Going Self Employed

spreadtrader

Hi
Advise and help please
I am 39 year old male who has worked all my life from the age of 17.
i contracted out of serps about 15 years ago and this contribution goes to a providor called windsor life assurance i do not pay any more into this fund
about the same time i started a personel pension with abbey national and pay only a small sum into this fund.
however recently i have become a partner in the familly business and am now self employed.
what choices do i have re the serp contribution with windsor?
i am under the impression i cannot transfer this fund into another fund
do i just make the policy paid up and if so what happens to it?
i do not need to add to my abbey pension because we are looking at it from the angle that the business will provide us our pension when we get to that time of life.
thanks in advance for any guidelines or help
ps
i did look at transferring into hl sipp but i dont think i can transfer both policies into it (please correct me if i am wrong)

dunstonh

what choices do i have re the serp contribution with windsor?

as you are self employed, you do not qualify for S2P (what used to be called SERPS). So it doesnt matter if you are contracted out "on paper".

i am under the impression i cannot transfer this fund into another fund

That is incorrect. Protected rights funds can be transferred and if its anything like the other windsor life ones I have reviewed in the last couple of years, this is something you need to investigate ASAP.

do i just make the policy paid up and if so what happens to it?

it already is paid up in effect. It will just sit there and grow over the years with the investment return appropriate for where it is invested.

i do not need to add to my abbey pension because we are looking at it from the angle that the business will provide us our pension when we get to that time of life.

Wrong approach. Abbey National pensions have a limited fund range and not very good funds at that. You could amalgamate the pensions, probably get lower charges and invest them into a much better fund range giving you greater potential for growth and therefore a bigger income in retirment.

i did look at transferring into hl sipp but i dont think i can transfer both policies into it (please correct me if i am wrong)

You cant transfer protected rights into a full SIPP. You can transfer them into a personal pension with large fund range or a Hybrid SIPP. The Hybrid SIPP will be the closest match to the HL full SIPP.

spreadtrader

thanks
very helpfull reply
i understand you cant give advise on this forum but do you think it would be better to look at the posiblity of combining the 2 pensions and transferring to another fund?
where is the best place to look up performance on pensions?
thanks again

dunstonh

i understand you cant give advise on this forum but do you think it would be better to look at the posiblity of combining the 2 pensions and transferring to another fund?

Combine is an option you should look at but not into one fund. One pension provider but not one fund. Single fund solutions are rarely the best option.

where is the best place to look up performance on pensions?

Past performance of individual funds only tells you what that fund has done in the past. It doesnt tell you what its going to do in the future. Over 90% of your return is in the sector allocation (i.e. what areas you invest in). Less than 10% is down to the funds you choose to match those sectors.

clairehi

dunstonh wrote:

That is incorrect. Protected rights funds can be transferred and if its anything like the other windsor life ones I have reviewed in the last couple of years, this is something you need to investigate ASAP.



it already is paid up in effect. It will just sit there and grow over the years with the investment return appropriate for where it is invested.

Hi Dunston

My OH has a personal pension taken out in 1991 when he was 18 with General Portfolio, now owned by Windsor Life. His SERPS/S2P contributions have gone into it. The administration fee is 1.5% pa

However since Jan 2004 he has been in contracted out occupational final salary schemes so nothing should be going into the WL policy - although I am still waiting for confirmation this is the case.

Am I right in thinking that the value of the WL fund will be eroded away by the charges over time if he does not pay any more contributions into it?

We have been given a fund value of about £7000 and a transfer value of the same amount. I believe this represents approximately 6 years of S2P contributions from 1998-2004 (before this he was in education or low earnings). WL have given us projections of what it would be worth at pension age which look a bit too good to be true but I havent got the figures at hand here.

I have therefore requested a transfer in value from his current occupational scheme. WL have not as yet advised us of any costs that may arise from the transfer, but they have said that a transfer should be considered only as a "last resort", however they dont explain why its the last resort.

Any comments on the abive would be v. welcome.

dunstonh

However since Jan 2004 he has been in contracted out occupational final salary schemes so nothing should be going into the WL policy - although I am still waiting for confirmation this is the case.

That is correct but always best to make sure with the confirmation.

Am I right in thinking that the value of the WL fund will be eroded away by the charges over time if he does not pay any more contributions into it?

In theory no. If the fund is growing at 9% p.a. and you are being charged 1.5%, then it is growing by 7.5% p.a. HOWEVER, if the fund that you are invested in is rubbish, such as a with profits fund from a closed insurer (most of the time), then the charge could exceed the bonus rate and cause the value to remain the same or drop.

I have therefore requested a transfer in value from his current occupational scheme. WL have not as yet advised us of any costs that may arise from the transfer, but they have said that a transfer should be considered only as a "last resort", however they dont explain why its the last resort.

The transfer value should include all penalties although sometimes a market value reduction is shown separatly. It is worth vertifying that.

A transfer is not a last resort. I transacted over 300 pension transfers personally in the last 12 months. In nearly all cases you get a letter from the existing provider trying to put you off. Pearl, for example, send a letter direct to the client telling them they will lose valuable benefits if they transfer and that it generally isnt a good idea. However, Pearl havent paid a bonus in 6 years and anyone transferring out last year would have seen more growth in 12 months than the last 12 years with Pearl. They dont want business to leave thats all.

One thing to note here is that the occupational scheme may not take protected rights (contracted out benefits). If that is the case, then it still can be transferred to another personal arrangement with a better fund range with better growth potential than WL with profits.

clairehi

Many thanks Dunston for this, we will review the situation when we've heard from the occupational scheme provider. I am curious as to why they would not accept a transfer in from this type of scheme as opposed to other schemes?

I dont think WL have provided us with historical info on the performance of the fund to date, just predictions for the future. Can I ask them for information which will help me assess its performance to date, or is it best to get an IFA involved.

I would be pleasantly surprised if the current fund is anything other than rubbish!

dunstonh

I am curious as to why they would not accept a transfer in from this type of scheme as opposed to other schemes?

Protected rights have to pay benefits in a certain way which may not be compatible with the scheme. This doesnt just apply to maturity benefits but death benefits as well.

I dont think WL have provided us with historical info on the performance of the fund to date, just predictions for the future. Can I ask them for information which will help me assess its performance to date, or is it best to get an IFA involved.

I did a windsor life WP pension transfer earlier this year and based on that information, it was a dead cert to move. Whilst your OH's version could be different, I would comment that I wouldnt want my money in there.

You dont need to get an IFA involved and if it is going to the occ scheme, it would cost you a fee. If you know what to ask and how to read what you are given in response, then you can DIY.

I would be pleasantly surprised if the current fund is anything other than rubbish!

I can save you the wait. Rubbish.

clairehi

dunstonh wrote:

If you know what to ask and how to read what you are given in response, then you can DIY.

You have put your finger on it - I dont know what to ask (except in general terms) or how to read what I am given in response! I have looked at the original policy document and it is very hard to understand as it is full of technical terms. This in itself makes me suspicious as this product was sold to an 18 year old lad, who did not really know what he was buying!

If the occupational scheme wont take the transfer, then I think we'll have to take advice from the professionals. Ho hum!