there is something called the pensions dashboard, which is gonna be launched in sort of a couple of years time or so. And that's going to be an online dashboard where you'll be able to see all your pensions in one place, even if they're with different providers and you'll be able to see your state pension as well. Now we just talked about the faff factor.

Justin: Yes. Which is a big deal to a lot of people

Sarah: Indeed. But, um, investment choice, that can also be a factor for people thinking about transferring as well, can't it?

Justin: Yes. Yeah, it can, it can be when you, uh, save into a pension, your money is invested and different providers will offer different investment choices. So you, for example, might really want to invest in a particular country or, um, into, um, a particular sector or, or sectors assets or something like that.

Yeah, yeah. What I'm talking about there more jargon, things like, yeah, it is more jargon, but, but sometimes it's important jargon. It's things like equities or commercial property, um, or, um, or, or maybe, um, corporate bonds or that sort of thing. Um, so if that's important to you, then um, then that could be something that you would need to have a look around. Now your pension provider, if you have an older style plan, might not offer a broad range of investment options. So if that's a big deal, transferring perhaps to your workplace pension might offer you more choice.

Um, now some people might want more choice than their workplace pension offers, but if you were still employed with your employer and you move away from the workplace pension, you might miss out on valuable employer pension contributions. So we would need to think, um, long and hard, um, before we, we, we went and did that.

Now you can also think about your investment options, um, from the perspective maybe of your needs and objectives, maybe thinking about your provider's approach to things like responsible investment or environmental social and governance factors, ESG factors they're often referred to. You might hear them described like that.

Now those help investors measure the ethical and sustainable sustainability impact of a particular business or sector. Now that could be important to you or there could be other areas that are really important to you as well.

Now I probably should say at this point that it is important to know that your pension money is invested and it means that the value can go down as well as up. And there is not any guarantee that bringing all your pension funds together into one place is going to result in a larger pension pot at retirement or a larger retirement income when you come to retire. And you could get back less than you pay in.

Now, just one point that I wanna finish off touching on here. Okay, um, if you, um, have, uh, a workplace pension you might have recently been, uh, or and particularly if that workplace pension has moved recently from one provider to another, your new pension provider might have contacted you, get in touch.

Yeah. Yeah. They might have done making an offer to say that, you know, you could transfer all of your older workplace pension plans or all your older pension plans into this new one. Now the first thing to say about that is that we all need to be constantly vigilant and on the lookout for pension scams. Okay? So if you are in any doubt at all about the validity of the correspondence that you've received, always a good idea to get in touch with your new workplace pension provider, um, with using details that you get from a trusted source.

Now, maybe a good idea to speak to your employer in that instance, but once you are comfortable that that correspondence has come from the new pension provider, this can be a relatively simple and cost-effective way of being able to pull all of your older pensions or all the ones that you want together into one place. Now we do need to, um, bear in mind that if you are approached in this way, your new provider is not recommending that you transfer or advising you to do it. It is, it is purely your decision. What it is doing however, is uh, it's likely to have in this pack the annual management charge of the new workplace pension plan if it has recently moved the annual management charge of your previous workplace pension plan, the fund options available, the retirement options available, and an invitation to help facilitate moving all of these pension plans together.

Now you do still need to bear in mind that you need to identify if any of your older pensions have any protections on them, and Sarah and I are gonna talk about that in just a second. But if they can be moved, if there's no barriers to that, then this can be particularly useful. I would say for people that have maybe only started their pension savings journey, perhaps in the last sort of 10, 15 years, they've had a number of different jobs and that's resulted in several relatively small pension pots.

Sarah: Now if you are then thinking of transferring, it's a really good opportunity to try and track down any lost pensions that you may have. So these could be pensions from jobs you did some time ago where maybe, you know, you, you moved a address and you didn't give the pension provider your new address. Now it's estimated there's a staggering 26 billion pounds, billion pounds in lost pensions. I mean, that's a huge, huge amount of money. Now the really good news is you don't need to pay somebody to help you track this down. There's a free to use government service called the Pension Tracing Service, which is an online service that you can use.

Now, as long as you have some basic information either about who the pension provider is or your employer's current or old address, then you can just pop that in. And what this service will do is not like kind of a government funded pension sniffer dog that will run around, get all your pensions enthusiastically and bring them back in return for a treat. But it will give you up to date details for your pension scheme. And then you need to get in touch with the pension scheme and say, actually I think I've got a pension pot with my name on it. So the details are on screen now long URL, which I, well I'll read out gov.uk/find-pension-contact-details but I say it's on the screen, so, um, do give that a try. You think you have got some old pensions. Now, Justin, you mentioned a moment ago, um, sort of protections you may have on older style pensions and yet a bit.

So something called a guaranteed annuity rate is something that, you know, a number of older schemes might have. Firstly, what on earth is a guaranteed annuity rate and why does it matter?

Justin: It's a very good question. Okay, look, you wouldn't expect to see this on a modern pension contract. Um, but a guaranteed annuity rate, which you'll sometimes see referred to as a GAR or a GAR, they were quite common on pensions that were set up maybe in the eighties or nineties, even if you're still paying into that pension today.

So what the guaranteed annuity rate does is it's the provider, um, promising to pay a minimum level of income when you come to retirement and take those pension benefits and convert that into a retirement income for the rest of your life.

The rate that you'll get from that provider that offers the guaranteed annuity rate is likely to be higher than most people could get on the open market when they come to retire.

So I guess it begs the question, how much extra are we talking? Is this just a couple of extra pounds each month or could it be a whole extra chunk of money?

And the truth of it is, it really depends on the size of your pension pot. But to give you an indication, the current deed annuity rates that we commonly saw were between 9 and 11%. We sometimes saw them a little bit higher than that. Yeah, and that to give you a bit of context is around 30 to 50% higher than most people could probably expect to get on the market at the moment.

Sarah: So what that could mean is if you've, for every hundred pounds you've got in your pension pot, you could through this guaranteed annuity rate, get between nine and 11 pounds of income a year compared to say £6 at today's rate. So, you know, if you, depending on size of your pension pot, that could make a big difference.

Now there are various factors that you'll need to consider, but in any case, if you do have one of these pensions and it's got more than £30,000 in it, then you will need to take financial advice before you transfer it.

Justin: Absolutely, you will. Now, uh, tax free cash is another one to think about. That's the tax free lump sum that you can take when you start to take your pension benefits. Now currently that is set at 25% of the value of the fund, but once again, some older style pension contracts did enable people to take more than 25% tax free cash. And it is possible to be able to transfer your pension and to keep that benefit. But we would generally suggest speaking to a financial adviser before, uh, transferring one of those if you're in that situation.

Now another thing that we often get asked about isn't it, is what's the minimum age at which I can take my pension benefits, um, that is currently age 55 and less. Of course you are seriously or terminally ill. Um, but that 55 is due to increase to age 57 in April 2028. Okay? Now, once again, it's not very common, but some older style contracts did enable people to take, um, their pension benefits before that age 55. Uh, if you were in that situation and you were thinking about transferring it then um, you, you'd probably be well served to speak to a financial adviser in that instance as well.

You might have heard of something called a loyalty bonus. It's a jargon alert, isn't it?

A loyalty bonus, particularly if have had something called a with profits plan in the past. The key thing to know about this is to get that loyalty bonus, you normally need to stay invested in that fund. If you transfer your pension out of that fund, you lose that loyalty bonus. And just to reiterate that final point we, we mentioned earlier on, you do get some people who are still employed with their employer but they want to leave their employer's workplace pension scheme. If you do that, you do run the risk of missing out on that valuable employer pension contribution. Often employers will only pay into the workplace pension that they set up. So by moving away you can miss out on that contribution and that could result in you having a significantly lower pension pot at retirement.

Sarah: And that could make a big difference. So we've been through some of the pros and cons, but if you are thinking, okay, well I want to transfer my pension or pensions, can you just go ahead and sort it out yourself?

And the answer is maybe, and it will depend on the kind of pension you have and we've sort of alluded to this, but if you have certain kinds of pen pensions, then you will have to get financial advice before you transfer 'em. Now it's worth remembering that these rules are here that they're designed to protect you to make sure you don't lose out by transferring. So James, can we have our next slide please? So these rules apply if you have a defined benefit pension that has more than £30,000 in it and you want to transfer to a defined contribution pension, or if you have a defined contribution pension with more than £30,000. And it has one of these guarantees about how much you will get it retirement and you'd lose that by transferring.

Now whether you have to take financial advice or not, it is often a good idea.

Thanks very much James. That's, that's enough slide. Let's go back to Justin and me. Um, you could lose it. It's important, often a good idea to have financial advice anyway and that's because a financial adviser will look at your own circumstances. They'll kind of look at your income, the risk you're prepared to take, what you're trying to achieve with your pensions and retirement. And if you have a husband, wife, or partner take their circumstances into account and then they'll kind of draw a short list of options and then make a specific recommendation so you know, they can be really worth their weight in gold. Now we have talked through some of the pros and cons, haven't we?

Justin: We have indeed.

Sarah:  It's probably just worth a bit of a recap because I think, I think it's, I think we've rattled through quite a lot of the last 20 minutes.

Justin: Of course, you know, it's a lot to fit into 20 minutes, isn't it? It's probably a lot to take on as well. So just to recap some of the main factors that you might want to think about if you are considering transferring your pension.

So firstly is to compare that annual management charge of your new pension plan with the annual management charge of any of the plans that you're thinking about transferring into that new one. Uh, charges aren't the only factor to consider, but they're certainly a good place to start. Um, next, if you have older pension contracts, perhaps that have limited investment options and maybe they're not meeting your needs, then switching to something with more choices could be advantageous to you. Do bear in mind, most workplace pensions have a fairly broad range of investment needs, don't they? Yeah, Indeed.

Um, if you were within say, five to 10 years of looking to take your pension benefits always worthwhile having a look at what options your existing provider has for accessing your pension.

If those aren't really meeting your needs, then a transfer to another plan might be beneficial. And as you were mentioning before, a lot of people will have had a lot of jobs and a lot of pension funds built up.

And if all of those various different pension funds,

Sarah: The faff factor!

Justin: The F factor indeed is making it difficult for you to engage with your pension scheme, then perhaps transferring them into one plan might make it easier for you to deal with and to engage.

But I would say please don't let the ease of use and convenience completely override charges and other important factors. And also let's always, always keep our eye out for pension scams.

Sarah: Well, I think we've packed quite a lot in, do you think we should be? I think so. Is it time to let Jonny back into this studio?

Justin: I think, yes. Come on!

Sarah: Here's Jonny!

Jonny: Hello. Hello. Thank you for that. I, I've found a seat next to Rachel, so Hello Rachel.

Rachel: Hello. Taking, not even going back into the studio I Taken. Yeah, he’s taken over my desk now.

Jonny: Sorry about that.

Sarah: Is that good or bad, Rachel?

Rachel: Um, I'll let you know at the end.

Jonny: Thank you. Thank you for that abuse. Right. So, um, I'm joined by Rachel. Um, Rachel handles all the questions here, pension awareness. So all the questions, um, that you've been putting in the, uh, chat, um, and question section alongside our screen. Now, that's what you look after, isn't it Rachel?

Rachel: I do, I'm trying my best to. There's lots of questions coming in, so I hope you guys are ready.

Sarah: We're on standby. Yes!

Jonny:  Before we start that though, I just wanted to, um, I've, I've got some things Rachel, I wrote from that show. I thought it was a brilliant show. I thought it was a really, really good show.

Rachel:  Very informative. Yeah.

Jonny: Um, so not too long ago, maybe a month ago, two months ago, I got a call and you never think you're gonna get a scam call, do you? Me and Rachel would do these shows.  Quite a lot of these shows, um, through the year. Um, and we've done lots of shows on scamming, but never had a call two months ago I had a call, knew exactly what to do, I just hung up, put down. But it just shows you show it was a scam. I think it was. It wasn't my mum. It was a scam. It was a scam. No, it was, I, well I think it was a scam. But anyway…

Justin: What I would say to you on that, Jonny, is that it's very unlikely you are going to be direct marketer called outta the blue about your pension.

So if you are, that is always a pretty good, well it should ring some alarm bells with you as well.

Yeah. Just on the, on the, on the, um, on the subject of scams as well. The other thing to say is if people are rushing you to make a decision that there's a degree of urgency on what always a warning sign. Always a warning sign. Always warning sign.

Sarah: Yeah.  You did the right thing there Jonny. By, yeah, by hanging up.

Jonny: Great. Great. Um, so I, and I like these, um, little sayings that you've got. Um, jargon alert.

And, uh, faff factor. Love that.

So, I have three pensions. Um, well now two, I've actually combined, I did a combined Right, okay. Um, but one of my pensions, you, you mentioned about looking at the kind of the small print and the, the bits and bobs on, on the Mm-Hmm. The pension and one of my pensions, it was with Aviva I believe. And it said that there would, I'm probably gonna say something.

Rachel: It said you had a protected retirement age.

Jonny: Yeah, 55. So I was gonna, it worked well, wanted to get my money as quick as I can. So, um, I didn't move that, didn't do that. So that, that's really good. I'm ignoring that.

Um, also you spoke about apps, I've, I feel like I've got pensions with everybody. I haven't, but funny enough I have got another pension. Um, I had an, had another pension with Royal London. Okay. And this might be another thing, a thing of like

Sarah: We’re allowed to cheer for ourselves – yay!

Jonny: But there's another, but when I combined it, I lost the, lost the app.

Um, but the other provider I've got has got an app, but I had a fantastic app. But when I had the Royal London app on my phone, I checked all the time. I felt, yeah, I get a statement once a year and didn't really open the, the letter.

Sarah: Um, we'll ignore that bit.

Jonny: Sorry, sorry. But when I had the app it made me feel closer to my money.

I think that's, it makes you, it's more tangible makes feel like It's a bank account, doesn't it?

Sarah: Exactly, exactly and I definitely think it makes it easier for you. I mean, in a way, you know, pensions aren't bank accounts and some people buy checking kind of every day.

It might spook them slightly. Yeah, cause you know, pensions are long term investments, but I've also got, got the app and I do check mine quite frequently and it doesn't, you know, it's kind of, I know it's invested for the long term but like you, I quite like feeling that tangibility and feeling connected to it. So, you know, definitely works for some people.

Jonny: Brilliant. Well I'm getting kicked under the table by Rachel, so get on with the questions because I'm getting, so, um, Rachel, let's go with the first question.

Rachel: Okay, thank you. Yeah, no, we've got so many to get through. So Jonny take a breather. You can have a little rest now let, let me fire away with these questions guys. Have a sip of water, cause I'm gonna try see if I can get through as many as possible and I just wanna say to everyone, there's been a lot of questions, um, and there's some quite specific to people's circumstances, so I've kind of grouped them together to keep them generic.

So do you know, please bear with me. I'm doing my best to get through them all so that, anyway, let's get started. Okay. Um, so a lot of these themes you've touched on, but I'm just gonna go through the ones, the main themes that I'm getting.

So we spoke about charges. Um, so one of the questions is, do different providers charge different fees?

Justin: Um, I'll take that if you like. Yes, absolutely they do. Um, so particularly if it's personal pensions, like Sarah mentioned, they have different charge rates, they have different points at which tiering of charges might alter.

But there, what is one degree of commonality across all workplace pension providers is that the default fund must have a charge of 0.75% or less. So that is one of the great things about workplace pensions.

As I mentioned, they're transparent and you know that if you stay in that default fund, you're not going to be paying more than that.

Sarah: So that's, I mean, most people probably know, but the default one is the one that you are kind of plunked into when you get automatically enrolled. And many people, it's designed to be, you know, a good fund for the majority of scheme members and many people stay in it. So although as Justin said it's a maximum of 0.75%, there could still be some variation because a number of providers will charge less than that. So that's the two ways that charges can vary.

Rachel: Super, thank you. Um, this is quite a popular one. I'm seeing this from a lot of people. Um, so is there a minimum amount that anybody needs in their pension to be able to transfer it?

Quite a lot of people say they've got less than £500 and they've been told that they can't transfer it for that reason. Is that correct?

Justin: I think that would possibly vary from provider to provider that some providers will have a, a minimum amount that they will accept for a pension transfer.

Um, so that might be the case in some instances, but it's likely to be quite low.

I appreciate £500 um, might be the case, but there isn't normally a particularly low minimum. I think once upon a time our might have been a thousand or 2,000 or something like that.

Sarah: Yeah, yeah. As I say, I think it is something that probably does, does vary bit from provider to provider. So for somebody who has a very small pension, um, they might find it harder to transfer it.

Um, if it is a sort of low amount, maybe you had a job for a short time or you're in the pension scheme for a short time and you've not then added to that pension since cause you're name with a new employer.

But as I say, it's not necessarily something that all pension providers will have the same flaw. So that might be that some have a higher or lower one.

Rachel: Great stuff. Yeah. So one to check with your provider?

Sarah: Indeed.

Rachel: Great stuff. Thank you. Okay, next question then. Um, this is quite a good one. If you, um, if you've joined a new pension scheme,

for instance you've joined a new employer, is there a certain timeframe that you, you have to if you wanted to transfer that, you have to transfer that pension into another pension if you wanted to?

Justin: No, I'm sorry. Would you like to, to go ahead or I happily will.

Sarah: Well I, I'll say cause this is sort of what you were talking about earlier on, where you will be contacted by um, well, so if, if you have joined your new employer, then uh, no there's not a timeframe.

If your employer's pension has moved from providers, then you might get contacted as Justin was explaining earlier on and offered or invited to transfer your old pensions to this new, um, provider. And that will normally have a, a timeframe, as Justin said, they're not advising you, they're just giving you the, the offer.

Um, and normally you'll have to kind of move within a certain number of months, but if it's just signing up with your new employer, um, then it's different, isn't it?

Because I mean I, I've, you know, I transfer my pensions. I've been with my employer for a couple of years and it actually took me a bit of time to do it. Yeah. But there wasn't a cut-off date. I could still do that.

Move my pensions that I had from previous work.

Justin: Absolutely. Yeah, you can, you can at any point you can, you can move your, your pensions across. Um, yeah, there's not a time.

Yes when you get that, um, that offer from the new pension provider, it might have some sort of set timeframe for it, but it's nothing stopping you being able to transfer later on if you want to.

Rachel: Great stuff. Thank you. Okay. This is another big one. Um, if you're not sure you've got other pensions, I know we mentioned this briefly before. Mm-Hmm. Um, how do you track them down?

Sarah: It's, it is a bit of a sort of chicken and egg question. It's a really good question.

I mean, I think you have to have a bit of an inkling that you may have had a pension or you know, you've had a job that you aren't sure whether you had a pension or not.

I mean, my, my thought on this is it's really worth seeing if you've got lost pensions cause you've got absolutely nothing to lose and you've got potentially thousands to gain.

So, um, obviously we had the address of the government website on screen earlier on. It's a free to use service. Now the only caveat is you would need a bit of information. So you don't necessarily need to know who the pension provider is or was, but if you don't know that, even the old name of the pension provider, cause it may have, you know, changed or, or merged. You'd either need to know your employer's current name or an old name. So maybe you worked for them 20, 30 years ago and they were called, you know, blogs, machines or something. They may have changed name or been taken over three or four times as long as you knew that old name. That would be enough to be a starting point. You pop that into the government, um, pension tracing service. And then what happens, because I've, I've done this myself. The name of the current pension provider or pension scheme, the contact details come up. So I would say give it a go because if there isn't a pension pot with your name on it, you are not gonna get money but you're not gonna lose anything.

Justin: But they, you're no worse off are you?

Sarah: But there could be, and I mean genuinely could be thousands of pounds. So could do it.

Justin: Can I just add something onto that as well and even if you have um, an inkling of employers that you might have worked for.

Yes. That's a great place to chase up. But remember Sarah mentioned earlier on that the, um, the pension dashboard is on the way as well and that's due to be with us in two years’ time and that's exactly what that's going to do. It's going to identify all of the pension, um, uh, uh, plans that you have, including the State Pension as well, isn't it?

Yeah, yeah. Yes. Is gonna be on there. So, um, alright. Not available just at the moment, but not too far away is it?

Sarah: But in the meantime definitely worth having a check on the gov.uk the pension tracing service website.

Rachel: Great stuff. Thank you. And actually that was one of my questions Justin, so thanks for that. The dashboard, um, that we mentioned earlier, people are asking when is it coming? So two years I heard you say approximately cause it's been in the making for a long time, hasn't it?

Justin: It has been in the making for a while and obviously it's, it's a massive undertaking to be able to have everyone's pensions details. So it is a, a challenging thing to do, but that's when we're being told at the moment, isn't it?

Sarah: Yeah, yeah. So yeah, a couple of years-ish from now, as you say, it has been, its, its launch has been delayed a couple times, but, but it is a, it is a huge undertaking but I think it will definitely make life so much easier for people because you will just have that instant visibility of what you have and crucially with the State Pension as well and we know, cause we also carry out research into the state pension and in fact some research we carried out very recently using DWP figures show that only half of pensioners get the full new State Pension amount.

Many people are unaware they're not on track to get the full state pension. And again, the pensions dashboard will help with that.

Rachel: Brilliant, thank you. Okay, next question then. Um, we, we've touched on this briefly. I think you mentioned this Sarah, practically transferring a pension or combining a pension, is it difficult to do? Is it a case of you just get in touch with your provider and they'll do most of the legwork for you? Or is it a bit more arduous than that?

Sarah: Yeah, so I mean it shouldn't be difficult. It's not that there's gonna be a lot of steps for you to take. It can sometimes take some time and that varies again from provider to provider. And it might vary in terms of whether you've got, you're bringing together a handful of pensions or you are just bringing, moving one into the other and the kind of pensions you've got if they're very old ones and so on.

So it, it, I mean definitely it shouldn't be a barrier to you transferring if you think it's right for you, but it's not like, um, so for example, if you were going switch your bank account, there's this current account switch service guarantee, which says it'll be done within seven working days.

It's not necessarily like that could take a bit longer, but it definitely shouldn't be something that's, you know, it's something that individuals can do if you want to transfer your pension.

Justin: Agree with that wholeheartedly. I think Sarah touched on the key point there. The only time is likely to be, if they're very old contracts, that can sometimes, um, take a little bit longer, but by and large it should be relatively straightforward.

Jonny: Great stuff. Thank you. I'm gonna put in quickly here, we've got two more minutes and two more questions. Okay. Let's do it.

Sarah: Talk quickly. Justin, go on let's do it.

Rachel: Okay, I'll the most popular last two then. Um, so I think I'm gonna go for this one. Can you transfer an annuity?

Justin: Um, don't get asked that very often. No.

Jonny: Um, we've stumped them.

Sarah: Yes. Generally not. I don't think. I don't, no, I, um, yeah, I don't think you can. But once you've got the annuity is, it's a contract. You've made that decision. It's basically a, um, a kind of contract for life, isn't it?

Justin: Well remember there was some talk about a secondary annuity market, but let's, let's say no by and large it's not a common thing people do.

Rachel: Yeah. Lovely. Thank you. Okay, uh, final one then. Um, I'm going to go for, um, quite a few people are asking this one. Um, is it worth seeing a financial adviser on this topic or can you do it yourself?

Sarah: I'd say it's a, it's a, it's a really good question. It's actually quite a big question that I think you need about, you know, five, 10 minutes. Don't worry, we're not gonna take that. I, I think the short answer is there are circumstances where you have to take financial advice.

There are lots of circumstances where a financial adviser can really add value, but for some people especially they've got quite small pension pots, they may not need to see a financial adviser. And in fact they might find it's not quite so cost effective. So it is up to the circumstances you are in, but a financial adviser can, you know, they can be invaluable in terms of the insights that they bring.

Justin: Yes, I think many people would be surprised at how much benefit they find from seeing a financial adviser despite the fact that not very many people do. Yeah. But hopefully we'll see more people getting advice.

Jonny: Brilliant, brilliant. So thank you Rachel. Before I wrap up, I'd just like to go and say big thank you to Sarah and Justin. What a fantastic show Rachel?

Rachel: It was fantastic. It was so informative. Thank you. And I know we didn't get big round applause, we didn't get through everyone's questions so I apologize, but we have got more sessions so do come along and we'll try and get in as many questions as we can.

Jonny: And I'm gonna follow up with that. Rachel is completely right as afternoon, we've got two more shows. We've got Agon who will be in the studio at 1230 till one 15 talking about financial wellbeing, finding the balance between money and mindset. Great show. We're gonna have some fun in, uh, fun with that one.

And, um, also we're joined by Money Helper. Um, this afternoon at two 30 I'll be joined by Jackie from Money Helper in the studio. Um, so we look forward to seeing you then. If you're not booked onto them, get booked onto them and thank you for joining us. What a great show. Bye everybody. Thanks.