Taking work pension out and re-investing where?

kiwigirl

Hi All,

New to this site so please excuse if there's been a similar thread lately, I've had a quick look but can't find anything similar.

I've been working for my employer for nearly 4 years and have contributed to a pension from day 1 there. I will be leaving there shortly and as the scheme isn't too healthy, I intend to take out my pension to reinvest elsewhere. I also intend to merge my other previous employers pension to it too which isn't much but I might as well put both together rather both frozen in different companies.

I do not have another job to go into but would if offered a new job and company pension would opt for that again.

I'm 28 and wish to invest the money so don't need it short term gain.

Anyone got any ideas / suggestions? I intend to go to an IFA locally when I have taken my money out but would like to learn about my options before I go there so I can have a good think about it.

Thanks in advance

KG

EdInvestor

How much is involved in total?Are both of them final salary schemes?

Assume you realise the money can only be transferred into another pension scheme ( including a Sipp) - you can't actually get the money out in cash.

kiwigirl

Hi, think there's around 10k in both, most in the current employer and around £100 in the other frozen around 4 years ago as I was on a much lower wage and only with them a few months before I got my current job. Both of which are final salary schemes (2 different council pensions)

I know it has to go to another pension fund but don't know my options currently properly, am intending to go to a IFA and not a bank one so I have better options but wanted to have some background information before so I don't appear naive and they can say go to this one, and then finding after I put my money in that I could've had a better one elsewhere at same time.

EdInvestor

Both of which are final salary schemes (2 different council pensions)

If they are local authority final salary schemes you will be much better to leave them where they are.

Why do you think the current scheme might be unhealthy?

dunstonh

Why do you think the current scheme might be unhealthy?

Because the taxpayer is paying it Although anyone in receipt of the scheme wont worry about that!

kiwigirl

Hi

Thank you both for your replies

Current place pension was front page of local newspaper a week or two ago, saying it's in serious deficit and as I know that at least 5 people have taken rule 85 is it - the I can retire at 60 rule if they've done enough time in. I think they're ages are 60, 54, 58, 57. I know the 60 yo is working elsewhere now too.

The one who deals with works pension has also decided to jump ship a couple of years early, jumped a few days after the big newspaper headlines. So I really don't trust them - nor do I trust my employers if I really think carefully.

If it was with the first of the two, I would leave it there (as I have already) but the other one is causing concerns to others in the area and I know others who are within the same scheme are retiring early too so they don't "lose" their pension.

I know I had the option to move my old one to the new one anyway but as I only had a bit in it, I was advised it wasn't that much use to do so.

dunstonh

Anyone jumping ship from the local govt final salary pension scheme is a fool. I'm sorry but I cannot word it any other way.

am intending to go to a IFA and not a bank one

Most banks do not offer independent financial advice. There is a world of difference between a tied financial advisor and an independent one.

I intend to go to an IFA locally when I have taken my money out

You cant do it that way round.

I really doubt you would find any IFA that would recommend you leave the LGPS final salary pension in favour of a personal arrangement.

EdInvestor

The pension scheme is very safe.It is just the Rule of 85 that could be changed - that's why the people who are eligible for it and already 60 or close to it are leaving now.

Removal of the Rule of 85 will benefit young entrants like you. You should just leave this money where it is.Nobody will advise you to move it, rightly so.

kiwigirl

Hi

So even though I am leaving the workplace and will not be returning to this employer it is still considered to be the best place?

The ones who are opting out aren't eligible in some cases.

I thought if you left the workplace it couldn't be considered a final salary scheme? I will not be taking this money out for around 30+ years and it will be frozen for that time. Wouldn't it be better trying to build it up with subsequent investment to boost it rather than freezing it?

Ian_W

Kiwigirl,
Can you clarify? Ed and dh seem to think that the pension you're thinking of moving is a Local Gov one? My reading of your posts is that your current employer [and pension] is NOT local govt but a private employer whose future and pension scheme you consider risky?

Quite rightly they're telling you need to leave a local govt scheme but the advice could be different for a private scheme.

dunstonh

If you leave the employer, you get the number of years service you did against your final leaving pensionable salary. That is increased annually to ensure a real terms value is maintained. You cannot buy that sort of guarantee within a personal arrangement (at least not at any sensible amount of money).

I am interpreting the posts to mean LGPS.