Personal Pension Options?

acrickie

Hi,
I have a personal pension which I have been apying into for about 10 years. Having just changed jobs I now have a company pension plan which means I will no longer be able to pay into the personal pension scheme. From what I gather I have a few options:
1) Transfer my personal pension to my new company scheme - this however looks like it will be quite expensive!
2) Convert to a paid up plan - this also looks like it will cost as there is a fairly high charge for the process but not as high as the transfer!
3) Take a payment holiday - nowhere near as expensive but is really only a delaying tactic as at some point I will need to do one of the above!

The spanner in the works is that it is possible that my circumstances may change again within the next year and I may be able to start paying into the plan again. However if there are likely to be better options from a new plan were I need to restart that may be a better option for me?

I was hoping someone could give me an idea of what is likely to be my best option!

thanks.

dunstonh

option 1 could be the best. But it could be the worst. It depends on the pension terms and investments compared to the one you have available now.

option 2 shouldnt cost anything. Most modern plans dont charge for going paid up and often the old expensive plans become cheaper if paid up. Although there are exceptions to that.

option 3 is unusual to come across with modern plans but yours isnt a modern plan. It is effectively the same as option 2 but with a period allowed ot restart.

option 4 - one you havent considered is to transfer to a modern pension scheme. This could be cheaper and offer better investment options. But may not.

MikeJones_2

Hi acrickie,

acrickie wrote: »

I have a personal pension which I have been paying into for about 10 years. Having just changed jobs I now have a company pension plan which means I will no longer be able to pay into the personal pension scheme.

Legally, there is nothing to stop you continuing to pay into your personal pension plan as well as commencing with your new employer's pension scheme.

There are no limits to how much you can pay into registered pension schemes (just a limit on the amount for which you would receive tax relief) and no limit to the number of pension schemes or plans that you can have.

It would be a matter of affordability.

What type of pension scheme is your new employer providing (defined benefit, such as a final salary scheme, or money purchase)?

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

EdInvestor

Who is the provider of the PP and what fund(s) is it invested in.What other fund choices are there? What is the current value and the transfer value? What annual charges are you paying?. if it is invested in a "With profits" fund, are there any guarantees attached? if you stop paying in will it invalidate the guarantees?

Step 1 is to figure out of the PP itself is any good.

If it isn't you can then look at transferring it either into the company scheme or into a new PP with better fund choices and lower charges, where it may perform better

How old are you BTW?If the existing PP has guarantees, that might be a factor.

dunstonh

if it is invested in a "With profits" fund, are there any guarantees attached?

GARs do not just apply to with profits. A number of providers offered them on unit linked funds as well. A few that come to mind are Scottish Widows, Pearl, Scot Eq, Scot Life.

acrickie

Thanks for the responses, I'm afraid I don't have answers to most of the questions asked nor do I currently have access to any of my documents which may help answer them. However here is what I do have access to:
1) I am 50
2) The pension is a Scottish Life Talisman Personal pension.
3) The fund value is £68,225 currently.
4) I am told it would cost me around £4,000 to convert it to a paid up plan!
5) I am told it' transfer value would be £61,091
6) I can't afford to keep paying into this pension as well as my work one - into which I pay 4% of my salary and my company pay an addional 8%.
7) No idea what type either is!
8) I have been paying £500 per month into the above plan for about 10 years.

Thanks again for the responses, I can look at the paperwork for pension at the weekend and find out more details if it would help!

dunstonh

2) The pension is a Scottish Life Talisman Personal pension.

A good proportion of Scot Life Talisman plans have guaranteed annuity rates and usually have access to their full internal unit linked fund range. I just looked at one that does have GARs and it shows it starts at age 60 at 9.346% and rises on each birthday (65 = 10.887%). So, you must make sure to find out if there are guarantees available or not as they are highly valuable.

6) I can't afford to keep paying into this pension as well as my work one - into which I pay 4% of my salary and my company pay an addional 8%.

That 4% isnt actually 4%. It is 3.2% if you are basic rate taxpayer or 2.4% if you are a higher rate taxpayer.

acrickie

I have now checked with Scottish Life and there are no GARs with this particular pension. I don't know what funds it is invested in or how I find out - there is so much "junk" that I have been sent over the years that it is difficult to know where to start - and I don't understand any of it - why do these things have to be so damn complicated? From an idiots point of view it seems I have the option to transfer in which case I lose about £7000 or make it paid up, which will cost me about £4000. It is rather unfortunate that the IFA who sold me this has died so is not really in any position to offer further advice - the company that took over his customers has just given me the figures, it appears to me that as they are not going to make anything out of it they are not really interested in giving any actual advice!!