pension winding up

gele

Hi all, I have lurked around these forums for a while but really need some advise. I have a small pension with a company I worked for from 2002 to 2010 which is now winding up the scheme. They have given me 3 options - basically take the cash [approx. £8500 after tax], transfer it to a buyout plan with Standard life or transfer it to another private pension of my choice. I made a phone call to my current employer to see if it could be transferred to theirs but it cant. I had guessed that that would have been the best option. Anyway I am clueless where pensions are concerned and am not even sure if my return were I to reinvest would be any better than putting it in an ISA for example. Any advise would be helpful. I am 47.

atush

No, putting it in an ISA would probably not be better as it is your main pension savings at this point most likely so needs to stay a pension given your age.

So, either open a new PP and transfer to it and put it in a 'lifestyle fund' such as Vanguard or transfer it to the Standard life one they propose.

Getting the cash will possibly seem a good idea, but it will be a bad one as it will rob yoru future self.

xylophone

http://www.pensionsadvisoryservice.org.uk/security-of-pensions/your-scheme-is-winding-up

http://www.cavendishonline.co.uk/pensions/transfers-and-repensioning/

http://www.hl.co.uk/pensions/sipp/transfer-to-the-vantage-sipp

gele

Thanks for the replies and the links. It makes sense to reinvest but I find the whole thing a minefield! I will look at what you suggest but I also have another old private pension that I stopped paying into years ago. All I can remember is that it was organised through the co-op insurance people. You can tell how long ago it was as the insurance man used to come and collect the premiums! I don't even know if it could be reactivated but if it could would it be worth adding this wind up to that? If I'm asking stupid questions I apoplogise, it just shows how little I know.:(

xylophone

another old private pension

More details required before anyone can comment?

atush

If you don't have a current statement, call them and ask for one and give them your current address.

gele

I have called the co-op and they were able to locate the pension. As you rightly say they need a letter confirming my current address and will then send me a statement. They told me it had been frozen and couldn't be reactivated but that I would be able to transfer to another, or take cash. It wont be a lot of money but I'll combine the two in a new one and it may make an ok amount by the time I retire in 20 years!
Thanks again for your replies. I'm trying to get my financial house in order finally, so you may see me on the MFW board if you get over there!:)

xylophone

but that I would be able to transfer to another, or take cash.

This sounds a bit odd. Be careful. You are only 47 and have other pensions.

Apart from that, did the co-op pension have any guarantees?

gele

To be honest I didn't ask about guarantees. Initially I just wanted to locate it because I had no paperwork etc. I have written a letter to CIS insurance informing them of an address change and asking them to forward info of the pension to me. I am sending the letter tomorrow and when I get more info I'll repost here. Re other pensions I only have this CIS one [which to be honest I have no idea of its worth] the wind up one, and a current works pension which I only started 2 years ago, so at the moment 3 very small pots I suspect. I wont do anything until I hear from CIS. I have til 1st Sept to reply to my options on the wind up scheme.

jamesd

Best option is usually to take the money, then pay it into a new pension. This is because:

1. You get 25% of the lump sum paid to you tax free. When you pay the money into another pension you get contribution tax relief on this. If you were to transfer you wouldn't get that extra bit of tax relief.
2. If you had a salary sacrifice pension scheme at work now you'd also gain from NI savings on the new payments.

There's more discussion in Old employer closing scheme = Options that you might find interesting.

Paying the money into a stocks and shares ISA is potentially of use if you may want to retire early and be able to spend the capital to boost your income until your main pensions and state pensions start. If you won't already have enough income even when all pensions are in payment it's better to take the pension route because that's the most efficient way to generate ongoing income.

gele

Thanks jamesd. My current pension is a local council one so one of the better ones I think. Based on what you say I might take the cash from the wind up 25% tax free and the old CIS one if that's possible, and reinvest it all in another, but I need to wait and see what response I get from the letter I sent to the Co-op. I had also wondered about buying extra pension to add to my current one[assuming Im allowed to] with the monies. Does this idea make any sense?