Pension Transfers - The Mechanics?

DCF_Evaluator

There are a number of threads dealing with Transfers.

But is anyone able to advise me on the actual mechanics involved. I have 3 funds and am likely to transfer all to a single provider.

For example Pension Fund Manager 1 has invested my contributions in Unitised Tracker Funds A and B. The Chosen provider offers/proposes Unitised Tracker Funds A and C.

So... in a transfer to Provider 2, are my units in Fund A just re-registered to Provdier 2/Account DCF? And the units in Fund B sold for cash by Provider 1 and the proceeds transferred as cash to Provider 2 to re-invest in Fund C?

With the B to C situation would this result in trading and bid/offer spread costs, giving untimately a lower consolidated Fund?

dunstonh

For example Pension Fund Manager 1 has invested my contributions in Unitised Tracker Funds A and B. The Chosen provider offers/proposes Unitised Tracker Funds A and C.

For clarification, the fund manager will only invest in the remit of their fund. The provider will offer a selection of funds. You or your IFA chooses the funds.

in a transfer to Provider 2, are my units in Fund A just re-registered to Provdier 2/Account DCF?

Whilst theoretically possible with unit trust/oeic funds within a pension it cannot happen with pension funds because the funds belong to the provider and not available through other providers. Sold to cash and cheque issued to new provider is the normal way.

With the B to C situation would this result in trading and bid/offer spread costs, giving untimately a lower consolidated Fund?

nowadays, most pensions are mono charged (AMC only). So, its unlikely. However, it is theoretical possibility that needs to be considered and could easily apply to legacy schemes (those from the commission days and not the explicitly charged contracts that have been around for the last 5 or so years)

DCF_Evaluator

Thanks very much.

Kaija68

Hi folks, this may or may not be the place to ask but here goes. A Financial Advisor recently told me that I could:

- set up a Trust with my child as a beneficiary.
- make arrangements for my employer to pay my pension into said Trust (I think those were the words used, not sure if he meant final payment or the regular payments they currently make)
- with my wife as a trustee, and in the event of my untimely demise, she would be well within her right to borrow a lump sum from the pension and, for e.g pay off a mortgage.

I may have not understood him entirely, especially with the last point. More important is setting up the trust and payments into it. If anyone can shed light on this, or what thread I should post this it would be highly appreciated. Thanks.

jamesd

Kaija68 I suggest that you start a new topic with a title "Pension trust for child, mother borrowing against it?"

If your employer is willing it'd be possible to pay into a trust for the child, not pension money, just money. That money would belong to the child.

After your death, your wife would presumably be responsible for care of the child and could spend money in the trust to provide for the necessities of life for the child. If the child is suitably young that could include paying off a mortgage. If the child is 17 that would be most unwise, though, for it's the child's money and in just one year the child would get it.

I'm uncertain about doing it as a pension and borrowing against it and if it's not done as a pension I don't see why borrowing would be needed, but maybe it'd be more tax-efficient in some way.

xylophone

What kind of Trust would this be?

Who would be the Settlor?

Who would be the Trustees?

Would the child be the only beneficiary?

What would the Trust Deed allow?

What would be the tax position?

If this were a pension trust for a child, how could money be extracted from it before the child reached pension age?

bigadaj

Kaija68 wrote: »

Hi folks, this may or may not be the place to ask but here goes. A Financial Advisor recently told me that I could:

- set up a Trust with my child as a beneficiary.
- make arrangements for my employer to pay my pension into said Trust (I think those were the words used, not sure if he meant final payment or the regular payments they currently make)
- with my wife as a trustee, and in the event of my untimely demise, she would be well within her right to borrow a lump sum from the pension and, for e.g pay off a mortgage.

I may have not understood him entirely, especially with the last point. More important is setting up the trust and payments into it. If anyone can shed light on this, or what thread I should post this it would be highly appreciated. Thanks.

Not really sure what the purpose of this would be. If this were still the parents pension then this would be paid out as a lump sum to the wife from which she could pay off the mortgage assuming she is the beneficiary.

I wouldn't have thought the employer would pa into a non employee pension though a parent could pay into a child's pension separately, and it sounds a complicated trust set up that would cost money to set up properly.