Can I transfer the money from pension scheme of my current employer?

HardCoreProgrammer

Latest update: The pension still has not transferred across yet.

I got the form from Fidelity in the middle of November. After about a week of telephone queries, I finally worked out how to fill in the transfer form (I work full time so could only squeeze in a quick call during lunch time) and obtained assurance that funds can be transferred by re-registration (i.e. "in-specie" transfer, without the need to sell, hand over cash to the new pension provider who re-buys with the cash). I then found funds which are available in both AEGON and fidelity, moved my AEGON investments from low-cost trackers (which are own-brand and not available in Fidelity) to these funds, and returned the form.

Less than 1 week later, I got a letter saying that my Fidelity SIPP is open with zero balance. I called Fidelity and was told that the process would take up to 6 weeks. Just after Christmas, I got a letter from Fidelity saying that we have checked with AEGON, your pension balance is x, yes the pension funds can be transferred, and please sign this form to authorise the transfer. I asked Fidelity why I need to sign another form, and they said that the original application form only gives them the authority to make queries with AEGON, not to do the transfer.

For the re-registration, I asked for confirmation again by speaking to a person at Fidelity and then writing a secure message from my Fidelity account. I got a written response saying that it would be possible.

So I filled in the form and posted it just after new year. This Friday, a terse letter came back saying sorry, AEGON does not do re-registration, so everything needs to be sold and transferred as cash. Please sign this letter if you want to proceed.

I was not happy because Fidelity told me numerous times that re-registration is possible, but actually never bothered to check with AEGON when they made queries back in December. Now they presented me with 2 options: sign it and proceed with the transfer (which gives me no control over when investments are sold and re-bought - this could matter with turbulent stock markets at the moment), or leave it.

Fortunately I have some cash sitting in a Santander account and worked out a plan to do the transfer in the way I want:
- move the money from Satander to Fidelity investment account
- once the money is cleared, buy the investments in Fidelity investment and sell the same investments in AEGON on the same day *
- send in the signed letter and proceed with the pension transfer
- once the pension money is cleared, sell the investments in Fidelity investment and buy the same investments in Fidelity pension *
* I have checked with AEGON. To have a trade executed on a particular day, it is necessary to put in an order before 12:00 1 working day before. For Fidelity, it is necessary to put in an order before 11:00 on the day.

I will write to Fidelity to complain after I have sorted all this out. I never thought transferring the pension would be so complicated and take so long, but there you go.

dunroving

HardCoreProgrammer wrote: »

Latest update: The pension still has not transferred across yet.

I got the form from Fidelity in the middle of November. After about a week of telephone queries, I finally worked out how to fill in the transfer form (I work full time so could only squeeze in a quick call during lunch time) and obtained assurance that funds can be transferred by re-registration (i.e. "in-specie" transfer, without the need to sell, hand over cash to the new pension provider who re-buys with the cash). I then found funds which are available in both AEGON and fidelity, moved my AEGON investments from low-cost trackers (which are own-brand and not available in Fidelity) to these funds, and returned the form.

Less than 1 week later, I got a letter saying that my Fidelity SIPP is open with zero balance. I called Fidelity and was told that the process would take up to 6 weeks. Just after Christmas, I got a letter from Fidelity saying that we have checked with AEGON, your pension balance is x, yes the pension funds can be transferred, and please sign this form to authorise the transfer. I asked Fidelity why I need to sign another form, and they said that the original application form only gives them the authority to make queries with AEGON, not to do the transfer.

For the re-registration, I asked for confirmation again by speaking to a person at Fidelity and then writing a secure message from my Fidelity account. I got a written response saying that it would be possible.

So I filled in the form and posted it just after new year. This Friday, a terse letter came back saying sorry, AEGON does not do re-registration, so everything needs to be sold and transferred as cash. Please sign this letter if you want to proceed.

I was not happy because Fidelity told me numerous times that re-registration is possible, but actually never bothered to check with AEGON when they made queries back in December. Now they presented me with 2 options: sign it and proceed with the transfer (which gives me no control over when investments are sold and re-bought - this could matter with turbulent stock markets at the moment), or leave it.

Fortunately I have some cash sitting in a Santander account and worked out a plan to do the transfer in the way I want:
- move the money from Satander to Fidelity investment account
- once the money is cleared, buy the investments in Fidelity investment and sell the same investments in AEGON on the same day *
- send in the signed letter and proceed with the pension transfer
- once the pension money is cleared, sell the investments in Fidelity investment and buy the same investments in Fidelity pension *
* I have checked with AEGON. To have a trade executed on a particular day, it is necessary to put in an order before 12:00 1 working day before. For Fidelity, it is necessary to put in an order before 11:00 on the day.

I will write to Fidelity to complain after I have sorted all this out. I never thought transferring the pension would be so complicated and take so long, but there you go.

Neophyte question but if you do it this "DIY" route, won't you have to pay income tax on the AEGON income?

If so, then you should pay into Fidelity only the "post-tax" amount you will get from AEGON, otherwise, based on your earlier £20k figure and assuming 20% income tax:

You pay £20k savings into Fidelity and get a tax "bump" from them of £5k, leaving £25k in your SIPP (not £20k).

You receive £20k gross income from AEGON but will pay tax on this and end up with only £16k in the bank.

Outcome: Your savings account will be £4k short of what you took from it.

To avoid this, you'd pay only £16k into Fidelity and with the tax bump this would be increased to £20k.

Apologies if I am completely off-track, but this stood out for me as a potential outcome.

ETA: It's also not clear why you are paying into a regular Fidelity investment account then switching to the SIPP. Won't you incur additional selling fees for this? Or are you playing it safe in case the AEGON payment hits a road block?

HardCoreProgrammer

To dunroving, the AEGON money is pension so tax free.
I cannot transfer it in specie, so I am setting up a Fidelity investment account (not pension) with my own spare cash, and then sell funds in pension + buy funds in Fidelity investment on the same day.
When the pension money has been transferred (as cash) to Fidelity pension, I will sell funds in Fidelity investment + buy funds in Fidelity pension on the same day, thus avoiding being out of market at an unknown time and duration. If I do not do this, I have no idea of when AEGON will sell the investments and how long the transfer will take.

HardCoreProgrammer

I should be close to the end now.

It took me a while to get the money from Santander to Fidelity investments. I started with a small amount which went through without problems, but when I tried to transfer the bulk of the cash, Santander was convinced that some crook was trying to empty my account. Some kind of fraud alert must have been raised and it took me about 2 weeks to sort it out (note to self: being out of the country did not help).

I have converted all the funds in Fidelity pension into cash, and bought some equivalent tracker funds in Fidelity investment. There was a minor mess-up when I put in any order to sell a fund in AEGON pension just before 12:00, but according to AEGON the order came in just after that, so it was sold 2 days later instead of 1 day. But fortunately the fund price fell between day 1 and day 2, so I actually ended up about £50 in pocket - a nice compensation for the lost interest in Santander.

There is one final sting in the tail however. When I rang AEGON for a final check, I was told that to keep the pension open (for future employer contributions), I must leave at least £1 in it, and transferring the full balance would automatically close the pension. This was then followed by frantic emails and letters to Fidelity to amend the instructions, and another week to sort out.

On Thursday I finally sent in the form to authorise the cash transfer from AEGON to Fidelity as cash. I will report back on how long it takes for the money to disappear from AEGON, to show up in the Fidelity pension, and to be cleared for dealing (as I ticked the "re-register" box and did not specify any funds in the Fidelity pension transfer form, I have to wait for the money to clear).

HardCoreProgrammer

Finally the end is in sight.

After calling Fidelity numerous times to chase them, they sent a chaser letter to AEGON, and finally 2 weeks ago I was told that the money should be in my Fidelity SIPP next Friday (i.e. good Friday, makes you wonder if they know what they are talking about).

My AEGON account shows that the money left on 24 March. On the day before good Friday (2 April), I got a call from Fidelity asking me to confirm that I want my money placed as cash. I said yes, and they said it will take 5 working days for it to clear and become available. This means I will not be able to use it after 13 April.

Why it takes from 24 March to 14 April, for cash to transfer from one pension to another, is anybody's guess. The fund in AEGON was all in cash already, waiting for the transfer. And Fidelity confirmed that AEGON is not sending a cheque - everything is being done electronically.
The money left on 24 March, so why does it take until 2 April for Fidelity to even acknowledge it? And they are not sending a cheque, so why does it take another 5 working days to clear?
I am really glad that I had spare cash in Fidelity investment for hedging. I would have been seriously out of pocket, as the market rose strongly during the transfer process.

It is also naughty for AEGON to hang on to my money for 2 months after I sent the transfer request to Fidelity. I know that they charge 0.6% pa for their cash fund - talk about taking the proverbial here!

Anyway, I will wait until 14 April and then simultaneously sell the funds in Fidelity investment, and buy the equivalent in Fidelity SIPP. That will complete the transfer.
I will then write in to complain about the time taken for the transfer, and the time they hang on to the cash.
Anyway, I am not keen to repeat this in the near future - this has caused a lot of stress when I have more important things to worry about at work.