Transfer into final salary pension

TheDink

Hi.

My employer offers a final salary pension scheme, which I have been a member of for the past 2 years since starting my job here. I now qualify to be able to transfer rights from my other pensions into the final salary scheme - I have two money purhcase schemes from previous employers, currently valued at less than £9000. I am under 30 and do not envisage remaining with my current employer for more than another 5 years.

I have asked the pensions administrators for a quote, but have two questions:

1. Does anyone have recommendations of good IFA's in the Berkshire area to advise me on this?

2. Is it generally a good idea to put additional money into a final salary scheme, or leave the money where it is and take a risk on the stock market (knowing that I am likely to shift back to a money purchase scheme when I leave my current job)?

Thanks!

dunstonh

1 - dont know.

2 - Depends (as is the answer to most things unfortunatly).

You need to find out what the current value and transfer value is on the other schemes along with a projection of benefits until your selected retirement age.

You then need to find out what the final salary scheme will offer you for the transfer values and how it will affect your final salary scheme projections.

An IFA can help you with advice in this area but it will almost certainly be on a fee basis and you will be looking at around £75 -£125 per hour

Pal

What benefits are they offering you for the transfer values?  If you don't know, I suggest that you get transfer value quotes from the old providers, send them to the pension scheme and ask for an illustration of what benefits would be bought.

In general if you are planning to leave your job and transfer the money out (not usually a good idea in itself) there seems little point in converting it into a final salary pension for such a short period of time just to convert it back again, but it depends on the specific circumstances and what is being offered to you.

Edit - crossed with DD's post!

TheDink

Thanks both - I'm waiting for the quote to come back, which apparently could take a while.

I wish pensions were simple!

Pal

I am glad they are not, or I might be out of a job.

dunstonh

LOL -yes

Pensions account for 75% of my income. Long live pensions

DiggingOut

You guys owe Gordon Brown more than you may want to admit. He's the pensions complexity guru extraordinaire. ::)

Pal

Actually it isn't him. Companies like mine advise him what to do.

DiggingOut

And he listens?

No wonder things are such a mess. ::)

Pal

He listens to the broad principals then changes all the detail to make it complicated to administer. He then takes on more staff to help him implement the changes and boost his power base.

Joe_Bloggs

When pal uses the phrase 'broad principals' he means fat cats in charge.
To further this discussion I propose to build a phrase that might describe the current pensions situation to the uninformed.

I suggest that pensions are 'speculative investments veiled by a mist of incomprehensability shrouded by ...,
cloaked by ...'.

I have run out of words and it may seem like I have invented a few. Please complete the description if you feel able.
J_B.