Transferring pensions?

Ozzybound

Hello all,

Sorry for making my first post a question - but, here goes.

My partner and I are emigrating to Australia in September, so I am currently looking at all of my financial affairs and getting them tidied up and in order.

I don't have much of a pension at the moment, ( something I intend to address when we are settled in Australia ).

I have an old frozen company pension from Kvaerner which is currently operating under pension protection. This pension has been dormant since about 1999 and is with Sun Life.

I have a current stakeholder pension with my current employer, which my employer contributes £1400 per year into. This is with Standard Life.

I am 31 years old and I have worked full time since aged 16, never missing any NI contributions for 15 years.

My questions are, ( if anyone can help a little? ):-

1 - Would it be it wise to transfer my Kvaerner pension into my Standard Life stakeholder pension? My last pension review from Kvaerner valued the total fund at £3412.53, this was one year ago. No more payments have been made into this pension since then. I have a current transfer value from them of £3863.85. My Standard Life fund is valued at approximately £4500 at the moment.

2 - Assuming I transfer the money into the Standard Life pension, would it be wise to leave this pension dormant when we move to Australia, enabling me to continue it again should we return to the UK - or transfer that whole pot into my 'new' Australian pension? Once in Australia, all employers must pay 9% of their employees salary into a pension. Moving my UK pension over would be a good start to that new pot.

3 - Can I continue to pay UK NI from Australia to ensure I receive a UK old age pension?

Thanks for any information you can help with.

Tony.

Cook_County

You are 100% rioght to ask the question as will need to act quickly to avoid the Australian tax changes - it is vital you take advice to minimise the impact of the Australian FIF regime.

Ozzybound

Cook_County wrote: »

You are 100% rioght to ask the question as will need to act quickly to avoid the Australian tax changes - it is vital you take advice to minimise the impact of the Australian FIF regime.

Thanks for the info re FIF.

Anyone any suggestions on the other points though? ( Transferring the Kvaerner pension and keeping NI payments up whilst away? )

Thanks.

EdInvestor

Ozzybound wrote: »

I have an old frozen company pension from Kvaerner which is currently operating under pension protection. This pension has been dormant since about 1999 and is with Sun Life.

What kind of protection are you talking about? Pension protection nornmally only allies to final salary pensions.

3 - Can I continue to pay UK NI from Australia to ensure I receive a UK old age pension?

Yes, and it's well worth it because it's so cheap: only 2.20 a week for class 2 contributions which are available for employed expats. Do note though, that UK state pensions in payment are not increased to take account of inflation if you live in Australia -though they are if you live in Europe, the US and various other countries,most unfairly.

Ozzybound

EdInvestor wrote: »

What kind of protection are you talking about? Pension protection nornmally only allies to final salary pensions.

Yes, and it's well worth it because it's so cheap: only 2.20 a week for class 2 contributions which are available for employed expats. Do note though, that UK state pensions in payment are not increased to take account of inflation if you live in Australia -though they are if you live in Europe, the US and various other countries,most unfairly.

Thanks for the reply.

I'm not exaclty sure waht sort of protection the pension is in. I just recalled getting a letter some months ago stating that the Kvaerner pension had applied to come under Pension Protection. I'm sure my pension with them is not final salary.

I had read somewhere about the UK pension not increasing with inflation if you lived in certain countries. That is realy unfair. Does that mean though, that if we came back to the UK at say aged 70, it would jump up to the UK level at that time? Then say we moved back to Australia the inflation increases would be frozen again? I assume that the pension is set at current value when I would reach 65 and then not increase, rather than it being set at the date we leave the UK? If that's the case, 34 years of no inflation would make it pretty worthless.

EdInvestor

Ozzybound wrote: »

Thanks for the reply.

I'm not exaclty sure waht sort of protection the pension is in. I just recalled getting a letter some months ago stating that the Kvaerner pension had applied to come under Pension Protection. I'm sure my pension with them is not final salary.

If it's not final salary, then the protection is not really relevant but you should still investigtae if there are any guarantees attached before moving it.

Does that mean though, that if we came back to the UK at say aged 70, it would jump up to the UK level at that time? Then say we moved back to Australia the inflation increases would be frozen again?

Yes.

I assume that the pension is set at current value when I would reach 65 and then not increase

Correct. Might be higher than 65, the retirement age is going up. I suggest you get a forecast, you probably have a built up a good entitlement to S2P/Serps as well.And although retirement age is rising, the number of years required for the full basic pension is falling - to 30. So given the low cost, it will be well worth your while to keep paying in.

https://www.thepensionservice.gov.uk.

Ozzybound

Thanks again for the comments.

I'll go and apply for a forecast.

Can you also continue to pay SERPS if you are living abroad, or are you restricted as to what you can pay?

I will go and check that website link and see what info I can find regarding expats.

I have my last Kvaerner statement here, it mentions nothing of guarantees. The estimate is £290 per YEAR! It states that the value may be significantly higher or lower than this at the time of retirement.

The fact that it is worth so little was the main reason for me to look into transferring it. I thought I may as well use the current transfer pot to top up my stakeholder pension, making it easier again should I decide in the future to transfer the lot into an Australian plan.

Thanks again for the comments.

EdInvestor

Ozzybound wrote: »

Can you also continue to pay SERPS if you are living abroad

No, only BSP.

I have my last Kvaerner statement here, it mentions nothing of guarantees. The estimate is £290 per YEAR! It states that the value may be significantly higher or lower than this at the time of retirement.

It certainly sounds as though it's money purchase, in which case you might as well transfer it.

Annuity rates are shocking these days I agree. That's one reason the Class 2 contrinutions to the state pension is such a bargain: you would have to save up a fund of 120,000 pounds to get the equivalent income on the open market. :eek:

Ozzybound

Money purchase - that rang a bell, so I checked my statements again.

I actually have two schemes with Kvaerner:-

Defined Contribution Scheme - Est. £130 per year - current transfer value - £1901.59
Protected Rights Scheme - Est. £160 per year - current transfer value - £1962.26

Neither of the last estimate statements mention money purchase schemes, however, the transfer valuation statements show a little more.

The DCS scheme shows "Money Purchase Benefits" - £1901.59
The PRS scheme shows "Protected Rights" - £1684.30 and AVC's at £278.66

So, I assume then that the £1684.30 is a guaranteed pot and the others are not.

For the amount we are looking at, I think moving it over to my stakeholder plan is probably the way to go, if only to cut down on paperwork. Mind you, the only thing in the back of my mind was whether Sun Life ( the Kvaerner fund ), was still a mutual? It may be worth a gamble leaving it in, in case of any future share offers?


I logged on for a pension forecast but the system would not recognise my details. I called the help line and the chap did it on the phone for me. He also gave me a number to call regarding the NI contributions, and a number for non UK residents for once we have moved. Nice chap, very helpful.

I'll wait and see what information the forecast shows, then give the NI number a call to find out what our options are once we have moved.

Thanks again.

PS what does 'BSP' mean? Bog Standard Payments?

EdInvestor

Looks like the whole thing is money purchase."Protected rights" is the term they use for a pension which is contracted out of the state second pension S2P/SERPs.

Since you were obviuously contracted out then, perhaps you are contracted out now too?If so the rebated NI money would be being paid into your Standard life scheme.Check with SL or the state pension people.

Being contracted out means that you get the protected rights pension instead of the S2P, so it's quite important that any PR money grows well otherwise you will lose out.

BSP stands for basic state pension.

Ozzybound

I checked my statements again, this pension has been unused since I left Kvaerner in about 1999.

Although the statement is only a few weeks old, it lists the fund values as at March 2006.

On both statements the 'brought forward' contributions table isthe same as the 2005 figures, with nothing in the 'received in 2006' columns. This would seem to suggest that my SSP payments are not going into there?

I remember talking about contracting out a long time ago, but cant remember if I did indeed contract out.

When my state pension forecast comes through, will that show whether I ever contracted out on it? I have never had a state pension forecast so I don't know what sort of information they give you on it.

Thanks again.