Are pension funds taxed when transferred?

rudebadger

Hi,

A question please - If a pension fund is transferred from one employer's pension fund to another, is the individual or the fund taxed?

I've been on the HMRC website and its not clear. The fund would be transferring from one UK based employer to another (both reputable firms).

Any advice please?

Thanks

jem16

rudebadger wrote: »

Hi,

A question please - If a pension fund is transferred from one employer's pension fund to another, is the individual or the fund taxed?

There would be no tax due in any form.

Your_Hero

There's no tax due on transfers.

You may wish to consider the merits of such transfer though as it is not always in your best interests. You should check the benefits with your old employer, i.e. mainly an issue with occupational pensions or if it's a Defined Benefit (DB) scheme, and compare with the new employer's pension to see if you will be better off.

If it's too much to take in, then probably best to seek professional advice but whether this is worth the money or not depends on the size of the pot in question.

MEM62

The fact that you asked the question suggests that you have not taken advice on the transfer. In most cases, you will not be allowed to make the transfer unless you have sought financial advice.

jem16

MEM62 wrote: »

The fact that you asked the question suggests that you have not taken advice on the transfer. In most cases, you will not be allowed to make the transfer unless you have sought financial advice.

Advice would only be needed if it was a Defined Benefit pension that the OP wished to transfer.

RickyC_IFSWP

There's no tax due.

Aside from looking at the merits of transferring as mentioned in the above posts, beware of any exit penalties/market-value reductions applicable or loss of valuable guarantees on the old pension, and any potential initial charges on the new scheme.

MEM62

jem16 wrote: »

Advice would only be needed if it was a Defined Benefit pension that the OP wished to transfer.

Based on my recent experience with a couple of transfers I do not believe that to be the case.

Neither of mine were DB and the receiving pension provider refused to accept the funds unless I was advised. In my case the cost of advice was very high in relation to the amounts being transferred and it was eventually done on an 'execution only' basis for which I had to give an indemnity to the provider receiving the funds.

I expect that the OP will be asked to seek advice before the transfer will be accepted.

Your_Hero

jem16 wrote: »

Advice would only be needed if it was a Defined Benefit pension that the OP wished to transfer.

DB schemes especially but could also be DC, because it depends how the employer's pension is set up. If it is set up on as a formal occupational pension scheme, i.e. on a trust basis (as opposed to a contract basis such as typical DC schemes from 3rd party providers), it could still contain various guaranteed elements, life insurance, etc.

Most insurers will insist on advice because when things go wrong and people have the slightest inclination that they've lost out, they will argue that "I was not told this or that before I transferred" and the provider could find themselves paying out for compensation for no reason.

jamesd

MEM62 wrote: »

Neither of mine were DB and the receiving pension provider refused to accept the funds unless I was advised. In my case the cost of advice was very high in relation to the amounts being transferred and it was eventually done on an 'execution only' basis for which I had to give an indemnity to the provider receiving the funds.

I expect that the OP will be asked to seek advice before the transfer will be accepted.

That would be an unusual requirement. Not an impossible one since a receiving scheme can ask for whatever they want. Just not usual. Picking a different scheme if they make it hard to do the usual execution only transfers would be one way to go.

rudebadger

Thank you for all of the replies.

I am not sure what to do. My old employer pension is managed via Towers Watson, my new employer pension is managed via Hargreaves Lansdown. I am concerned for the future of my old employer and it is this which is the main drive to look to transfer the pension.... I do not know if there fear is even realistic, i.e. if the my old employer disappeared could my existing pension pot 'disappear'.

pot with old employer is 6 figures.

Thanks

xylophone

managed via Towers Watson,

Is this a deferred final salary/defined benefits pension?