In-specie transfers and contributions
Whether you are consolidating older pension schemes or moving to a SIPP provider with keener charges and a better investment choice, you will come across the term in-specie transfer.
What is an in-specie transfer?
An in-specie transfer is the transfer of an asset from one pension scheme to another. Rather than having to sell the asset and buy it back, it is transferred from one pension wrapper to the other. The term in-specie is the Latin for ‘in its actual form’.
What can I transfer in-specie?
There are some conditions though. The asset must be available on your new SIPP platform. If you hold a fund that is bespoke to your current provider, or an investment or asset your new provider does not offer, it will not be possible to transfer it in-specie. You can still transfer it, but it will have to be sold first and you will need to make new investment choices with the proceeds.
It is also important to note that, as whether an investment or asset is moved in-specie or in cash, this is a transfer rather than a contribution. This means it does not qualify for tax relief but neither does it count towards your annual allowance.
Pros and cons of an in-specie transfer
The big plus with an in-specie transfer is that, because you do not need to sell or buy back the asset, there are no dealing charges.
An in-specie transfer enables you to remain invested throughout. This can be positive or negative, depending on how the value of the asset shifts during the transfer. If the value falls by more than the cost of selling and buying, you would have been better off in cash; if it rises, you win by staying invested.
You may even be able to trade once you have requested an in-specie transfer. As long as your investments are not in the process of being re-registered in your new SIPP, most providers will allow you to trade during the transfer. Speak to the provider you are leaving if you want to do this.
It may sound simpler than having to sell assets to move them, but an in-specie transfer is a more complex process from a provider’s perspective. As well as potential delays receiving information from your current provider, each of your investments needs to be re-registered in your new SIPP.
These complexities mean that completing a transfer can take time. As a rough guide, and depending on the type of investments you want to transfer, an in-specie transfer usually takes between 8 and 12 weeks.
How do I arrange an in-specie transfer?
Arranging an in-specie transfer is simple. Your new SIPP provider will do it all for you, liaising with your current provider to arrange the transfer.
- Contact your new SIPP provider and, if you do not already have a SIPP with them, open one.
- Complete an application form to transfer assets from another pension. If you are consolidating several pensions, you will need to complete a form for each of them. At ii, we offer an online transfer process to make this as simple as possible.
- Ask your current provider for – and complete – a ‘Valuation and Discharge Form’. This authorises it to release your investments to us.
- Your new SIPP provider will organise your transfer for you. If there are any assets it can not transfer in-specie, it will let you know. You can instruct your current provider to sell them for you, or arrange this yourself. The proceeds will be transferred to your new SIPP.
If you wish to transfer to ii, we will keep you updated with regular progress emails throughout the transfer.
Frances has a SIPP with Over, Priced and Inflexible. She is unhappy with the high charges and the limited investment selection so she picks a new SIPP provider.
She asks her new SIPP provider to transfer her current investments in-specie where possible, completing all the necessary forms online. She holds 10 investments in her SIPP. Of these, nine are available on her new provider’s platform but the tenth is a lifestyle fund bespoke to the original SIPP provider. Her new provider lets her know it will not be possible to transfer this in-specie and she arranges for it to be sold.
Eight weeks later, the transfer is complete. Nine of her investments plus the proceeds from the sale of the tenth investment are in her new SIPP. “It was so easy,” she says. “Everything was taken care of throughout the transfer and I received regular updates from my new provider. All I need to do now is find a new investment to replace the one that had to be sold.”
Getting financial advice
We recommend seeking financial advice if you are considering transferring pensions. An independent financial adviser will be able to assess your circumstances and recommend the most appropriate action to achieve your goals.
If you are over 50, you can get free and impartial pensions guidance from Pension Wise. This is a government service designed to help people understand their pension options.
How can Pension Wise help?
If you have a defined contribution pension scheme and are 50 or over, then you can access free, impartial guidance on your pension options by booking a face to face or telephone appointment with Pension Wise, a service from MoneyHelper.
If you are under 50, you can still access free, impartial help and information about your pensions from Moneyhelper.
Learn more about our SIPP
Learn how to make the most out of your SIPP with our useful guides.
Please remember, SIPPs are aimed at people happy to make their own investment decisions. Investment value can go up or down and you could get back less than you invest. You can normally only access the money from age 55 (57 from 2028). We recommend seeking advice from a suitably qualified financial advisor before making any decisions. Pension and tax rules depend on your circumstances and may change in future.