Introduction

With many older defined contribution schemes only offering limited investment, retirement and death benefit options, they may no longer be suitable for changing client needs. So a transfer to a modern DC scheme may be the only way for some clients to access the extra flexibility now available. Combining pension savings into one arrangement can also be beneficial in terms of lower costs, increased client engagement and easier administration.

Advisers need to fully understand the associated risks, importance of timing and options to protect existing valuable benefits before giving advice to a client in relation to moving their DC pensions.

This module should take around 60 minutes to complete. Once you have completed all the sections there is a short self-assessment quiz to check what you have learned and a CPD certificate for up to 60 minutes can be claimed.

Outcomes

On completion of this module you should be able to:

  1. Describe the possible implications of transferring benefits for those in ill-health
  2. Explain the options available to keep protected tax free cash or a low pension age when moving to another scheme
  3. Determine the main benefits to consolidating multiple pension pots
  4. Detail the limitations on drawdown transfers and the reasons why transferring assets in-specie could be useful for some clients

Post learning assessment

Question 1

Geoffrey has been diagnosed with a medical condition which is likely to reduce his life expectancy to 15 months. What are the possible IHT implications of him transferring his personal pension to a SIPP?

  1. None – as neither plan is counted as inside Geoffrey’s estate
  2. None – as Geoffrey’s life expectancy is more than one year
  3. The transfer will be subject to IHT if Geoffrey dies within 7 years
  4. Geoffrey’s executors will need to include the transfer of the IHT409 form if he dies within two years of the transfer

Question 2

Which of the following is NOT a qualifying condition for a block transfer to be effective in protecting an individual’s low pension age or tax-free cash entitlement of more than 25%?

  1. The individual cannot have been a member of the receiving scheme for more than 12 months
  2. The transfer must represent the member’s total rights in the transferring scheme
  3. The transfer must involve at least two members
  4. All members involved in the transfer must have either a low pension age or tax free cash entitlement of more than 25%

Question 3

When considering pension saving consolidation, which of these statements is correct about the reasons why?

  1. Can sometimes offer a wider range of retirement and legacy options
  2. Makes it easier to monitor against the client’s goals
  3. A larger combined fund could lead to reduced charges and help achieve greater returns
  4. All of the above

Question 4

Which of these is NOT a reason to consider transferring an asset in-specie to the receiving scheme?

  1. The new scheme has higher investment charges for holding the existing portfolio
  2. Investment markets are going through a downturn, so selling assets now is not in client’s best interest
  3. The client wants to keep an asset(s) as part of their future pension portfolio
  4. The asset held is fairly specialist, so would take time to sell due to having to find a buyer/market conditions

Check your answers

Claim your certificate