- It generally does not make sense to transfer out of a workplace pension scheme during the accumulation phase as you lose employer contributions
- There are a few instances where it can be a good option
- Consolidating former workplaces pensions into a Sipp can be sensible in some circumstances
There are several risks and disadvantages to transferring out of your defined-contribution (DC) workplace pension while you are still in the accumulation phase. While you might wish to take charge of how your Sipp is managed, you are likely to lose out on employer contributions and will not get other benefits, such as more salary, in place of them. Gary Smith, chartered financial planner at Tilney, says that you should consider whether you will be able to compensate for the loss of employer contributions because this could result in a shortfall in your desired level of retirement income.
If you are thinking of transferring out of your existing workplace scheme first check with your employer if they would contribute to your Sipp. “If this is not an option and consolidating your pension funds remains an appropriate course of action, it may be possible to transfer all or most of the funds out of a workplace pension while leaving the plan open – a partial transfer,” says David Wright, wealth management consultant at Mattioli Woods. “This way, regular contributions can continue unchanged although it may be wise to consider another transfer at some point in the future.”