What to do with frozen pension?

stuarth1977

This is my first post so please be gentle. I am approaching 36 this summer and currently working for Sainsbury's where I am saving 7% pension with the company putting in 6% (I believe). I used to work for Tesco and have a pension with them that is frozen, it is not a final salary and has around £20k in the pot. I have requested the release papers to transfer the pension to my Sainsbury's one. Is this is a wise choice or not? I have absolutely no financial expertise so all advice would be appreciated.

Stuart

kidmugsy

What do you see as the advantages of this move?

For instance, does the Tesco scheme offer free insurance against death or incapacity, and would transferred-in money earn that same benefit?

Or a potential disadvantage: does the Tesco scheme tie you to an early payout (if still working for the company) only with their approval or only on retirement?

stuarth1977

Well as far as I know Tesco only increase it in line with inflation?? I would assume I could get more growth if I moved it? Or is it best left?

stuarth1977

I do have death cover with my Tesco pension but I also get it with my current pension. I don't mind leaving it just thought I could get more growth by transferring?

dunstonh

I used to work for Tesco and have a pension with them that is frozen, it is not a final salary and has around £20k in the pot.

You say it is frozen but the type of pension you describe cannot be frozen.

I have requested the release papers to transfer the pension to my Sainsbury's one. Is this is a wise choice or not?

Depends on what you are transferring it to. What are you reasons for transferring it and is the alternative better?

Well as far as I know Tesco only increase it in line with inflation?? I would assume I could get more growth if I moved it? Or is it best left?

Dont assume anything. Stick to facts. There are way too many differences to assume things.

stuarth1977

To be honest I am way out fo my depth so I am guessing it is better off left where it is!!

jamesd

stuarth1977 wrote: »

Well as far as I know Tesco only increase it in line with inflation??

Only final salary and other defined benefit pensions automatically increase with inflation.

Do you have a list of investments that you can pick form in the Tesco pension? Is the payout related to your earnings in some way or is it described as based on how investments grow?

If the Tesco pension is defined contribution - the type with investments you can pick from - then you'd transfer it if the investments you want are in the Sainsbury's pension at the same or lower cost as in the Tesco pension.

stuarth1977

This is going way above tbh, I think someone would have to have a look. I have all the paper work here incase I was going to move it. I would be lying and guessing if I were to answer your questions, why do pensions have to be so complicated?

stuarth1977

I do know that my Sainsbury's pension is run by Legal and General and I can go online to manage it so I can chose the investments related to it. I know very little about my Tesco pension apart form the paper work I have for it which seem to be a load of numbers.

stuarth1977

I am reading the info now it says the pension is a contracted out salary related scheme

jamesd

As a contracted out salary related scheme it'll increase with inflation and you should not try to transfer it. Just leave it and look forward to the payout whenever that happens. To double check that this is the correct type, how is it related to salary, some number of 80ths or 60ths of your salary when you left, perhaps?

If you were a skilled investor it'd be worth wondering about transferring it but if you were in the scheme for only a few years the costs involved in transferring it would be too high to be worth paying.