Can foster carers transfer pension savings between providers?

Transferring pension savings means moving the value built up in one pension scheme to another, usually so that your retirement savings are held together or managed under different terms. Foster carers can consider a transfer in the same way as other savers, but the right choice depends on the type of pension, the benefits attached to it, the charges and the features of the receiving scheme.

First, identify what kind of pension you have. A defined contribution pension is based on contributions and investment performance. These pensions can often be transferred between providers, subject to the scheme’s rules and the receiving provider’s acceptance. A defined benefit pension, sometimes called a final salary or career average pension, promises benefits based on salary and service rather than an investment pot. Transferring one of these schemes can mean giving up a guaranteed retirement income and may require regulated financial advice.

You should also check whether the pension contains safeguarded benefits . These may include a guaranteed income, a guaranteed annuity rate or other valuable rights. Moving the pension could permanently remove those benefits. Do not assume that combining pensions is automatically simpler or better if it means losing protections that are difficult or impossible to replace.

A typical transfer involves the following steps:

• Collect your pension information. Ask each existing provider for an up-to-date statement, the current transfer value, details of any guarantees and information about charges or exit penalties.
• Check the receiving scheme. Confirm that it accepts transfers and understand its investment choices, administration charges, withdrawal options and any restrictions that could affect you later.
• Compare the benefits. Look beyond the size of the pension pot. Consider investment arrangements, death benefits, flexibility, guarantees, fees and whether the scheme is suitable for your intended retirement plans.
• Obtain advice where required or appropriate. A transfer involving safeguarded benefits may require advice from a suitably authorised financial adviser. Even where advice is not compulsory, it can help you assess complex terms and the long-term effect of moving the pension.
• Complete the provider’s transfer paperwork. The current and receiving providers will normally verify the request before the money is moved. Keep copies of forms, statements, illustrations and correspondence.

Foster carers should take particular care when comparing pensions because fostering income and household finances may not follow the pattern of regular employment. Before transferring, consider whether you may need access to pension benefits at different times, whether you expect to continue fostering and how contributions will be made after the move. A pension that offers a convenient contribution method may not offer the same investment options or retirement flexibility as another arrangement.

Charges deserve close attention. A transfer may involve an exit fee, transfer fee or other deduction, while the new pension may have ongoing administration, investment or withdrawal charges. A lower charge is not the only consideration: the services, investment options and benefits provided must also be compared. Ask both providers to explain any costs in writing before authorising the transfer.

There can also be a period during which your money is not invested in the same way while the transfer is processed. The provider should explain how the transfer will be carried out and whether this affects your investments. Do not make decisions based solely on recent investment performance, as past performance does not establish what will happen in future.

Be alert to pension scams. Treat unexpected approaches about transferring your pension, claims of guaranteed high returns or pressure to act quickly as warning signs. Do not share personal or pension information until you have independently checked who you are dealing with. A transfer to an unsuitable arrangement can result in financial loss and may create tax consequences.

Keep a record of the decision even if you decide not to transfer. Retain pension statements, benefit illustrations, advice documents, fee information and confirmation of the final outcome. These records can help you understand your total retirement provision and will be useful if your circumstances, fostering arrangements or contribution pattern change.

If you are unsure whether moving a pension is suitable, speak to the existing provider first to understand what you would give up, then seek regulated financial advice where the decision is complex. A pension provider can explain its own scheme, but it may not recommend whether transferring is right for your wider circumstances.