To transfer pension or not?

[LGBirmingham]

I have recently been made redundant, but fortunately have another job secured.

I have a small pension with the first company. I was only there for 3.5 years, one of which I was on maternity leave. So the sum in there is not substantial. The company I'm going to has a very generous pension scheme with large employer contributions which is fantastic.

What I'm wondering is should I transfer the old pension money into the new one or is there some sense in leaving it where it is to spread my risk? I'm sure I sometimes hear of pension schemes going bust so maybe there is value in having money in different places?

Any advice welcomed.

Makes sense to transfer it, one less thing to keep track of.
Is the new employer scheme a direct contribution one or a DB one?
DB pensions are now usually just Teachers/Police/NHS etc.
If it’s a DC scheme then it’s likely with a large pension company and you will be able to choose your own investments, or just leave them in the ‘default’ funds.
Don’t worry about the scheme going under, modern schemes are nothing like the old ones that were raided/mismanaged, there is also financial protection, your own funds should be ‘ring fenced’.

The younger you are, the higher risk you can take with your investments, 100% equities for 15+ years before retirement age. You should also have an online portal to keep track of your pension.

If it’s DB then I would only consider moving it to either your new work one or DIY if you are young.

I'm in my 30s and a career changer. I have a teachers pension in addition to the other one mentioned above. It hadn't actually occurred to me that I could transfer that too. I just assumed that had to stay where it is and could be picked up again if I ever went back to teaching.

What is a dc pension? I assume the pension from my last company and my new company must be this? Is a db pension 'defined benefit'? I think the teacher's one is this because last time I looked at the account it told me how much per year it would pay when I retire.

DC pension means ‘defined contribution’ and you’re right, it’s likely the small one you’re talking about it a DC pension and your teacher’s one a DB pension. It’s very rare that a pension provider would let you move a DB pension to them without ensuring you’d had independent financial advice first as it’s almost always best to leave it where it is unless you can get a high transfer value for it.

As others have said there’s unlikely to be any benefit in you leaving pensions with different providers as there’s next to no risk of you loosing it through mismanagement/fraud etc. It’s normally a good idea to put small pots in one place as it reduces the fees you’re paying overall.

Thanks for clarification. So a defined contribution pension is one where you contribute a certain amount of salary but don't know how much it will pay out at the end? And a defined benefit one is where you know how much it will pay our at the end?

So I'm best to leave the teacher's pension alone and move the small pension from my last job?

Yes, that’s right - the defined contribution pensions are pots of contributions that grow, defined benefits are a guaranteed payment. Leave your teachers one put, as you say.

You can't transfer from TPS to a DC pension. The only public sector DB pension you can transfer is the LGPS (although you probably wouldn't want to anyway).

A DB pension isn’t a ‘pot’ of cash, it’s a guaranteed annual income, regardless of what Stock markets do. They only become a pot of cash if you transfer them, which is practically impossible for most people if it’s over £30000 cetv.

A DC pension is invested in stock market funds of various levels of risk according to your appetite or put in a ‘default’ lifestyling fund which is only suitable if you plan on buying an annuity ( you hand over your pot for a guaranteed income ) .
A DC pension is easily transferred, unless it’s got protected features.
Some people use Sipps,
some use robo advisors like Nutmeg, when they don’t want to actively manage their pension.