final salary Vs annuity scheme

rokati

Hello,
Need some opinions and advice on the following.
I recently started work with a company who have a pension scheme which buys an annuity at pension age to provide the pension, one particular relevant part is that the older you are the larger the employers percentage of contribution i.e. at 60 plus, employer contributes 8 %, employee 3%. at the moment I'm 59 years old.
I have a "frozen" final salary pension from a previous employer with just under 10 years contributions, which has been dormant for several years.
I know very little about the ins and outs of the different schemes, but I would appreciate any general comments re whether it is best to leave the final salary scheme as is, or transfer this into the new employers scheme.
thanks for any help given.
Regards
rokati

A_Nice_Englishman

It will depend very much on what transfer value your old scheme offers, what terms the new scheme offers for transfers in, how long you expect to work for your present employer, when you expect to retire, amy other pensions you may have, what you think inflation and investment returns will be in the future, your attitude to risk and many other factors.

Get a statement of benefits and transfer value for every pension scheme you've been in and see an IFA specialising in pensions.

I have potentially lost tens of thousands of pounds by making the wrong decision over transferring my pension (and I used to work in the pensions industry!)

EdInvestor

Hi Rokati

rokati wrote:

I recently started work with a company who have a pension scheme which buys an annuity at pension age to provide the pension. I'm 59 years old.I have a "frozen" final salary pension from a previous employer with just under 10 years contributions, which has been dormant for several years.
....whether it is best to leave the final salary scheme as is, or transfer this into the new employers scheme.

Very unlikely to be a good plan to transfer a risk free f/s scheme into a money purchase scheme just as you are coming up to retirement.

The f/s scheme will have been revalued up by inflation to a max of 5% since you left the company, so it may be a good idea to write to the old scheme for a projection of the pension ( and cash lump sum) you are ;likely to get when you retire.Also check for extras like post retirement inflation rises, spouse's pension amount etc. Ask for a transfer value as well.

Then check how much you would have to save up in the new scheme to buy an annuity to match the old penson.I suspect you might be shocked, as annuity rates have fallen by 50% in the past few years.

While you're at it, why don't you get a state pension forecast as well, you might as well collect all the info about your retirement income now, just to see if it's enough.

rokati

Gents,
Thanks very much for the info and advice, I think perhaps best to stick with the f/s frozen pension and contribute afresh with the new employers scheme, and hopefully both won't go belly up at some point.
Take care
Regards
rokati