Pensions from April 2006

sabelu

Whats going on ?
I currently am on a final salary scheme where I pay a lower contribution than my employer. Can I buy property with my fund from April and gain a tax incentive ?
What are the benefits/concerns with this ?
Does my fund have to allow me to do this ?

ReportInvestor

You can't buy property. You haven't got a fund. But you do have a commitment from your employer to pay a pension that relates to your final salary.

If you are lucky enough to be in such a gilt edged final salary scheme you should sit tight, give thanks and pray that your employer stays solvent.

sabelu

Thought there were changes coming in to place from April 06

ManAtHome

There are, but you need to have access to your pension fund (ie private/personal pension of some kind). You may be able to get a transfer value from your employer's scheme, then move it into a SIPP then buy your house or whatever, but I doubt that anyone would advise you to do it as at best you'd lose your employer's future contributions (at worst the transfer value is likely to lose some contributions already paid in).

I think there was a big mis-selling issue from the 80s when NHS and government employees were persuaded to drop their works pensions and invest in personal pensions - anyone have more detail on this (if it happened and if it was sorted)?

Note that you'll already be getting tax relief on pension contributions subject to some (high) limits so you wouldn't be gaining anything from that angle.

dunstonh

You may be able to get a transfer value from your employer's scheme, then move it into a SIPP then buy your house or whatever, but I doubt that anyone would advise you to do it as at best you'd lose your employer's future contributions (at worst the transfer value is likely to lose some contributions already paid in).

The fact that moving out of a final salary pension into a personal arrangement (of any kind) is a total mistake and would lose you lots of money.

I think there was a big mis-selling issue from the 80s when NHS and government employees were persuaded to drop their works pensions and invest in personal pensions - anyone have more detail on this (if it happened and if it was sorted)?

1988-1993 was the rough timescale. With the issue or personal pensions there was a big advertising campaign by the government encouraging people to join personal pensions. The industry jumped on this as well and sold pensions when, with hindsight, it was not the best thing to do. Nothing done with malice. It was just the way things were at that time with less qualified people doing pension transfers and opt outs.

The rules are being amended from April 2006. It is not a wholesale change. Some of the amendments are significant though.

You can rule out going into property. Also, property is not all its cracked up to be. Its just as prone to price crashes as the stockmarket is.

EdInvestor

Also, property is not all its cracked up to be. Its just as prone to price crashes as the stockmarket is.

Rather easier to spot them coming in advance however

Pal

EdInvestor wrote:

Rather easier to spot them coming in advance however

But takes rather longer to sell out. And is a lot more expensive to boot.