Low Value Pension Transfer idea

Hi All

I was on the phone to an adviser the other day and we were discussing what to do with a clients pensions. The client has two pensions one quite large and the other worth about £800.

The client wants to tidy up the pensions and have them managed on her behalf, the usual story.

The smaller pension though was being charged at 0.20% per annum which made it quite hard to justify the transfer and then I had a brainwave which I wanted to run by the community brains that are far better than mine.

What if you were to say to the client, that pension is okay, we can leave it where it is but it is going to be a bit of a faff for me to manage it and for you to get info from etc etc, however if we move it the cost will increase 10 times more than where it is currently.

The idea is to say to the client, the difference in the cost of the new scheme is £14.40 a year, if we build in some growth into that for the next 10 years that amounts to £181. The advisers takes £181 off of the initial charge to account for the difference in cost for the next 10 years.

Providing obviously the current scheme doesnt have anything valuable within it, can you see any issue with this approach?



  • Hi Nathan - how old is the client, how far off 55 are they?

  • The client is 55 already but doesn't yet need income so flexibility is not a reason to move.

  • Could she take it under the small pots rule rather than transfer though? If it's only £800, for the hassle and cost of moving it, she may want to just draw it as a lump sum if she meets the required conditions. There could be tax on it but may still be an option depending on the amount of tax she may pay.

    Just a thought :smile:

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