SIPP transfer considerations
Are you considering a Sipp? If you are, here’s a checklist for you to run through.
Are you in a final salary pension scheme? If so, then in nearly every case, you should stay put and not transfer.
Is your current pension invested in with-profits? If so, are there exit penalties (called market value adjustments (MVAs))?
Does your current plan offer guaranteed rates of future growth?
Is there potential for a demutualisation bonus? (Not as likely these days)
Does your current pension offer a guaranteed retirement income rate (a guaranteed annuity rate (GAR))? This is likely to offer a better annuity income than you could get in the general market.
Is your adviser properly qualified for the purpose of advising you? Better qualified advisers will have a diploma in financial planning and have taken the JO4 and JO5 exams.
Are you nearing retirement? If so, there will be less time for the new investments to overcome any new costs charged, penalties incurred or loss of guarantees.
Are you prepared for losses incurred by being out of the market during the transfer of funds? You won’t be invested in the stock market while the transfer takes place. This could protect your savings if the market falls, but means you could lose out on any gains.
Are there any transfer penalties with your existing contract?
Will you lose any tax-free lump sum entitlement? Some transfers mean that you will receive less tax-free cash at retirement.
Just some things to think about if a Sipp is on your mind.
