Frozen Pension's - Can they be closed ??

workingboy

I'm in my early 60's and have 2 Frozen pensions.

One is a 'Final Salary', frozen some 10 years and the other was a 'Opted out of Serps', frozen some 7 years.

Where the annual pension forecast for when I offically retire in 2012, their values are falling, due as we all know.

Can I ask for these accounts to be closed down and be payable to me now and then find a better safe keeping etc.

dunstonh

their values are falling

Shouldnt be. The low point was March and since then most asset classes have seen good gains. Even property seems to have bottomed out.

Can I ask for these accounts to be closed down and be payable to me now and then find a better safe keeping etc.

No. Not in the way you mean. You can alter the investments to suit your objectives and risk profile though if you no longer want the level of risk you currently have.

KathysBoy

workingboy wrote: »

I'm in my early 60's and have 2 Frozen pensions.

One is a 'Final Salary', frozen some 10 years and the other was a 'Opted out of Serps', frozen some 7 years.

Where the annual pension forecast for when I offically retire in 2012, their values are falling, due as we all know.

Can I ask for these accounts to be closed down and be payable to me now and then find a better safe keeping etc.

Surely the final salary pension is just that, a pension based on your salary at the time you left. I assume by "frozen" you mean deferred. In which case it should also be increased in line with pension legislation. I think there are a couple of ways, but generally its the lower of RPI or 5%. However, I think the increase is cumulative, so will be lower now than it was in September 2008 (about 1.8%), which was the peak of the RPI index. You can check the index here going back to 2001. Having said that RPI will probably bottom out towards the end of the year, and start to be positive again. I'm not sure I'd be considering transfering this pension at this stage, certainly not without proper financial advice.

workingboy

Thanks,

Where you say they should'nt lose value.

Only my 'Opted out of Serps' yearly statement dated in January, shows a reduction in value, currently I have no figures for my 'Final Salary' to compare.

The Final Salary was frozen when the Parent company sold the company where I was employed.

'Opted out of Serps' was frozen when I was made redundant by the company where I was employed as above 4 years later.

thanks

EdInvestor

Frozen is a misnomer in both cases.The final salary pension will increase by the average of inflation up to 5% until retirement, so should keep its value, while the other pension money will remain invested and should also increase in value, depending on the performance of the markets and also the charges you are paying.

If the charges are high and the investment performance is poor you may be better to investigate transferring the opted out pension to a more modern, cheaper plan.

dunstonh

If the charges are high and the investment performance is poor you may be better to investigate transferring the opted out pension to a more modern, cheaper plan.

A paid up Skandia plan shouldnt be too bad on the charges front and has access to around 300-400 funds, mostly external. So, investment potential is fine. They also offer an internal fund range which can be under 1% AMC.

KathysBoy

workingboy wrote: »

Thanks,

Where you say they should'nt lose value.

Only my 'Opted out of Serps' yearly statement dated in January, shows a reduction in value, currently I have no figures for my 'Final Salary' to compare.

The Final Salary was frozen when the Parent company sold the company where I was employed.

'Opted out of Serps' was frozen when I was made redundant by the company where I was employed as above 4 years later.

thanks

If I were you I would ask for a figure if you were to take your "final salary" pension now, but note it will be reduced (generally about 4-5% per year taken early), and the current forecast if you leave it until your scheme retirement age (this will be a good indicator, but is not guaranteed). At least the you'll have some information on that part of your pension. Normally you can ask for a quote at least once a year. You can also ask for an indication if you were to draw it next year, or whenever.

EdInvestor

dunstonh wrote: »

A paid up Skandia plan shouldnt be too bad on the charges front and has access to around 300-400 funds, mostly external. So, investment potential is fine. They also offer an internal fund range which can be under 1% AMC.

Where does the OP mention he has a Skandia plan?

dunstonh

EdInvestor wrote: »

Where does the OP mention he has a Skandia plan?

OK, I swear I saw Skandia EPP mentioned as the other pension. Its not there now though. I must have typed it thinking of another thread.

Sorry for confusion.


edit: Yes, found the other thread with the Skandia EPP. Moment of madness from me. Sorry.

MikeJones_2

Hi KathysBoy,

KathysBoy wrote: »

I assume by "frozen" you mean deferred. In which case it should also be increased in line with pension legislation. I think there are a couple of ways, but generally its the lower of RPI or 5%.

Technically, and for where it is supposed to be applied, it's the:

- lesser of RPI or 5% p.a. compound between the date of ceasing to be an active member and Normal Retirement Date (i.e. the 'revaluation period').

There's a subtle difference which most people don't seem to understand/know.

Hence, if inflation ever exceeds 5% for a particular year during the revaluation period that may be included in the revaluation calculation so long as the overall culmulative amount does not exceed 5% p.a. over the preservation period.

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.