Pensions Decisions, Decisions !!

sabelu

My current final salary/care scheme pensions finishes at the end of Feb and our employer is recommending transfer to an L&G stakeholder.

The decisions I have to make are complex as I am also due to be made redundant in Sept/Oct.

1. I currently have a GMP assigned to an AVC within the Final Salary scheme that my SIPP provider would not accept due to the fact it had a death in service element to it I presume that once the scheme closed there no DIS relevant so should be easy to transfer?

2. Have contributed to the FS/Care Scheme for 7yrs and my fund around £30-35k the scheme has a £200m deficit and my pension will be frozen at between 3-5% growth pa. Would moving the fund be a good option?

3. The new Stakeholder will be 5% - 5% so I am looking to also add an additional 5% as I may be out of work for a few months and have spare cash at this time. I am therefore contibuting 15% + tax relief in my pot that will be there for around 6 months, I think a good deal!! However I also have the options to defer my decision and backdate my contributions to day one, what would be the benefit of this I realise I would lose any interest gained on the investment.

4. The Stakeholder is through L&G which of their funds Cautious/High etc have performed best over the last five years anyone know?

dunstonh

My current final salary/care scheme pensions finishes at the end of Feb and our employer is recommending transfer to an L&G stakeholder.

Are they actually recommending that or is that just one of the options available? Was there a section 32 buy out bond in the list of options?

Is the stakeholder for ongoing contributions as well as the transfer of just the ongoing contribtuions?

4. The Stakeholder is through L&G which of their funds Cautious/High etc have performed best over the last five years anyone know?

You dont buy investment funds on best past performance. Especially at the moment.

sabelu

dunstonh wrote: »

Are they actually recommending that or is that just one of the options available? Was there a section 32 buy out bond in the list of

Is the stakeholder for ongoing contributions as well as the transfer of just the ongoing contribtuions?



You dont buy investment funds on best past performance. Especially at the moment.

There were several options during consultation but this has been where the company have gone following advise from KPMG

sabelu

dunstonh wrote: »

Are they actually recommending that or is that just one of the options available? Was there a section 32 buy out bond in the list of options?

Is the stakeholder for ongoing contributions as well as the transfer of just the ongoing contribtuions?



You dont buy investment funds on best past performance. Especially at the moment.

Sorry yes the stakeholder for new contributions no transfer at this stage

dunstonh

Normally you get given options though. Things like, transfer to their recommended Section 32 buy out bond, or their stakeholder pension or your own S32 or your own personal pension. It seems strange to just give you the option of a group personal pension for the transfer (not the onging as you would expect that)

sabelu

dunstonh wrote: »

Normally you get given options though. Things like, transfer to their recommended Section 32 buy out bond, or their stakeholder pension or your own S32 or your own personal pension. It seems strange to just give you the option of a group personal pension for the transfer (not the onging as you would expect that)

Options may follow later to transfer and relieve the company of its £200m liability.

sabelu

sabelu wrote: »

My current final salary/care scheme pensions finishes at the end of Feb and our employer is recommending transfer to an L&G stakeholder.

The decisions I have to make are complex as I am also due to be made redundant in Sept/Oct.

1. I currently have a GMP assigned to an AVC within the Final Salary scheme that my SIPP provider would not accept due to the fact it had a death in service element to it I presume that once the scheme closed there no DIS relevant so should be easy to transfer?

2. Have contributed to the FS/Care Scheme for 7yrs and my fund around £30-35k the scheme has a £200m deficit and my pension will be frozen at between 3-5% growth pa. Would moving the fund be a good option?

3. The new Stakeholder will be 5% - 5% so I am looking to also add an additional 5% as I may be out of work for a few months and have spare cash at this time. I am therefore contibuting 15% + tax relief in my pot that will be there for around 6 months, I think a good deal!! However I also have the options to defer my decision and backdate my contributions to day one, what would be the benefit of this I realise I would lose any interest gained on the investment.

4. The Stakeholder is through L&G which of their funds Cautious/High etc have performed best over the last five years anyone know?

Any advice on the highlighted text?

dunstonh

So, at the moment, it is just the redirection of ongoing contributions?

(sorry to Labour the point, but just want to make sure).

sabelu

dunstonh wrote: »

So, at the moment, it is just the redirection of ongoing contributions?

(sorry to Labour the point, but just want to make sure).

Yes but I looking to double my contribution to plug any gap whilst seeking working following redundancy in 6-8 months

thirdparty

sabelu wrote: »

However I also have the options to defer my decision and backdate my contributions to day one, what would be the benefit of this I realise I would lose any interest gained on the investment.

To be honest, I don't see any benefit of this to the member only the employer.

If we take out the potential gain or loss in the movement of investment as a possible reason then the only benefit is that you would have the additional cash now if you needed it desperately for something else - debt repayment.

By deferring the decision, the employer gains from having better cashflow not and if members decide at later date to take up the offer there is the potential they may not want to back-date their contributions as they cannot afford to and the employer gains by making less contributions.

If you are being made redundant in 6/8 months time, how confident are you in finding another job? What is the reason for increasing your contributions from 5% to 10% at the first opportunity?

dunstonh

Take the free money every time. It doesnt matter if its just for a short period. Its still money that any alterantive can never match. I dont see the point of deferment unless you think that paying in a single amount in 6 months time or whenever is going to be better than paying it monthly.