Transfer into Final Salary Pension scheme.

RichardS

I have a job interview coming up with BAA. BAA still operate a final salary pension scheme. I currently have my own personal Stakeholder pension with Standard Life (I am 39 and the pension pot is currently about £45,000 I think). Obviously I'm a long way to getting the job at the moment but if I did, what would be the best thing for me to do - transfer my pension into BAA's final salary scheme or freeze it and keep it (so as not to have all my eggs in one basket) ?

dunstonh

Either option has its pros and cons depending on what you plan to do with your retirement, how and when you want to take your retirement income and what BAA would offer you in return for the Standard Life pot.

Pythagorous

If you get the job you should be able to get a quote from BAA as to what your transferred in pension would buy with them.

Then as Dunstonh states its a matter of weighing up the pros and cons!

By transferring in to BAA they are effectively taking on the risk (as opposed to you) which will determine your pension on retirement. For instance if interest rates were to drop to v low levels and annuity rates were to subsequently increase the amount of pension which your £45K would buy at retirement from your stakeholder pot would decrease, whereas with the BAA final pension plan the predetermined amount will stay the same and BAA would have to fund the difference.

Hope this is of some help!

ffacoffipawb

Pythagorous wrote:

By transferring in to BAA they are effectively taking on the risk (as opposed to you)

But this will be reflected in the terms they offer in the first place, eg x years of past service credit!

Debt_Free_Chick

ffacoffipawb wrote:

But this will be reflected in the terms they offer in the first place, eg x years of past service credit!

Agreed - but they do so by making assumptions about the future. Depending on what actually happens, the transfer value may prove to have been or less than the actual cost of the final additional pension. In other words, you may find that you might have been better off leaving it where it is.

It's not a one-way street - hence one can only weigh up the pros & cons. No-one will guarantee which will turn out to be the better option.