Transfer very short term company pension?

JohnLF

Hi all.
The company I worked for for 13 years was recently taken over. All terms and conditions transferred but of course I had to start again with the new companies' pension scheme.

Within the first month, I was one of many people made redundant. With consultation and garden leave, I ended up with 5 months of payments into the new scheme.

I have a choice of being refunded £250 or having a transfer value of £1250. Given that I have set myself up working for myself, I would like opinions on whether it would be best to leave it where it is or transfer the pot into a private pension - which I need to setup as I am now self-employed.

I think I have already answered my own question, i.e. transfer it, but would like confirmation of this. I would be thinking of a simple private pension so I guess the only concern is that the money may grow more where it is, although I also think a larger starting pot my help the new pension.

Thanks
John

Loughton_Monkey

You don't say much about your original pension (from the 13 years). Did you have one? If so, was it 'Money Purchase' or 'Defined Benefits?'. If a money purchase scheme, then you might as well add the £1,250 to that. If defined benefits, then you won't be able to do that.

As you suggest, you will be well advised to start a new private pension for your self-employed earnings, and you should dump the £1,250 into it as an initial payment/transfer.

dunstonh

I have a choice of being refunded £250 or having a transfer value of £1250. Given that I have set myself up working for myself, I would like opinions on whether it would be best to leave it where it is or transfer the pot into a private pension - which I need to setup as I am now self-employed.

Its quite clear which option is best as one is worth £250 and will be subject to tax and national insurance. The other is £1250 in your pension.

You are now self employed which means less state pensions for you in retirement. So, you need to make up that shortfall. So, having £1250 is always going to trump £250.

LongTermLurker

You don't say much about your original pension (from the 13 years). Did you have one? If so, was it 'Money Purchase' or 'Defined Benefits?'. If a money purchase scheme, then you might as well add the £1,250 to that. If defined benefits, then you won't be able to do that.

If the old scheme is paid up (probably is, as he hadn't paid into it for at least 5 months) then he won't be able to transfer in.

I think I have already answered my own question, i.e. transfer it, but would like confirmation of this. I would be thinking of a simple private pension so I guess the only concern is that the money may grow more where it is, although I also think a larger starting pot my help the new pension.

If you are starting a new pension anyway, then it would make sense to transfer this small amount in. However, your company's provider (i.e. Aviva, Scottish Widows, etc) may just transfer the pension into your own name and let you carry on contributing to that - if so, that would be your easiest option.

Pensions are just wrappers, so the money will only grow more in one pension compared with another if you have a batter choice of funds in the first - if you move the money from Pension A balanced-managed to Pension B balanced-managed then they will probably grow at similar rates, depending on the skills of the two companies. A "simple" pension will only mean you have more limited fund choices - unless you chose specific funds for your 5 month pension, it's probably invested "simply" anyway.