pensions advice

gunneradt

I am 42 and pensions have been a hit and miss due to moving jobs etc.

I have a pension sitting with Windsor Life that my firm contributed to for 5 years between 1988 and 1993 and another (final salary scheme with the Pru) for 2000-2003.

I have been contracted out of serps since 1988 with windsor life.

Should I now try and amalgamate these pensions? Should I stay contracted out of serps? I think we got bonuses re serps as I contracted out when it was first launched.

cheers

dunstonh

Should I now try and amalgamate these pensions?

Possibly. The windsor life plan could be a lot better off moved (but exceptions exist). The Pru final salary plan should stay where it is. When you worked for the Pru, you should have been given a scheme booklet. If you contact their pensions/human resources section, they can send you another one if you have lost it.

Whilst you were working for the Pru, you probably werent contracted out with Windsor Life but this would have re-activated after leaving Pru.

Should I stay contracted out of serps?

Possibly. It is unlikely the windsor life contract is still suitable for contracting out nowadays but this doesnt mean you should contract back in as a more appropriate contract could be used. Contracting in or out both have pros and cons. If you take one action, you could miss out on benefits on the other.

A number of insurers have been bulk contracting people back in again. There are rumours that the FSA may look into this as it could be a breach of the TCF guidelines as not everyone being bulk contracted in will be better off.

gunneradt

thanks

why wouldn't the windsor life policy be suitable for being contracted out in (if that makes sense)?

EdInvestor

Because it might have high charges and the funds you have to choose from might be poor performers.

Contracting out really only works these days if the money is in really good funds,and preferably with very low charges as well.

It may be sensible to look for a new provider with really good funds and then transfer the scheme via https://www.cavendishonline.co.uk or another discount broker so the charges are rebated back to you.

But ask Windsor Life first what charges you are paying and what funds they are offering if you ant to switch.You never know, you may be able to "modernise" the pension without moving.

gunneradt

thanks very much for your kind advice.

dunstonh

Nothing here is advice. It is discussion only and maybe guidence for you to help find out the information you need. We cant give advice as we dont know your circumstances.

Very roughly (and I mean roughly as it depends on size of rebate and age as well) you need 7%pa average growth or higher to match benefits. Whilst this is within the reach of a medium risk or higher portfolio, it is less likely within low risk or low potential growth funds. If you are in windsor life unit linked funds, it could be possible with them and if the old pension has lower charges, it could still be suitable (not all old pensions charge more annually). Equally, the old pension could have higher charges and you can be in the with profits fund which offers little chance of you seeing 7% p.a. long term.