New job / New pension scheme

bikebarbie

Hi all,

I am changing job after paying a year into a good local council pension scheme. The new job does not offer any pension and I have been told that if I transfer the money into a private pension I loose quite a bit of money.
I am alien to the whole pension issue and need some good advice on whether I should transfer it: if so how do I go about it? Or should I cash it in? Or freeze it?

Thanks

dunstonh

Or should I cash it in?

You cannot.

Or freeze it?

Freeze it is not the right term really. It still gets increased every year to keep the amount more or less in line with inflation.

whether I should transfer it

Almost certainly not.

bikebarbie

I have been told by HR that I can cash it in. Also please explain why some options are to consider and some are not. If you advice to "certainly not transfer" it, I also need to know why. Thanks

dunstonh

I have been told by HR that I can cash it in.

If that option is available then you must be in the first two years of employment only. (edit, just spotted the "paying a year" in your first post ). This option usually only means you get your money contributions back and not all of them either.

If you advice to "certainly not transfer" it, I also need to know why.

My advice is not to not transfer it. I am not giving any advice because there are insufficient facts to give advice and it is against board rules and FSA rules for me to give advice on the open forums like this. Anything posted here is purely discussion and nothing else.

Statistically, more final salary schemes are best left where they are than being transferred. Being a Govt scheme, odds favour being left where it is. However, there are exceptions depending on circumstances.

The option you choose should be the one that gives you the most money at the end. You need to calculate the three options and see which one is best.

EdInvestor

The local govt scheme is a very good one with no risk, so you should leave the money there, where it will keep pace with inflation.It can also be "unfrozen" if you get a job later in local govt, or other associated govt linked work.

If you cash it in, you will lose the govt contributions, and other cash will be taken to repay tax and contract back into S2P.

Transferring to a personal scheme would mean you lose the govt guarantee and take the risk yourself so this is not a good move.

bikebarbie

hi thanks for you replies, it makes more sense now. OK I think the best option is to leave it where it is, but what happens if I forget where this money is or if I die? Sorry but really I dont know anything about pensions.

Also, if I have to start a new Private pension where do I start? What are the best options?

Regards