Whether you will benefit from the transfer of accrued benefits depends on the differences between your old and your new pension scheme. That is why you should compare the schemes in detail. The Pension Comparison Tool is a useful tool for this. Do you need advice? Please contact a pension adviser.
Things to consider before transferring your accrued benefits
Are you opting for a transfer of accrued benefits? In that case, the old-age pension will be increased in your new pension scheme. But is your new pension scheme actually better than your old one? That depends on several aspects and on your personal preferences. We would like to help you on your way with the following considerations.
1. Pension scheme type
Compare the type of pension scheme of your previous and new employer. There are basically three different types of pension schemes. From the most secure to the most insecure type:
- Defined Benefit agreement: You accrue pension with a fixed guaranteed benefit. This can be an average or final pay scheme.
- Capital agreement: You build up a pension that guarantees a fixed capital. The amount of your benefit will not be known until your retirement date.
- Investment pension (defined contribution): You build up a pension with an investment capital. The amount of investment capital on the retirement date depends on the investment results. And the amount of your benefit will also be determined at that time.
Is security important to you?
In that case, a transfer of accrued benefits from a defined benefit or capital agreement to an investment pension is not your best option.
What do you have to consider?
Defined benefit agreement
Are both your old and new pension scheme a defined benefit agreement? Check whether your pension grows in line with price or wage increases. This is called supplementation. In your pension scheme rules, you will find the conditions and provisions about increasing the pension.
Are you comparing two investment pensions? If so, they will be similar in many ways. You compare them in terms of investment results. Please note that past performance is not a guarantee for the future.
2. Partner's pension and orphan's pension
Upon your death, you want the pension for your surviving dependants to be properly arranged. In the case of transfer of accrued benefits, you should therefore pay close attention to the differences between the partner’s pension and the orphan’s pension.
In the case of a capital agreement or investment pension, the partner’s and orphan’s pensions are co-insured on a risk basis. This means it stops when you are no longer employed.
Sometimes an investment pension may also include a partner’s pension. The relevant premium is paid from your investment capital. Does your new pension scheme include a partner’s and orphan’s pension? If so, these are also increased after transfer of accrued benefits.
Overview of all your pensions
Do you often change employers? In that case you will have several pension schemes. Transfer of accrued benefits reduces the number of pensions.
Do you want to keep an overview of all your pensions? My pension overview will help you keep track.
Need some advice?
We are not allowed to give you advice on the transfer of accrued benefits. For advice we would like to refer you to an independent pension adviser. This could be your employer’s pension adviser, for example. Or you can choose your own adviser.