Our innovative new ONEfee offering has proven popular with investors looking for a cost efficient way to save for retirement and we are getting many requests about how you go about transferring your Retirement Annuity (RA) to OUTvest. If you are considering a transfer to OUTvest then we hope that the information below will shed some light on the process.
A transfer from one Retirement Annuity provider to another is typically initiated through what is called a “Section 14 Transfer”, referring to Section 14 of the Pension Funds Act.
While this process should – in theory – be relatively straight-forward, there are a number of factors which can draw out your transfer.
Your first consideration is whether you are currently invested in what is broadly-termed a “new generation” RA product (typically offered by asset managers) or one of the older generation products which were historically offered by insurance companies (like a policy).
Why are you switching?
Are you switching out to reduce fees charged on your investment? Fees will be one of the biggest determinants of long-term investment returns – this will be particularly relevant for investors who still have more than 10 years to retirement
Are you switching to a service provider that has a better investment performance and management track record?
Are you switching on a like-for-like basis or not in terms of your asset allocation? For example are you switching from a low risk investment fund to a high risk investment fund or to a similar risk fund
Before making the decision to switch from one service provider to another, you need to ensure you have a good understanding of all the pro’s and con’s. In other words understand what you losing and gaining when leaving one provider for another, so that you are able to make an informed investment decision.
Will I incur fees or penalties by transferring?
It is important to read the fine print on your agreement before making any decisions to transfer from one service provider to another.
Each service provider will have different contracts, particularly if the product includes forms of guarantees over the lifetime of the RA. Make sure you understand whether you will be charged any penalties or additional costs on the transfer from one service provider to another.
Will I incur a tax liability if I transfer an existing Retirement Annuity to OUTvest?
No – your RA is effectively housed in a tax “wrapper” and it will be exempt from tax during this process.
How long will this take?
When transferring a new generation RA, this process can typically take four to eight weeks depending on the provider.
For the older generation products, this process can take significantly longer, sometimes even as long as six months.
- When transferring your Retirement Annuity, you need to be aware of a “contribution gap” – this arises when you have a monthly debit order contribution being received by the original RA provider at the same time as you’re transferring to the new provider.
- Were there other life, disability or additional insurance products linked to this policy that might be impacted by the termination of the contract?
- Were there any guarantees linked to the original RA product and will you be forfeiting these when you transfer?
- If you are planning to transfer into a Preservation Fund, remember that you will not be able to make further contributions and might instead need to setup a new RA if you wish to continue to contribute and benefit from a tax perspective.
If you are ready to transfer your Retirement Annuity to OUTvest then click here and we will get the process started.
If you would like to talk to one of the OUTvest Financial Advisors around the implications of transferring your RA or preservation fund, then please contact us on 0860 688 837.
OUTvest is an authorized financial services provider