How to make the right decision - pension scheme closing.

Dasiesmum

After working for a particular firm for 14 years, my husband was made redundant - now - after four years we have received a letter saying that the pension scheme is to close down. We need to make a decision before December.

We have the option - as he is over 50 - of taking the pension now - or transferring it into a new pension.

He's recently started a new job and doesn't qualify for their pension yet - but he does have some other smaller pensions from earlier roles. He's 58 - and had been made redundant yet again, now he has taken a lower paid job - worried about the recession and age, particularly as there is definitely age discrimination out there - sadly his recent job hunting proved that time and time again.

What do moneysaving experts think? How do we find a Pensions expert? Is there a way of finding out the right thing to do that we know will be good advice?

Any ideas?

milocoon

Hi if its a Final Salary Scheme then I`d say "do NOT transfer" as you`d lose money. Whether to take this pension now or wait till later will depend on your personal finances, you can usually take up to 25% of that pension as a tax free lump sum and take a reduced pension as an option. If you take it later you usually get an annual increase in its value so a letter or phone call to his pension company will be needed to get some more info, if you phone most pension administrators are helpful and will tell you your options so you can decide what is best for you. Several small pensions can be paid into your bank account although it will make tax matters a little messy so you might end up doing a tax return to sort it out each year, this is still a good idea as if you transfer say all the funds into one to "make it easier" it will cost you transferring out and transferring in to the scheme. If in any doubt see an IFA,
my union arranged for a 30 minute freebie last week and it was worth it. One last factor is if your husband gets a new job then you might want to delay taking this pension, you should be able to take it later even though it`s closing. That makes no difference but ask the question anyhow !

:beer: :rolleyes: :T

Debt_Free_Chick

Dasiesmum wrote: »

After working for a particular firm for 14 years, my husband was made redundant - now - after four years we have received a letter saying that the pension scheme is to close down. We need to make a decision before December.

Can you please confirm exactly the words they've used to explain this "closing down"? Is the scheme being "wound-up"?

We have the option - as he is over 50 - of taking the pension now - or transferring it into a new pension.

Again - what words have they used? If the scheme is being wound-up there should be another option - "do nothing and we will buy an insurance/annuity policy to replace your pension, in full".

Sorry to be picky, but it's really important that we understand precisely what the scheme is proposing, otherwise we could be giving you duff info.

Dasiesmum

Debt_Free_Chick wrote: »

Can you please confirm exactly the words they've used to explain this "closing down"? Is the scheme being "wound-up"?



Again - what words have they used? If the scheme is being wound-up there should be another option - "do nothing and we will buy an insurance/annuity policy to replace your pension, in full".

Sorry to be picky, but it's really important that we understand precisely what the scheme is proposing, otherwise we could be giving you duff info.

Many thanks - -

"if we have heard nothing by 31st Dec 08 then we will assume that you have elected to leave your retirement account in the scheme - in which case the trustees will use the monies in your account to secure a policy on your behalf with an insurer on the best terms they are able to secure'

it is a puzzle - not sure what to do or who to seek advice from.

We will be grateful if you have any ideas - or thoughts.

Debt_Free_Chick

OK - it sounds as though he has a defined contribution/money purchase entitlement .... rather like a personal pension, but under a group scheme.

He should probably transfer this to a stakeholder/personal pension instead - but others will be along and give you more specific guidance on this. However, it seems clear that he doesn't have an entitlement to a "final salary" pension, which is what I wanted to establish or eliminate.

Dasiesmum

Many thanks - no - its not a final salary pension. Still not really sure how to get best advice.

dunstonh

Still not really sure how to get best advice.

Any IFA with G60 or J04 qualifications should be fine for a final salary scheme. For a money purchase scheme those qualifications arent required.