What is a Pension Transfer Value?

When you’re considering transferring your current pension into a new one, the amount of ‘cash’ being transferred, is referred to as the pension transfer value. This value will be agreed on by your current pension provider.

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Understanding Pension Transfer Value

Depending on your current pension provider or trustee, any benefits you have built up may be converted into the cash that is being transferred. The transfer value is also known as the CETV– Cash Equivalent Transfer Value.

If you have a defined contribution pension, your transfer value may be lower than the fund value itself. This then results in less being moved over to your new provider. This is only precautionary, and it is always best to check with both a financial advisor and your provider for the finer details of your policy.

If your pension is part of a defined benefit scheme, this transfer is simple in comparison. Again, provider permitting, your current pension pot with its benefits should be transferred over directly as it is, where possible. Any benefits you have accumulated should remain yours under your policy terms until the policy is terminated or transferred.

You may be thinking that you could work out the pension transfer value yourself, and it is certainly doable if you know your pensions. But it can also be somewhat complex if you’re not in tune with financial jargon and that’s ok, most of our customers aren’t. Luckily, this is where a financial advisor can help, along with your pension provider.

You may think that your calculated sum looks like a healthy amount, but this is where you need to take fees and deductions into consideration, or we can do this for you as your financial advisor.

The process of obtaining your transfer value needn’t be a complex task, but may just need a little help to give you some realistic expectations before you make the move. But note that the pension transfer value figure isn’t the same as what is in your actual pension pot, and this is the bit that may be somewhat confusing.

The pension transfer value could actually seem to be higher than your actual pot in some cases, especially if you have numerous benefits with your pension provider. When taken into consideration, with your added benefits factored in, this could be an increased amount if your employer has also put a large percentage into your pot.

For the best advice on your pension transfer value queries, it is worthwhile to consult with a financial advisor who specialises in pensions.

The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

We can refer you to a pension transfer specialist if you are considering transferring from a defined benefit/final salary scheme.

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