It is quite common for members and their advisors to consider an in-specie transfer of assets from one pension scheme to another. Elaine Turtle, Director at DP Pensions, discusses that certain matters need to be taken into account.
Cash transfers
Firstly, if the assets being transferred are actually going to be encashed once transferred over then there is little point in doing this as an in specie transfer, as the timescale for an in specie transfer can be from 4 weeks to 3 months! So if the plan is to encash rather than transfer in specie, we recommend that you have the SIPP set up and the account opened with the new Investment Manager in advance and at that point you can tell the existing Pension Provider / Investment Manager to sell down the assets and we will request the cash transfer – this usually means we will have funds within 10 days and they can be moved across immediately to the new Investment Manager once received. This is normally the quicker option if the portfolio is being re-jigged.
A partial in specie transfer
If the plan is to just transfer some assets in specie (and the rest as cash) it might be worth considering doing a partial transfer first of the cash and then go back for the in-specie transfer after the cash is received. The reason for this is that most Providers only transfer cash once the in specie is completed so cash can be sitting for some time out of the market and transferring the cash first can help avoid this. This can only be done if the member is not fully crystallised and the value that is transferred is equal to or below the value of the uncrystallised amount. There will also usually be 2 charges from the existing Pension Provider as there will be 2 transfers. Also note in specie transfers usually incur a charge whilst a cash transfer might not. Always best to check with the investment provider first on your options and charges.
Full in specie transfer
So, if in specie is the best way forward then we will require a list of existing assets before the transfer can be requested to check that all the investments held are in the Permitted Investment section of our Investment List. Our Investment List complies with the FCA’s Standard Asset list. Please note if a stock has been delisted or is suspended, we won’t accept this and, in fact, they can’t be transferred. It means that the account with the existing Investment Manager can’t be closed and so the existing Pension Plan can’t be moved either. It will mean having two Pension Plans going forward until the suspended funds can be moved or are written off and that is the same for delisted stock. During which time you might be charged two sets of fees (one from each pension provider).
Time expectations
Once the stock/ assets have been checked as acceptable to us we will then complete the discharge forms for the other Pension Provider and send these off – please note the Origo system does not deal with in specie transfers.
If the in specie is staying with the existing Investment Manager / stockbroker then this should make matters much quicker. So, it helps if when you send our SIPP opening forms that you send us the account opening forms for the Investment manager / stockbroker so we can have the account opened quickly ready to deal with the in specie transfer. The Investment manager /Stockbroker must wait on instructions from the existing Pension Provider. Once instructions are sent off to the existing Pension Provider, we will leave it 2 weeks before we chase and then chase weekly after that.
Once we have confirmation that the investments/ stock has been transferred we will request a valuation again to review this against the original list to make sure all the assets have been transferred. If cash has been received as part of the transfer, then we will move this across to the Investment manager / stockbroker if that has been requested. This cash will also be used to settle our fees and any fees being paid to your financial adviser.
Pension Scams
One thing we need to look out for on a transfer is that the new Scheme is not part of a scam. Please see our link on our website with regards to We pledge to combat pension scams and protect savers