Pension Transfer Quandry

Moscow888

I am hoping someone will be able to give me any advice on a decision I have to make.

I am 37 years old and married.

Some time ago, with a former employer, I started a private pension (Scottish Widows). I was in that job for around three years and paid in around 200 per month on average. I started at 180, but increased it as my wages went up.

I have now moved into a public sector job (Health Service in Northern Ireland) and with this obviously comes the public sector pension which I am now paying into - £143.85 supperannuation per month.

It was my intention to transfer my Scottish Widows funds into the HSC pension, but now upon receiving my valuation from Scottish Widows and assessment from HSC I am not so sure.

My transfer value is £10525.09.

This will convert to a service length of 1 year and 18 days with HSC which on my present salary (£26556) is estimated to provide me with a pension of £446.45 pa and Widow's cover of £167.42.

Basically, I am baffled because if only paying in about £1700 per year in superannuation now, how does my ten grand from Scottish Widows buy me only one year of backdated service?

Should I proceed with the transfer?

jem16

Moscow888 wrote: »

Basically, I am baffled because if only paying in about £1700 per year in superannuation now, how does my ten grand from Scottish Widows buy me only one year of backdated service?

Basically because your employer is paying much more into your pension than you are. You are paying around 6/7% and your employer is paying around 15%. With a transfer you are not getting the employer's contributions so you are paying it all yourself.

Should I proceed with the transfer?

If you we're to purchase an annuity with £10,525 under the same conditions you would get around 3% which will give you an annual pension of £315.75. Seems like good value to me if you're getting £446.45 and removing all the investment risk.

kidmugsy

Moscow888 wrote: »

I have now moved into a public sector job (Health Service in Northern Ireland)

Basically, I am baffled because if only paying in about £1700 per year in superannuation now, how does my ten grand from Scottish Widows buy me only one year of backdated service?

Because NHS pensions are a super deal for employees, the bulk of the contribution being paid not by them but by the taxpayer.

Moscow888

Working on the basis that I am buying one years service at my current salary, is 15% of £26556 not £3983 (employers contribution) and employee contribution of 7% (£1858), total = £5841 should I not be getting closer to two years service for my ten grand from Scottish Widows?

jem16

Moscow888 wrote: »

Working on the basis that I am buying one years service at my current salary, is 15% of £26556 not £3983 (employers contribution) and employee contribution of 7% (£1858), total = £5841 should I not be getting closer to two years service for my ten grand from Scottish Widows?

If you were buying Additional Pension yourself, then quite probably. What you have to remember though is that your final salary will probably be a lot higher.

You could always ask them to check the figures but if that's what they are offering then that's what you will get.