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Pension scheme(8 Posts)
As ive been made redundant - i need to move my work pension to a personal bank - which is the best pension bank? (have i made any sense??) )
why do you need to move it? what kind of pension is it? money purchase or final salary
find out what it will be worth if you leave it with your company and what the transfer value is (then the projected pension from that)
you can have a number of different pensions, it depends which makes the most sense
its a life assurance and pension scheme.. i cant leave it where it is as im not employed in the company anymore so gotta move my pension elsewhere now
You don't need to do anything yet. If you want, it can stay where it is until you are 65 (not always a good idea).
Is it a "final salary & death in service grant" scheme (i.e. on retirement you would get a certain fraction of your final earnings) or a "cash accumulation & life assurance" scheme (i.e. on retirement you would get an annuity - pension - based on how big your balance had grown)?
Beware of financial salespeople - there are many honest ones, but history shows there are also many whose only interest is their own commission. The "nicest" ones can be the worst.
it doesn't matter whether you are employed or not by the company you can keep it as a paid-up policy
you need to find out what kind of pension it is and what the transfer valuation or projected pension pot will be once you stop paying into it
you can then make a decision
The standard position is -
If a "final salary" pension is left in a previous employer's scheme it is called a deferred pension (often wrongly referred to as "frozen"). Some or all of it (I'm a bit out of touch - it's probably only the part called the GMP element) receives annual increases in the years before retirement.
If the "normal retirement age" of that scheme is 65, then no pension will be paid from it until that age (i.e. you can't claim an early pension from it).
At any stage you can move the transfer value into another approved scheme - a bank or pension company or to a new employer's scheme. At each stage (transfer from, and transfer to) each organisation is likely to skim an administration charge from the transfer sum. One advantage which may exist with a transfer to a pension company is that you may be able to get an earlier pension than age 65 (obviously your other finances may not allow this). If you transfer it to a new employer and then leave that company you have the same dilemma again (and more charges).
One important factor is your age. If you are near to retirement, it may be best to leave it where it is now (avoid paying the administration charges). If you are young, it may be best to transfer it to a pension company and let interest boost it over the years.
If you decide to transfer it, act soon after the decision. If you delay for, say, a year it will cost you dearly later on. (£10,000 transferred to a pension company and left for 30 years may grow to £100,000. If you delay and it is there for only 29 years - at the same rate of interest - it would only grow to £93,000.)
I'll make no comments regarding your old scheme if it is a "cash accumulation" type instead of a "final salary" type - I just don't know much about those.
Try to find independent advice - and be careful about trusting anyone who has a policy to sell.
Twiglett - I'd appreciate your thoughts on these comments.
All of the final salary defferred pension should be increased each year for someone leaving a final salary scheme now. Its a minefield but advice needs to be sort. I used to work for an insurance company producing reports into the viability of transfering such benefits and there are so many things that you need to consider and each case is different. I then went on to work on the project to compensate people for the misale of these pensions that occurred before these reports were used and some of the sales done which misused these reports. Independant advice is a good idea, especially if you can get a fixed fee arrangement where the salesman, which is what he is, doesn't get any money for getting you to transfer the benefit. Can't believe its 7 years since I had anything to do with all this!
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