Offer to move pension

miracleboy

I've just had a letter from AXA who I have a really old pension with, they have suggested I move it and have offered to top up a bit and a small cash payout.

It's an old company pension I had from about 15 years ago, and haven't paid in since then, I guess AXA are trying to get rid of old stale pension accounts.

Not sure what to do, is it best to open a new pension to move it into? And is there any way I can just ask to cash it in now?

xylophone

What kind of pension was it? How long were you paying into it? Did it come with guarantees of any kind?

atush

If they are offering you money, it isn't out of the kindness of their hearts.

It either is a FS pension scheme, or has valuable guarantees. So we'd need to knwo mroe to give our opinion, but generally speaking it might be better to leave it (but do review the investments and change them if required)

jamesd

It's easy: they are offering you money because it'll make them better off and most people taking the deal worse off.

If it's a final salary type of pension that might be worth considering if your life expectancy is lower than normal or if you are single and the pension includes money for a spouse after you die.

If it's not final salary it'll probably be because of guarantees that they hope you won't notice the real value of.

miracleboy

Thanks for the replies and sorry about the delay in replying, I was trying to find the old paperwork. It doesn't look like I have much old paperwork as I left the company 15 years or more ago.

Here's the details I do have though, maybe someone can decipher them.

It is a deferred pension, split between;

(i) Guaranteed Minimum Pension (GMP) of £113.36 per annum.
(ii) Excess pension of £646.64 per annum.

The GMP increases at 6.25% per annum. The Excess increases by the change in RPI up to 5%.

The details above are from a statement from 2003.

And these are from the offer letter last week;

Pension was £760 a year when I left the company.
As at 15 Feb 2012 it's now worth £2514.41 a year.

If I transfer I get;

(i) Standard transfer amount £15139.81
(ii) Additional increase £1977.10
(iii) Total amount £17116.91
(iv) Cash lump sum (from above) £842.70 (subject to tax + NI)

That's all the details I have, apologies if it's not much to go on.

AXA have appointed an IFA who I need to contact to discuss.

miracleboy

Oh. and what do you mean by guarantees and how would I know what they were?

bilbo51

Scandalous!

To produce even a flat rate male pension at age 65 of £2.500 p.a. would need a fund of roughly £50,000. And they are offering you £18,000.

Ask them if they know where the monkey puts its nuts.

lowbrim

I agree with previous comments a very big NO!! Keep it where it is you will not get a pension like this now. Don't be tempted by a cash sum now.

jamesd

Well, that explains why they want to get rid of you!

The GMP is going to cost them a lot of money if you stick with them - 6.25% a year and guaranteed is a good to great deal for you.

It's unlikely to be in your best interest to accept this offer unless you have an uncommonly low life expectancy - which is now close to 90 for men who make it to age 65 with normal good health. It might also be worth considering if you're a skilled and experienced investor also, but even if that's true it's likely to be good diversification to leave it where it is.

Have a read about the Guaranteed Minimum Pension.

If the IFA comes anywhere near to suggesting that this is a good deal be very cautious and ask for a clear and detailed reasons why document.

atush

That's a No then. They are offereing you a tiny fraction of what it is worth.

xylophone

Certain types of pension came with guaranteed annuity rates.
Yours looks like a deferred pension in a final salary scheme.
AXA MUST pay you at least your revalued GMP at state pension age.
There are rules too about the revaluation of the excess.
http://www.pensionsadvisoryservice.org.uk/workplace-pension-schemes/final-salary-schemes/revaluation

If I were in your position I would not accept the offer. Think carefully and take personal advice if you need it.