Blog

If you've changed employers within the railway industry, you may have pension benefits in more than one section of the Railways Pension Scheme (RPS). 

A question that comes up regularly among members is whether you can transfer benefits from an older membership into your current one. This is called an inter-Scheme transfer, and it can make your pension easier to manage in the long run. 

The answer isn't the same for everyone. Before deciding whether to explore a transfer, it's important to understand how they work and what they could mean for your pension.

To help you make an informed decision, let’s separate fact from fiction with five common misconceptions about inter-Scheme transfers.

Not always.

If you move between employers or sections in the RPS, your pension benefits won't automatically move with you.

If you've left a job where you were paying into the RPS, the benefits you've built up stay in that employer’s section of the Scheme. This is called a preserved membership. You're no longer paying into it, but you keep the pension benefits you've earned.

If you then join another employer that participates in the RPS, you start a new membership. This means you’re an active member currently paying into the Scheme and building up pension benefits.

Even though both memberships are in the RPS, they won't automatically be combined. In this situation, a transfer will only happen if you request one, and if you’re eligible.

If you're interested in transferring benefits from a preserved membership into an active membership, you'll need to visit the request a transfer page.

In some cases, your pension benefits may move to your new RPS membership automatically. If this happens, we'll tell you what it means and explain your options. You'll then have six months to decide whether you want the transfer to go ahead.

Not necessarily.

The rules on transfers vary between sections of the RPS, so what's possible for one member may not be possible for another. Not all memberships or periods of service are eligible for transfer.

If you’re considering a transfer, check your Member Guide first. It explains the rules for your section and what transfer options may be available to you. You can find it in the ‘My Library’ section of your myRPS account.

Myth 3: If I transfer, all my pension benefits will look exactly the same

Not necessarily.

One reason transfer quotes can seem confusing is that not all pension benefits are built up in the same way.

That’s because some RPS sections provide a defined benefit (DB) pension, while others provide defined contribution (DC) benefits, such as the Industry-Wide Defined Contribution (IWDC) Section and Additional Voluntary Contributions (AVCs).

A DB pension aims to pay you a regular income based on your salary and how long you’ve been a member of the scheme, rather than the amount of money you’ve contributed to the pension.

A DC pension works differently. Instead of building up pensionable service, you build up a pension pot through personal and employer contributions, and investment growth.

This means the information shown for different memberships may not be presented in the same way. So, it’s important to understand what type of pension benefits you have. 

The transfer terms could also differ depending on when the transfer takes place or whether any of your benefits have protected status.

If anything in your quote or Member Guide is unclear, speak to us before making a decision.

Myth 4: If a transfer is available, it’s probably the best option

Not quite. 

When you transfer benefits from an old RPS membership into a current one, it's important to think about more than just the transfer value.

Different RPS memberships can have different rules and benefits. Before deciding whether to transfer, make sure you understand what benefits come with both memberships and whether these would change after a transfer.

For example, you may want to consider:

Myth 5: There's no point getting a transfer quote unless I've already decided

Requesting a quote doesn't mean you have to transfer your benefits. It’s there to help you understand your options before you decide whether to go ahead.

You can request one inter-Scheme transfer quote free of charge within a 12-month period. There's a charge for any additional quotes you ask for within the same 12 months. Find out more on the transferring my pension page.

Things to think about before making a decision

Every member's circumstances are different, so there's no one-size-fits-all answer when it comes to transferring pension benefits.

Before deciding, ask yourself:

Whenever you're thinking about making a big decision about your pension, it's a good idea to get financial advice first. 

You can find a list of independent financial advisers at unbiased.co.uk, or use our preferred partner Liverpool Victoria (LV), who have a good knowledge of the Scheme.

You can also visit MoneyHelper for free, impartial guidance backed by the government.