generally confused (happens often!)

head_in_clouds

Hi I am a little confused by pensions lol!!
I have been paying into my company pension scheme for over three years now, and i may move to another company soon, however they dont offer a pension.

Soooooooo couple of questions -
1. What happens to the money i have been paying in so far?
2. Can I have start a pension somewhere else, or should i simply save the money in an ISA?

I feel wayyyyy out of my depth here, however I am only in my early twenties so I have a long road ahead of me to get this sorted lol!

Many thanks

EdInvestor

head_in_clouds wrote: »

1. What happens to the money i have been paying in so far?

Depends on what type of pension it is.
a)final salary occupational pension
b)money purchase occ pension
c)group personal pension

2. Can I have start a pension somewhere else, or should i simply save the money in an ISA?

Answer to this depends partly on reply to question 1.

jh2009

In response to your questions

1. If you have saved in a scheme for more than 2 years then your pension is held until your retirement, so you wont be given a refund option.

You can either:

(i) Leave it where it is until retirement (your scheme will have a normal retirement date, probably 65, and you can take early retirement from 55)

(ii) Transfer it at any point in the future to another policy.

2. You can save in a private scheme. Its a shame if an employer won't contribute, but you could do a private scheme.

If you are currently budgeted to spend say £xxx on pension then its easier to get out of that habit than to have to start again in a few years time. Being in your 20s means you also have a longer timeframe for investment than say if you start again in your 30s/40s.

Remember any contribution you make to a pension gets tax relief, so assuming you are earning below c£40,000 you will get tax relief at 20%. This means that for each £1 in pension contributions you're only paying 80p.

Comparing that to an ISA where if you save 80p, you only have 80p invested.

Obviously the most sensible strategy would seem to have a combination of pension savings with savings in isas for a rainy day.

If you want to start a private scheme, you may wish to look at a stakeholder if you want a product that has low charges, but not so detailed investment options. Other options are SIPPS or personal pensions. You should be able to find out more about these on a search engine. Or you could go to www.thepensionsadvisoryservice.co.uk which explains these in a bit more detail.

MikeJones_2

Hi head_in_cloud,

head_in_clouds wrote: »

...and i may move to another company soon, however they dont offer a pension...

Just so you can read up on it, the Government has commited to pension reforms that mean employers will have to have a workplace pension with effect from 2012, if they do not already do so. Hopefully, like the olympics, it won't be delayed!

Employees and employers will have to pay contributions. Employee contributions will receive tax relief.

A feature will be auto-enrolment, where employees are automatically signed up to the work based scheme, but will have the option to 'opt-out'.

You can read more at:

- Personal Accounts Delivery Authority

Hope that helps.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a 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.