Non contributory pension question!

MeGaMaN_2

I worked for 18 months for an employer in 2003 who paid 9% of my pro rated annual salary into a non contributory pension scheme every month.

I was informed at the time of leaving that I wouldn't be entitled to the pension as I had left the company before two years of service and as the company had paid everything and I hadn't contributed at all.

I thought nothing more of it until a few days ago I received a forwarded mail from my old address from Standard Life regarding the pension.

As this is a 'bonus' of sorts, I was hoping for some advice on firstly where I stand with regards to this pension and secondly what my options are.

It's only had between 3 and 4 thousand paid into it and I'm now paying regular amounts into a new pension with my new employer. I'm guessing the first two options are to leave it until retirement age or to transfer it into my current pension. I guess what I'm asking is whether or not there is any way I can access this money now as it would come in really handy to pay off debts and to start a savings account (I was also informed that there are different rules to pensions that you haven't paid into for over 2 years and there may be some way to get the money out).

Many thanks in advance for your advice,

Paul

McKneff

No you cannot access it I'm afraid.

Your only options are the ones you mention.

MeGaMaN_2

Thanks for the prompt reply, just to clarify - I am definitely entitled to it?

McKneff

It did surprise me that the pension from your employer is still there.

Its a bit difficultto clarify because going on my own experience
when it happened to me years ago, I took out what i had paid in (my contributions only - less tax) in the last 18 months and the pension was then cancelled, i presumed that the company took their contributions back also. It sounds as if your company has not done this and their contributions are still in the fund. Why not give the pension company a ring and query it.

dunstonh

Was it a non-contributory final salary scheme or a non-contributory money purchase scheme?

The way you word it sounds like money purchase (invests in funds). In which case, most of these dont allow you to have the money if you leave within 2 years (as that tends to mainly apply to final salary schemes). However, the money in the pension pot is yours.

Also, those schemes that do allow you to get your money back in the first 2 years if you leave only return the money you have paid in minus tax and National insurance. They dont give the employer contribution.

jh2009

Did they actually write to you to say something along the lines of "there will be no benefits due to you, and that the company had reclaimed the funds?" or was it a response to a verbal enquiry where someone said you couldnt have a refund?

If they did write to you, then ive seen it happen before where an administrator writes to you to tell you this, and then leaves the reclaiming of the funds to someone else who should reclaim the funds a few weeks after you leave (they usually leave this a month to make sure that you have left, and that any final contributions have been paid). This other person/department then either forgets to reclaim these funds, or doesnt bother. A benefit is then left and you carry on getting statements.

It sounds therefore like the company may have forgotten to claim the money back. If that is the case id be tempted to sit back and leave the funds there and see what happens over the next few years.

One day the company may get its act together and reclaim the funds (in which case you are no worse or better off). Although the longer they leave it you could argue that in good faith through receipt of statements these funds form part of your long term retirement provision! Especially if they leave this more than 6 years.

Alternatively they may forget and never do this and one day you could get benefits from this policy.

The honest thing to do is to probably ring them up and ask, but personally if it was me id be tempted to sit back and leave it to them. No one can complain if in 20/30 years you draw benefits from this in good faith!

MeGaMaN_2

I was told I wasn't entitled to it by a colleague on my leaving night out, no official letters from the company or anything like that.

I believe it was money purchase (where they pay 9% of my gross monthly salary in every month).

dunstonh

workplace myths. More often than not wrong and often quite damaging. Especially when it comes to pensions.

jh2009

In which case it seems that this benefit is yours then, and your friend at your leaving party was wrong.

Your options with this are:

1. To take early retirement anytime from 55 (if you are 50 now then you can take early retirement from 50 up to 6 April 2010).

2. To take retirement from your normal retirement date (probably 65 - this will show on your statement though), or from a later date (up to 75)

3. To transfer this at anytime to a new policy (although a new scheme is entitled to refuse to accept a transfer payment)

Also if you die then it will have death benefits associated with this policy, most likely a lump sum payment of the fund balance.

If you ever move then keep them updated of any new address details.