Transferring Personal Pension into company Pension

Brocher_2

I'm wanting to transfer my 'frozen' personel pension into a company final salary pension scheme.
My private pension scheme from 'Pearl' looses approx 35% from the current fund value to the transfer value :'(.

Is this normal to loose so much & would it still be worthwhile transferring the fund into the company scheme or leave it frozen?

Oh BTW I only contributed into the personal pension for approx. 11years.

Thanks in advance

dunstonh

Pearl are charging massive transfer penalties. However, in many cases (particulary pearl version 1 plans starting 09), the paid up projections supplied by Pearl show reducing fund values. So justification for moving them is easy. Lose money if you stay, lose money if you move but at least get some growth to replace that penalty.

The company scheme will offer you a certain number of years for the transfer value. This too can also act as a "fee" in a roundabout way. Some schemes will be more favourable than others.

MarkyMarkD

I'm not an adviser and this doesn't constitute financial advice, but my humble opinion is that it is almost always beneficial to transfer funds from a personal or any other type of money-purchase pension scheme, into a final salary type scheme.

Now, there are specific circumstances where my general principle is definitely wrong.

- if your employer goes down the tubes, they may take the pension scheme with them. This wouldn't happen with a personal pension, although in the case of Equitable Life, what's happened is fairly similar.

- if your future salary performance is abysmal, compared to investment performance, then a money purchase scheme MAY be better for you than a final salary one. But most people would assume this is unlikely to apply to them.

So, my general view is that transferring into final salary is a good thing. And that's the policy I have personally followed.

Pal

I believe that there is never a general rule that can be followed on these things. Most final salary schemes DO NOT offer added years of service - these are now very much in the minority.

The majority of final salary schemes give a fixed pension calculated at expected date of retirement. This makes the transfer comparison easier, gives certainty to both the individual and the company running the scheme, but also makes it more difficult to gain financially from transferring.

Personally I would advise anyone looking to transfer to pay an IFA to look at the figures for them.

Brocher_2

Thanks for all the great information.

I'm not all that clued up on this sort of thing.

The company pension scheme converts my transfer fund value into additional period of pensionable service.

As far as I know its a good deal but just a bit dissapointed Pearl take such a large chunk of the fund value. :'(

Thanks in advance

DavidLaGuardia

Another point about trasferring to a company scheme is that you might be paying for future benefits you do not want or need such as a spouse pension if you are single or if your spouse is well catered for anyway or an escalating pension when the part of your funds in the private contract you may wish to be level and thus have more benefit in earlier years of retirement when you are likely to be more active.
There are no hard set rules