Over the last twelve months, we have seen enquiries for transfers from occupational schemes go through the roof - and understandbly so. Why would you not want to take all that money - it's yours, just waiting for you?

It will be yours when you transfer, but will the former scheme have compensated you with enough money for the personal risk that you will be taking on? Quite often we find that this is not the case: a financially weak employer. But this is not the only reason to avoid a transfer. 

The attached article covers some really important issues, but I would like to add four more:

  1. Attitude to risk. Yes yes I hear you say, I've been tested and I am "balanced". Someone transfering needs to understand the additional risks that they are taking on and should be comfortable with the ups and downs of investment markets. We like to understand how someone might have behaved during an actual event, for example; during the dot.com bubble burst or the Banking crisis, what was your investment situation (if any) and what action did you take, if any? 

2. Sequencing risk. What would happen if in the first few years of investment, returns were negative. What would your strategy be and how would you handle it? This risk can have long term consequences for your retirement income and is generally poorly understood. We help this by demonstrating it with a cash-flow tool.  

3. Are there any other assets that you can draw on if your pension got into financial difficulty? Felxibility helps enormously. 

4. How flexible are you in your spending habit? Could you survive on less income for a few years, or the rest of your life?

There can be many positive reasons for transfering. At Ifamax we have created 10 steps to giving independent advice on occupational transfers.