Old Pension Review Checklist: What to Check First

An annual check is a useful starting point for an old defined contribution pension, particularly when a new statement arrives. Review it sooner if you change your intended retirement date, approach retirement, change jobs, experience a major family event or receive notice of changes to charges, funds or scheme rules. A defined benefit pension does not need investment monitoring in the same way, but you should still keep contact details and beneficiary information current and understand the benefits recorded. Reviewing a pension does not mean moving it every year. Frequent transfers can create costs and may cause valuable features to be lost. The purpose is to confirm that the information remains accurate, the pension still plays the intended role in your retirement plan and any action is based on evidence rather than short-term market movements.

Begin with the latest annual statement, policy or membership number, scheme booklet and any retirement or transfer illustrations. For a defined contribution pension, request the current value, fund holdings, contribution history and a full breakdown of charges. For a defined benefit pension, ask for the accrued pension, normal retirement age, revaluation terms, spouse or dependant benefits and any available transfer value. Request written confirmation of guarantees, protected tax-free cash, protected pension age, bonuses, exit deductions and transfer restrictions because these may not appear clearly on a routine statement. It is also helpful to collect details of your other pensions, State Pension forecast, savings, investments, debts and expected retirement spending so the old pension can be considered within the complete plan rather than in isolation.

Performance is mainly relevant to defined contribution pensions because their value depends partly on investment returns. Compare results over a suitable period with an appropriate benchmark and with funds taking a similar level of risk. Check performance after charges and consider whether contributions or withdrawals affected the figures. One strong or weak year is not enough to judge the pension. Also examine the investment mix, the time remaining until retirement and whether a lifestyle strategy is moving the money into different assets. Defined benefit pensions should not be assessed using investment performance because the member normally receives benefits calculated under the scheme rules. A regulated adviser can assess whether an invested pension remains suitable, but past performance cannot guarantee future returns and changing funds solely because of recent results can be unhelpful.

Charges are an important consideration but should never be considered alone. Establish the total current cost and compare it with the proposed pension on the same basis, including platform, policy, fund, transaction and adviser charges. Then identify what the existing plan provides. It may contain a guaranteed annuity rate, protected tax-free cash, a protected pension age, bonuses or favourable death benefits that would not transfer. The new arrangement may offer lower costs but different investments, fewer services or retirement options that do not meet your needs. Exit penalties or market value adjustments can also reduce the amount moved. A transfer should therefore be based on the net effect of costs, benefits, investments, flexibility, tax and risk. The correct result may be to retain a pension whose charges initially appear higher.

Ask the provider or scheme administrator to confirm every guarantee and protected right in writing. Examples include a guaranteed annuity rate, protected tax-free cash above the standard entitlement, a protected pension age, guaranteed minimum pension, defined benefit income, inflation-linked increases, spouse or dependant benefits and with-profits or terminal bonuses. Check the conditions attached to each feature. A guarantee might apply only if benefits are taken at a specific age, through the existing provider or in a particular form. Annual statements may not describe these features fully, so ask a direct question rather than assuming none exist. If a transfer is being considered, establish exactly which rights would end and whether anything equivalent would exist in the receiving pension. Once surrendered, valuable guarantees can be impossible to restore.

Yes. A review and a transfer are separate things. Reviewing the pension means understanding its benefits, charges, investments, risks, retirement options and place within your wider plans. The review may reveal that the existing pension remains suitable and should be left unchanged. Even where an alternative appears attractive, no transfer should take place until the benefits and costs of both arrangements have been compared and any legal advice requirement has been addressed. You can also take administrative steps without moving the pension, such as updating contact details, correcting the selected retirement date, reviewing beneficiary nominations or changing investments where the scheme permits. Treat a transfer as one possible outcome rather than the purpose of the review. A regulated recommendation must reflect your circumstances and may conclude that no change is appropriate.

Review any expression-of-wish or nomination form, especially after marriage, divorce, bereavement, the birth of a child or another major family change. Ask how the particular scheme pays benefits on death before and after retirement. A defined contribution pension may provide a remaining fund, while a defined benefit scheme may pay a lump sum or continuing income to an eligible spouse, civil partner or dependant under its rules. An expression-of-wish form often guides the provider or trustees but may not bind their decision, so the scheme should explain how discretion works. Keep a dated copy of any update and make sure the provider has received it. Pension death benefits and their tax treatment depend on the arrangement and circumstances, so obtain appropriate financial, legal or tax advice where needed.

Chesterton Grant can help you understand which documents and questions may be relevant and can arrange for you to speak with a regulated, qualified financial adviser. Pension and investment advice is provided by Steve Wright, a True Potential Wealth Management Partner. Before making a personal recommendation, the adviser will need information about the pension, your other retirement provision, financial circumstances, objectives, attitude to risk and capacity for loss. The review may consider charges, investments, guarantees, tax, retirement options and death benefits. It may conclude that the existing pension should remain where it is. A transfer, consolidation or withdrawal is not automatically suitable because a pension is old or no longer receiving contributions. Any applicable advice charges will be explained before you decide whether to proceed.