Transferring pension

[SophisticatedWoman]

I have a stakeholder pension valued at approx £60000, the value has remained static over the last 12 months despite paying in £600 a month. I am thinking about transferring into my nhs pension.

Is this a good idea. Or should I leave it to see if the value increases? I am no longer paying into it as cannot afford to, but still contributing to the nhs pension.

I will have worked for nhs for approx 15 years by the time I retire, so looking at ways to maximise what will be quite a small amount.

What do you mean by transferring into your NHS pension? Your NHS pension is defined benefit - there’s no pot to transfer into. Or are you thinking of something else?

@Hazelnut5
Thanks for replying. I understand that I can make overpayments either in instalments or as a lump sum.

You can make overpayments into your NHS pension, there is a calculator on the website which you can use to work out how much extra you'll get based on what extra you put in.

Into an NHS pension? Are you sure? Do you mean buying added years?

However, if you transfer money out of your stakeholder pension, which is an investment product, that means you will almost certainly lose money, that could be regained if you just left it alone as it could well recover.

What you're looking at doing is selling when the market is down, which should only be done as a last resort, and it doesn't sound like you're in that position.

You can often get a small amount of financial advice via your union for free, so maybe you should use that to ask your question, from someone who is familiar with your exact pension arrangements.

Thank you, that's very helpful.

Ah yes, I see. I did this under the old scheme but thought they had stopped it. Good to see it’s still there.

Things to think about:

• There’s no extra employer contribution, so it isn’t the fantastic gold-played scheme which the main pension is.
• A plus: if you have to take ill health retirement then it will pay out from when your ill health retirement starts.

BUT it isn’t very flexible (or wasn’t when I set mine up) - you can only take it when you take your NHS pension, so you can’t use it to retire early unless you take a reduction in your whole NHS pension.

If you want to give yourself the option of retiring a few years before state pension age then you might be better off keeping the money in a separate pot which you can access at any point from the age of 55 (soon rising to 57).

Keeping a separate pot also allows you to have more control over how much you add to it and how often. You don’t have to liaise with payroll to do it.

Agree with the last two posters too. Sorry my reply was short as was busy but they've raised really good points.

I used the calculator to help a friend decide and it wasn't worth her while to add money in (you have to add in quite a lot and over a decent period of time to make it worthwhile) plus it's not very flexible once the money is in there (restricted to taking it at pension age etc).

Giving up your stakeholder pension when the market is low could be a poor choice, pensions are all down just now and it's a waiting game, probably best to be patient and let it sit there. I check my pension all the time and it's still going down despite getting a hefty contribution every month.

Disclaimer - I’m not familiar with the NHS scheme, but as a general principle, If you move the money now you’re crystallising the losses. You’re actually buying now at a low point in the market so over time is should come back to overall growth. Pensions are a long term savings vehicle and have ups and downs, but over the decades would always normally be “up”.

Thank you so much everyone. I will leave it as it is.

Seems your decision is made (and a sensible one), but for the benefit of other readers thinking about doing similar:

• You can only transfer another pension into the NHS pension within the first 12 month of joining the NHS.
• There is a way to increase the NHS pension after the 12-month window - you can no longer buy added years in the NHS pension, but you can buy an additional amount of pension. But you have to buy it with cash. You can't cash out another pension and use that unless you are past minimum pension age (and even then it would be a complicated and probably not tax-efficient way of doing it.).
• You can also make Additional Voluntary Contributions (AVCs) to a private pension through the NHS but not linked to the NHS scheme. It is possible that if you set up an AVC pension you might then be able.to transfer the stakeholder pension into it, but that's not something I've ever looked into so I have no idea if the rules allow it.