Company Pension/Private Pension

psear

Help needed I have read through pretty much all the relating threads, and am still in need of some help, I am 31 years old, and have a private pension scheme with Norwich Union which on my annual statement had a value of £14,000, I am currently contracted out of serps, however I am due to start a new job next month, which offers a company stakeholder pension with Legal & General, I will be contributing 3% of my salary the company 5%, they have advised me to contract in. Should I transfer for my private pension into the company pension, since I do not want to continue paying into both.

dunstonh

Joining the group stakeholder pension is obviously the right thing to do as there is free money involved.

Transferring is not a simple answer. It depends on the terms, conditions and charges on the old plan. If they are better than the new plan, you should keep it where it is. If they are better on the new plan, you should transfer it.

The advisor that told you to contract back in will be able to do a cost analysis and see if transferring is the right thing to do. (assuming it was an IFA and not a Barclays advisor, who are tied to L&G)

psear

If transferring is not viable, do I need to just freeze the pension,will this not cost me more fees in the long run since, Norwich Union will has to manage my money until I am 65?

I was going to seek advice of an IFA but am a little concerned in how much this will cost me!

dunstonh

You can cease contributions into the existing pension. As to whether it costs, that depends on the type of pension plan and terms offered. Usually, it costs nothing to make a plan paid up.

An IFA could do a cost analysis and let you know what option is the cheapest. An IFA would do first appointment free but then give you a choice of options on how you pay. You can choose commission from product provider or you can pay a fee and any commission earned is paid back into the plan or you can do a hybrid of this where you agree a fee and the commission pays that fee with any surplus coming back to you or adjusted into the plan (due to clawback liability on some plans, like pension transfers, the last option may not be available).

it is worth investigating as L&G do have tiered charges on some of their individual plans and some of their group plans. The more you have, the lower the charges are as a %. However, so do NU on some of theirs and you don't want to transfer out of one with lower charges into one with higher.