pension options

jayremoh

Hi all

i have recently been made redundant and am going self employed or possibly setting up a new company, with obviously low income for the early part.

i was part of a salary sacrifice scheme with scottish life, where the company were matching my 3% of salary contribution.

i have a transfer value of about 38k and im 34 years old.

what should i do with my pension?

is it something i can do myself?

should i get an IFA involved.

thanks

dunstonh

The key thing going forward is that self employed currently qualify for a lower state pension than employed. That is changing but that is the current position. So, making provision is important. Whether you can or should use the current pension needs to be found out. If its a group scheme you probably cant. It may be able to converted internally to an individual scheme. It may be better to transfer it to another provider. If you can do your own analysis and research then you DIY. If you cant then you use an IFA.

jayremoh

thanks for that.

yes it was a group scheme.

if i rang scottish life, would they give me reasonable advice or just try and keep me as a customer?

dunstonh

if i rang scottish life, would they give me reasonable advice or just try and keep me as a customer?

Scottish Life dont give advice. You would need an IFA if you want advice.

Product provision and advice are two different things.

jayremoh

sorry, i didnt mean advice.

i meant options without the sales talk.

dunstonh

Scottish Life dont have sales reps or advisers. So, they cant do either. All their staff can do is give factual information relevant to that policy. i.e. how much is it worth. They wont give you anything which is advice, opinion, suggestion or options that may be available elsewhere or on other plans.

FatherAbraham

jayremoh wrote: »

i was part of a salary sacrifice scheme with scottish life, where the company were matching my 3% of salary contribution.

i have a transfer value of about 38k and im 34 years old.

what should i do with my pension?

is it something i can do myself?

You could begin by asking the pension provider whether you can continue to pay into it after leaving the empolyer. I'm surprised to hear from Dunstonh that group schemes often don't allow this; he knows far more about this kind of thing than I, but every group pension plan I've been in in the last ten years (Scottish Widows, Prudential and Friends Life) has converted automatic to a personal pension plan (with the same T&Cs) after I left employment. Indeed, a provider would in general have to be insane to refuse the business (unless the employer had been providing some kind of subsidy to the provider, I suppose).

In any case, you can continue to hold that plan until retirement. Possibly you can continue to contribute to it (I'd have said this is likely, but dunstonh has already contradicted that opinion -- in any case, speculation is not a fruitful substitute for asking the provider directly "Can I continue to contribute to this plan now that I'm no longer employed by British Bogshed Corporation?").

However, it mght be that another provider could offer lower charges or better investment options. Prhaps you could consider a stakeholder pension if your current ability to contribute is low (or too low for the minimum permitted regular contrib to the ex-group pension you already have). Either you have to do the research and learn enough to make the right decision, or you need to pay someone (an IFA) to help you in an unbiased way.

Getting advice can seem costly; making the wrong decision without advice can also be costly.

At least you should try to read, and make sense of, the literature (key features, fund options and charges) of the scheme you're already in. This board can help with any specific questions which might arise from that.

Warmest regards,
FA

xylophone

The key thing going forward is that self employed currently qualify for a lower state pension than employed. That is changing

http://webcache.googleusercontent.com/search?q=cache:eSHakUkX8MwJ:www.parliament.uk/briefing-papers/SN06525.pdf+&hl=en&gl=uk page 18.

http://www.guardian.co.uk/money/2013/jan/19/single-tier-state-pension-winners-losers

dunstonh

I'm surprised to hear from Dunstonh that group schemes often don't allow this; he knows far more about this kind of thing than I, but every group pension plan I've been in in the last ten years (Scottish Widows, Prudential and Friends Life) has converted automatic to a personal pension plan (with the same T&Cs) after I left employment.

Some providers will allow conversion to an individual personal pension (e.g. Standard Life). However, others are set as group personal pension and require a FSA regulated individual (such as an IFA) to switch it to an individual scheme as they class that as a new sale. Scot Life also do some COMP/CIMPs as well as GPPs. They cannot be switched to an individual scheme internally (without an IFA) or accept contributions after leaving as payments are made via payslip of the employer linked to the scheme.

A very common occurrence is that whilst an employee of the firm, you get a discounted annual charge but once you leave, you are put on a higher annual charge. Seen two of those in the last few weeks. One with Scot Wid and the other with Aegon.