Transferring a Pension: What You Need to Know

Transferring from one pension scheme to another can be a lengthy and intricate process, and will often take much longer than clients, and their financial advisers, expect.

Like buying a house or transferring a mortgage, a pension transfer is a complex financial process and there are many reasons why it can prove difficult to provide a timescale for completion. In a similar vein to a house purchase or remortgage, unknowns can spring up during the process adding further delays.

While it may seem cumbersome, understanding why it takes time can help you to navigate the process more smoothly and to help manage your expectations. Here, we delve into some of the reasons behind delays and what clients should anticipate when transferring their pension schemes.

Regulatory Compliance

One of the primary reasons for the lengthiness of a pension transfer lies in regulatory compliance. Pension providers such as us are bound by strict regulations imposed by the Financial Conduct Authority (FCA). These are in place to ensure the security and integrity of pension funds. Compliance involves thorough checks to verify the legitimacy of both the transferring and receiving pension schemes.

Due Diligence and Anti Money Laundering (AML) checks

As Pension Providers it is our duty to engage in meticulous due diligence to safeguard all our clients’ funds. This process involves verifying the details of both the transferring and receiving schemes, ensuring that the transfer is being made by (or to) a reputable provider with sufficient safeguards in place. What’s more, in line with UK Anti-Money Laundering regulations, we are required to request identity documentation from you that meets our Anti-money Laundering Requirements and perform verification checks on this documentation. Any discrepancies or red flags discovered during due diligence and AML checks must be addressed before the transfer can proceed.

Administrative Processes

Pension transfers entail a significant amount of administrative work, including paperwork, documentation, and coordination between various parties involved. Each step of the transfer process, from initiating the transfer request to finalising the transfer, requires careful attention to detail to avoid errors or delays.

Communication and Coordination

Effective communication and coordination between providers and other parties are an essential part of the transfer process in order to ensure the transfer happens as smoothly as possible. From an outside view of this process, it can sometimes seem to a client and their advisers that we as administrator of their SIPP are causing delays and preventing a transfer from completing, and/or we’re simply not chasing the receiving scheme for updates enough. However, frequent chasing can raise internal red flags by the receiving scheme provider who have a duty to carry out their own due diligence. This can add extra time to the process or even prevent a transfer from completing altogether, so it is not in our interests to do this. Delays can also occur when there are discrepancies in information provided by different parties including the information that we and the receiving scheme are provided by you and your adviser about you and your SIPP. Resolving these issues can also prolong the transfer timeline.

At PSGS, we do everything in our power to minimise this type of disruption but ultimately clients and advisers have a huge part to play in ensuring accuracy at all levels when completing paperwork between us and the receiving scheme. Therefore, it is important that you take the time to sit with your adviser and complete all sections carefully.

Legal Considerations

Legal considerations, including contractual obligations, tax implications, and pension regulations, must be carefully evaluated before proceeding with a transfer. Pension providers need to ensure that the transfer complies with all legal requirements and that clients fully understand the implications of transferring their funds.

Client Consent and Authorisation

Clients must provide explicit consent and authorisation for the transfer to take place. This involves reviewing and signing relevant documents, understanding the terms and conditions of the transfer, and complying with any additional requirements imposed by the pension provider or regulatory authorities.

We hope this article gives you some further insight into transferring a pension, why it is a lengthy process and where delays can occur and we invite anyone with questions regarding the transfer process to Get in Touch.

For further information on our Transfer out process please refer to our Transfer Out Policy.

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