Nuvos pension - leaving with less than 2 year's contribution

redley

Hello,

I'd be grateful for a little advice from someone with more (read: any) financial know how than me.

I have recently left a nuvos pension scheme having joined 14 months ago on a 12 month contract (yeah... go figure). I now have a few 'options' which to be honest I am confused about.

As it happens I think I was misinformed about this scheme when joining the CS as I had no idea it required 2 year's minimum membership, or that they would charge me just shy of £400 for the privilege of being a member for 14 months, or indeed that in fact I didn't have to have a pension at all... Why I was encouraged to join a 2 year scheme on a 12 month contract I don't know.

That aside, I have been presented with 2 options; a pay out of approximately 1/3 of my contributions which is galling to say the least, or transfer it to a "contracted-out pension scheme or arrangement" that is registered with HMRC.

Since the transfer seems a much better option, what does that actually mean? What schemes would I have access to?

I have no other pension, I am late twenties and I am not optimistic about finding well paid employment again for at least a little while, so if possible I'd be very grateful for advice with this in mind.

Thanks!

jem16

redley wrote: »

As it happens I think I was misinformed about this scheme when joining the CS as I had no idea it required 2 year's minimum membership,

It doesn't require a minumum of 2 years. It's a defined benefit scheme with different rules dependent on how long you have been in the scheme. This is exactly the same with all defined benefit schemes. In this case less than 3 months service you have to take a refund. Between 3 months and 2 years you have a choice of a refund or transfer to another pension scheme. Over 2 years and you become a deferred memeber.

or that they would charge me just shy of £400 for the privilege of being a member for 14 months,

Charge you £400 in what way? If you are referring to the tax and NI that you now have to pay, that amount is what you saved earlier by being a member of the scheme.

or indeed that in fact I didn't have to have a pension at all...

No you didn't but that would have been very silly of you not to join.

Why I was encouraged to join a 2 year scheme on a 12 month contract I don't know.

You should go back and say thank you to whoever encouraged you to join as it was a good decision.

That aside, I have been presented with 2 options; a pay out of approximately 1/3 of my contributions which is galling to say the least,

You get back your contributions minus tax ( the tax that you saved by being in the scheme as you got 20% tax relief on your contributions) plus your share of the NI contributions that you would have paid had you not been in the scheme.

or transfer it to a "contracted-out pension scheme or arrangement" that is registered with HMRC.

Since the transfer seems a much better option, what does that actually mean? What schemes would I have access to?

That means another occupational scheme or personal pension.

I have no other pension, I am late twenties and I am not optimistic about finding well paid employment again for at least a little while, so if possible I'd be very grateful for advice with this in mind.

Thanks!

Taking the transfer value is a no-brainer.

Loughton_Monkey

Why so cynical?

Transfer the money, run, and be thankful.

redley

jem16 wrote: »

Charge you £400 in what way? If you are referring to the tax and NI that you now have to pay, that amount is what you saved earlier by being a member of the scheme.

No I don't mean tax and NI, yes I do know I would have to pay that anyway.

The £400 they would charge if I asked for a refund (which as I said I'd prefer not to since it is worth so little compared to my contributions) is for something called "member's share of CEP" on top of tax, etc.

jem16 wrote: »

That means another occupational scheme or personal pension.

Taking the transfer value is a no-brainer.

Indeed, I already said I would prefer to. As to my original question, what schemes do I have access to? Can I transfer it in to any scheme (which seems to be what you are saying about occupational or personal)? Are all schemes "contracted-out" and HMRC registered?

If I asked the wrong question or came across as cynical then my apologies. I do however believe I was misinformed; there was no mention of having to pay hundreds of pounds for leaving early (before tax deductions), nor that I didn't have to have a pension in the first place (which wouldn't have been an automatic choice as I was on a 12 month contract).

If anyone would like to point out a useful link rather than give advice, I'd be grateful for that too, just not sure where to start.

jem16

redley wrote: »

No I don't mean tax and NI, yes I do know I would have to pay that anyway.

The £400 they would charge if I asked for a refund (which as I said I'd prefer not to since it is worth so little compared to my contributions) is for something called "member's share of CEP" on top of tax, etc.

That was what I was referring to with regards NI. When you are in a defined benefit scheme you are contracted out of SERPS/S2P and pay approximately 1.6% less NI than those not contracted out. When you request a refund they have to buy you back into SERPS/S2P to put you back into the same position as you would have been if you had not contracted out by joining the pension scheme.

http://www.civilservice.gov.uk/Assets/pc207_tcm6-1624.pdf

Indeed, I already said I would prefer to. As to my original question, what schemes do I have access to? Can I transfer it in to any scheme (which seems to be what you are saying about occupational or personal)? Are all schemes "contracted-out" and HMRC registered?

Defined benefit schems are all contracted out and will continue to be so. Personal pensions (and probably stakeholders although I'm not sure) have the ability to accept protected rights (which is what being contracted out gives you) contributions.

If I asked the wrong question or came across as cynical then my apologies. I do however believe I was misinformed; there was no mention of having to pay hundreds of pounds for leaving early (before tax deductions),

There is no payment for leaving early. The tax is due as you already have had this refunded. The NI is due as you received a rebate for being contracted out. To put you back into the same position you have to pay these.

nor that I didn't have to have a pension in the first place (which wouldn't have been an automatic choice as I was on a 12 month contract).

Would you really have wanted to throw away 14%pa of free money from your employer?

If anyone would like to point out a useful link rather than give advice, I'd be grateful for that too, just not sure where to start.

As it's a defined benefit scheme that you are transferring from, it must be signed off by an IFA before anyone will accept the transfer so i would recommend seeing an IFA.