Transfer company pension ?

pomadaprincess

Hi there,

I have £75,000 in a Philips pension and they have written to me asking if I want to transfer this into a private pension of my choice. They are going to give me an enhancement if I wish to go ahead, £3700 (which I can take as a cash sum now if I wish). I no longer work for Philips so this is a deferred pension and I have no other pension provision.

So, my dilema is:

1. Do I leave it where it is and save seperately (using Isa's) to top up my pension pot or

2. Do I transfer the amount to a private scheme and start adding to it again. This option scares me as I'm unsure who to choose, want no risk, and am scared to put all my eggs in one basket.

Any advice would be appeciated

Chartered_Eng

pomadaprincess wrote: »

Hi there,

I have £75,000 in a Philips pension and they have written to me asking if I want to transfer this into a private pension of my choice. They are going to give me an enhancement if I wish to go ahead, £3700 (which I can take as a cash sum now if I wish). I no longer work for Philips so this is a deferred pension and I have no other pension provision.

So, my dilema is:

1. Do I leave it where it is and save seperately (using Isa's) to top up my pension pot or

2. Do I transfer the amount to a private scheme and start adding to it again. This option scares me as I'm unsure who to choose, want no risk, and am scared to put all my eggs in one basket.

The first and most important question is "is the Phillips pension final salary or money purchase?"

If it is a final salary pension then the company has to increase it's value year by year so it is not stagnant (but it won't match inflation). This is a guaranteed pension based on your salary & length of service when you left.

Transferring it to a private scheme will mean moving to a money purchase method of saving where you buy an annuity when you decide to retire.

Final salary pensions are guaranteed whereas the money purchase pensions are variable and based on age expectancy and the health of the market. In other words, you take the risk.

jazzyman01

You need to talk to an IFSA. They can look at what your current pension is and will provide and whether there is something better in the market.

pomadaprincess

Thanks to you both for the advice.

I've recently received a huge report from a financial advisor which recommends opting out of the scheme. However, the report is mind bogglingly complicated and so full of financial jargon that the majority went completely over my head. What I did glean from it though is that in order to increase my pension pot long term, that I would be expected to invest in medium to high risk funds and I don't really want to take the risk.

So, I've decided to adopt the old " if in doubt do nowt" philosophy and leave it where it is. Hopefully I'll have another 15 years of working life left (or a lot more if the government get their way!), to top up my pension by paying a regular montly amount into an ISA.

Here's hoping I've made the right decision.

jazzyman01

Hmmm, the financial advisor should have gone through this with you in detail not just deposited a report on your lap!