Leaving Nuvos

civil12345

Hi, I know nothing about pensions but trying to sort out my arrangements! I've been in the civil service a year and paying into Nuvos. Now, my plan is to be in the civil service for a few years then leave and be self-employed. At this point I'd be looking to leave Nuvos and move my pension so that I can put it into a pension fund that invests in funds. So my question is if I leave Nuvos would the amount that gets transferred simply be the sum of my contributions + sum of employer contributions - some juice? Or would it get reduced quite a lot? I'm currently getting 18.8% employer contributions which is a lot more than if I go into a partnership scheme which makes me feel it will be reduced.

Also, I'm looking to put quite a lot more contributions into an added scheme which I've just started reading about. Given my plan would it be best to switch to a partnership scheme now even though the employer contributions would only be 3%?

Thanks for reading.

dunstonh

At this point I'd be looking to leave Nuvos and move my pension so that I can put it into a pension fund that invests in funds.

Why?

So my question is if I leave Nuvos would the amount that gets transferred simply be the sum of my contributions + sum of employer contributions - some juice? Or would it get reduced quite a lot?

You will get a transfer value based on benefits accrued.

I'm currently getting 18.8% employer contributions which is a lot more than if I go into a partnership scheme which makes me feel it will be reduced.

You are not getting 18.8%. That is not how it works. You are buying a defined benefit to which you make a contribution and the employer pays for based on figures and research from actuaries. There is no fund value.

You would also need an IFA to sign off on the transfer and that is unlikely to happen as statistically 9 out of 10 are best left where they are. I suggest you read your scheme booklet again as you dont appear to understand what you have now.

civil12345

Thanks for the reply - I thought it would be something like that and you're right I don't understand what I have.

I don't intend to be in the civil service for more than 5 years - therefore anything that builds up won't be enough for a reasonable pension.

Currently, I work full time and I'm self-employed. I make enough to live on through my business. Therefore, what I want to do is put most of my salary from work into a pension fund and use it as a long term investment vehicle.

If I moved into one of the partnership schemes I would get 3% employer contributions. Would that be an actual 3% that gets added into my fund or is it defined benefits?

Apologies if these questions are way off the mark - I understand most investments and I work in finance but I've never had anything to do with pensions!

atush

Five years of a FS/Defined benefit pension is worth something. Certainly will be worth more that what you can do with any transfer value.

So, rack up as many years as you can before you quit, then reap the benefits when you retire. I suspect, you will get more out of those 5 yrs contribs than 10 years of contribs into a PP (if the levels stay the same) as when you are self emloyed you wont' have an employer contributing as well.

One thing to think of, long down the line when you have a business, is if you are profitable enough, pay yourself a pension out of the business as it will save you tax, and your business tax too as it will count as a 'cost'. So something to ask your future accountant.

civil12345

That's for that. I was mainly thinking about the additional contributions I could make which might make a partnership scheme worthwhile. Also the tax benefits of investing this way - I already have a share portfolio I might just put more money into this.

hugheskevi

I'm currently getting 18.8% employer contributions which is a lot more than if I go into a partnership scheme which makes me feel it will be reduced.

That is the employer contribution rate to the scheme. That is roughly what the 'average' member will get, calculated under a particular set of assumptions.

But the actual value to any individual could be a lot more or a lot less than this - the value of a Defined Benefit scheme can easily be more than twice as valuable to an older person than it is to a young person.

Given my plan would it be best to switch to a partnership scheme now even though the employer contributions would only be 3%?

The employer contributions into Partnership range from 3% (aged under 21) to 12.5% depending on your age, and the employer will match up to 3% of employee contributions on top of that.

I don't intend to be in the civil service for more than 5 years - therefore anything that builds up won't be enough for a reasonable pension.

Never really understood that view - in 5 years you probably won't have enough saved up enough to buy a house outright, but it doesn't mean it isn't worth saving anything toward a house.

Your final retirement income will probably be made up of a whole load of different things, most of which wouldn't be reasonable on their own. So I'd view the final retirement income more like a pie made up of about 40 annual slices (with a variety of different flavours...)

Be a bit careful about expectations of length of service - a lot of people start out thinking they will only be somewhere briefly but things change.

Would that be an actual 3% that gets added into my fund or is it defined benefits?

Actual money, to grow or decline as you see fit for your investments.

That's for that. I was mainly thinking about the additional contributions I could make which might make a partnership scheme worthwhile.

You can save into a personal pension alongside Nuvos. And you can also purchase Added Pension (a defined benefit pension purchased with voluntary additional contributions). Not saying either is necessarily a good idea, just that they are options.

Thrugelmir

civil12345 wrote: »

Now, my plan is to be in the civil service for a few years then leave and be self-employed. At this point I'd be looking to leave Nuvos and move my pension so that I can put it into a pension fund that invests in funds.

Any accrued pension will continue to be index linked to CPI on an annual basis. So a good basis for your retirement.

Why do you believe funds are going to perform so well in these difficult times? Growth is slowing and margins squeezed in terms of Corporate earnings.

taktikback

This is silly - it's a defined benefit pension -forget about what it's invested in -it's not your problem, and it has no bearing on what you will receive from the pension. When you leave, the pension will increase in deferment and be there for you when you retire. Whatever you do next as a job with whatever pension arrangements, has no bearing on this arrangement.

civil12345

Thanks for the replies. I'm starting to get my head around it (a little!). Really, the defined benefit scheme doesn't interest me as much as the partnership option. So another stupid question - I currently pay lower NI because nuvos is contracted-out - is that the same case for partnership pensions? (I guess the answer will be no)

Thanks

civil12345

Also, is there an easy way to work out what benefits I would have accrued from 5 years in nuvos? It just seems to me like it won't be a lot. In the other scheme I would be able to contribute a lot more now and keep contributing if I start doing something else which is very likely to be self-employed.

dunstonh

Also, is there an easy way to work out what benefits I would have accrued from 5 years in nuvos?

Yes. Very easy. Look in the scheme booklet. It tells you.

It just seems to me like it won't be a lot.

It will be better than the other options available to you.