Choose whether to transfer your pension investments as they are, or as cash
When you transfer your pension pots, you may be given the option of taking your money in cash or transferring the actual investments as they are. The latter option is known as an ‘in specie transfer’.
There are advantages and disadvantages of each method.
Transferring the money as cash, which will mean selling the investments first, transferring the cash, and then making new investments with your new provider, will sometimes be cheaper. It is almost bound to be quicker and less prone to administrative hiccups.
On the other hand, if you plan to reinvest in broadly the same assets within your new amalgamated pension, you are exposed to the risk that the market climbs sharply while your money is in cash and you are making the transfer, meaning that you miss out on the gain. An in specie transfer will guard against this risk.
That said, we suspect most people will probably prefer to make the transfer in cash, because your self-managed investment strategy (see Step 3) is likely to be tailor-made to new circumstances in retirement. It will therefore require a different range of holdings to those in which the pension pot was invested during your working life.
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