Offered the opportunity to leave a pension scheme

atush

I don't know if you should move the Winterthur pension.

but if the Arcadia one is FS, then don't move it. I was assuming it was defined contribution not benefit.

worried_jim

Considering all of the above it seems that I will be better off leaving all the arrangements as they are. Keep my current employee fund as it is as a growth fund for a few years to see what it can achieve. Leave Winterthur as it is as it is increasing (albeit with some downs as well as ups, I am sure this probably market typical at present and I believe the fund is managed by AXA now).
I will wait to see what information I receive back from JLT Wealth Management and I am grateful to the comments above re final salary and the enhancement of £1,116 not being brilliant, I had no idea. So I may be better off leaving it where it is, which is an option- I don't have to leave it.

sandsy

The transfer value you have been offered will have been calculated on the assumption that you are male, ie. it's based on the cost of a male purchasing the same benefits as the final salary scheme would pay you.
The problem is, that by the time you come to retire, that assumption won't hold true as male and female annuity rates are being equalised from the end of next year. Effectively, this means that it will cost men more to buy an annuity so the transfer value - which in theory should be sufficient to be the benefits you're giving up in the final salary scheme - will be nowhere near sufficient.

worried_jim

sandsy wrote: »

The transfer value you have been offered will have been calculated on the assumption that you are male, ie. it's based on the cost of a male purchasing the same benefits as the final salary scheme would pay you.
The problem is, that by the time you come to retire, that assumption won't hold true as male and female annuity rates are being equalised from the end of next year. Effectively, this means that it will cost men more to buy an annuity so the transfer value - which in theory should be sufficient to be the benefits you're giving up in the final salary scheme - will be nowhere near sufficient.

A bit early in the morning for me! So are you saying I should take the offer and transfer out?

atush

I would look at the winterthur pension in more detail.

what is it invested in? With profits or funds? you might be able to move the investment within winterthur for a better return.

worried_jim

[STRIKE][/STRIKE]I have had a look again at Winterthur pension and it is called rainbowplus personal pension. The pot is divided equally between two funds: 'Rainbow Equity' and 'Rainbow Managed', and then this is split in to four sections-

account name fund name current bid value
non/pr rights rainbow equity (0.75%) £2357.27
non/pr rights rainbow managed (0.75%) £2354.42
prot rights rainbow managed (0.75%) £3869.00
prot rights rainbow equity (0.75%) £3835.74

total £12416.43

atush

Protected rights is a different kettle of fish. We;ll have to wait for Dunstoh or one of the other professionals to say.

AS for the funds, are those the only two funds available? Not a big fan of managed myself as charges are high and preformance often not good enough to justify fees although your fees seem equal.

Go to their webiste and see what other funds are available, what they invest in, charges and past performance.

worried_jim

This is a list of the Colonial finds available, although there are pages and pages on the Winterthur website-

http://www.winterthur-life.co.uk/fundinformation/Unit+Prices/currentunitprices/Colonialfunds.htm

jamesd

worried_jim wrote: »

A bit early in the morning for me! So are you saying I should take the offer and transfer out?

No. It was saying that even though it looks like a bad deal now it'll look like an even worse one a year from now.

One reason for them to do this now is to get it done before next year's changes raise the equivalent value and the cost to them of making such offers.

It actually isn't impossible for you to be better off bby transferring. If you do invest well routinely you can beat a final salary scheme, particularly at relatively young ages like yours. The IFA firm should calculate for you a required investment return to match the benefits you'd be giving up. Once it gets above 8% it starts to be hard to certainly achieve it. If it's as low as 5-6% then it's relatively easy to achieve. Given that we know that male annuities will pay out less from next year you can ask the IFA firm to calculate the return based on unisex annuity rates, not current male rates. That will increase the investment return needed to break even.

sandsy

jamesd wrote: »

No. It was saying that even though it looks like a bad deal now it'll look like an even worse one a year from now.

One reason for them to do this now is to get it done before next year's changes raise the equivalent value and the cost to them of making such offers.

It actually isn't impossible for you to be better off bby transferring. If you do invest well routinely you can beat a final salary scheme, particularly at relatively young ages like yours. The IFA firm should calculate for you a required investment return to match the benefits you'd be giving up. Once it gets above 8% it starts to be hard to certainly achieve it. If it's as low as 5-6% then it's relatively easy to achieve. Given that we know that male annuities will pay out less from next year you can ask the IFA firm to calculate the return based on unisex annuity rates, not current male rates. That will increase the investment return needed to break even.

As James said.

The problem is what unisex rates to use. It is looking increasingly unlikely that firms will use the same unisex rates as are currently used for protected rights annuities. It's more likely that a blend of male/female rates will be used. Typical software used by pensions transfer specialists won't be set up to use a market appropriate gender equal rate yet.