Pension transfer/consolidation?

[mumonashoestring]

Anyone have a solid understanding of this? I have two or three little pension pots from previous employers - 2 or 3 years here and there which I'm considering transferring in to my current employer pension (USS). They've offered good transfer values but is there a downside to doing this that I might be missing? Is it better to have several little pension pots that might pay £100-odd a month by retirement or is it better to put everything into my current scheme (which I'm likely to be paying in to for many years)?

How old are you? (It is relevant!)

Sorry! Of course it is I'm 37, work full time and am likely to do so til retirement (if they haven't abolished retirement by then and started working us to death then mulching us or something)

Watching with interest as am exact same age and in the exact same position

The only downside is if you transfer from a good scheme to a bad one. It doesn't make any difference from a tax perspective.

It's like asking whether you should have multiple savings accounts. It might be psychologically better to have it all in one place but if they are paying the same interest rate, you are not going to be better off in the end.

Are the small pensions defined benefit or defined contribution? If they're DB it would likely be an extremely bad idea to move them.

If they're DC, I believe the usual advice would be to move them if the annual fees will be lower in the new scheme. You may also feel the USS investment options are more appropriate for you. However, you may prefer the diversification of having your funds invested in different places - if they're DC you could just consolidate on retirement.

The USS won't let you move the funds into the DB/Career Average part of the scheme, so they would go into the DC bit.

I would advise you to request the investment options and fees for each of the schemes and take it from there.

I really need to look into moving my own previous pension into the USS!

Thanks Liv, I did wonder. Both the smaller previous pensions were DB (under £30k transfer value for each).

If DB schemes then check carefully for any guarantees they may have, such as Guaranteed Minimum Pension (GMP), Guaranteed Annuity Rates (GAR) or protected tax free cash higher than 25%, as well as what the rates of increases in deferment are. These can be quite valuable, especially as you can't draw benefits for another 18 years.

If you are going to do it then do it now, especially considering the proposed changes to USS currently being considered!

I advise on the USS scheme.

What type of pension have you got with the previous employers?

DB or DC a totally different story. Is it transfer club?

Assuming a DB, you might want to keep your existing ones separate if they have an earlier retirement age.

Upcoming changes have no bearing on this decision.

Can you really no longer transfer into db part of USS? Didn't realise....

That would suggest don't do it OP if it can only go into dc.

I did this about 5 years ago. Put everything into my uss pension. About 4 smaller pots. The uss was a final salary at the time and from memory it bought me an extra 9 years I think. And I add the max avc's every month to the fund. I am glad I consolidated and it didn't cost much to transfer

Right, I'm off to dig out all the statements etc. that both schemes have sent me and see if I can work all this out! Thank you so much all

You have a time limited opportunity to transfer into the DB side. Ask for a quote.

I've got quotes/transfer statements from both - the statements give the transfer value but as far as I can see don't talk about transferring any conditions of the original pensions hence the need to dig out previous paperwork/statements.

Have you had a quote from USS too?

You don't transfer the conditions of the ceding scheme. These are monetised and then the USS tells you what they buy in their scheme.

Ah! No, that I do not have yet - but then I've only just got the transfer quotes through from the other schemes so I guess the USS quote will follow?

So grateful for the useful folks on here

It will only follow if you've asked for a transfer in quote, which I assume you have?

The thing to be aware of is the the years will be 'anointed' as NRA of 65. You will by then have a NRA of 67/68 and an early retirement reduction factor on future years if you wanted to claim your pension before then. If you have an NRA of before that, I would be very careful about rolling them together.

You will need to ask the USS what your transfer in would buy you.

If they just allow you to invest the funds in the DC section, it won't matter what the retirement age etc is - they'll simply invest the transfer value from your old scheme in the DC part of your pension. However, this is highly unlikely to replicate the income you would have got from your previous DB scheme on retirement (assuming the company doesn't go bust with the scheme underfunded).

If they allow you to bring it in to the DB bit it'll be a bit more complicated. You may prefer to keep them where they are for diversification. But you should definitely take advice either way before moving DB pensions.

I recently got a quote from USS for my contributions (built up over 20 years in another scheme, partly DB then CARE). The transfer value USS offered me was really awful and made it a very easy decision to keep my contributions where they are. I got advice from a pensions advisor but it was obvious that it wasn't worth transferring. I'm not saying it would be the same for you.

PS You have to ask USS for a quote once you've got the value from your previous schemes.

The USS is dreadfully underfunded too. Although 'too big to fail' comes to mind.