pension winding up

xylophone

My current pension is a local council one so one of the better ones I think.

Is there any chance you would be allowed to transfer in? I gather that normally you would only be able to do this within a year of joining but it is worth checking whether the Trustees would exercise discretion?
https://forums.moneysavingexpert.com/discussion/4721813

jamesd

Assuming the current one is LGPS you might want to learn a bit more about the way AVCs are treated. If I recall correctly they can be used to provide the 25% lump sum, which is much more efficient than taking it by reducing the income. But I'm no expert on LGPS. You might try a search for LGPS and AVC and that'll probably turn up useful information.

gele

Sadly I cant transfer in, I have asked that. I believe I can "buy extra pension" and AVCs so when I get news from CIS I'll give my pension people a ring and get more info. Thanks for your replies. When I know more I'll repost.

atush

If the AVCs can be used to pay your TFLS, instead of commuting valuable FS pension, that could be the way to go. Take the Money and pay it in, grabbing another bite of HMRC contributions.

gele

update - well Ive had a long wait to find out the value of my CIS pension. Info's come today. Its £4600 [frozen years ago]. This is what Im now thinking of doing. Take the cash 8500 from the wind up scheme. Use some to overpay mortgage [4.74% mortgage rate] and put remainder in a new pension, then transfer the 4600 to the new one. not sure how much to overpay and how much to add yet, and no idea on which pension but does this seem like the basis of a sensible idea?

kidmugsy

gele wrote: »

This is what Im now thinking of doing. Take the cash 8500 from the wind up scheme. Use some to overpay mortgage [4.74% mortgage rate] and put remainder in a new pension, then transfer the 4600 to the new one. not sure how much to overpay and how much to add yet, and no idea on which pension but does this seem like the basis of a sensible idea?

That mortgage rate is a bit steep. In your shoes I'd be tempted to use the full £8500 to pay it down. I'd first check that I had a decent emergency fund available (e.g. in Cash ISAs or high-interest current accounts) and I'd also check (i) whether I can later borrow back overpayments, and (ii) whether an £8500 overpayment lowered my LTV far enough to open the possibility of remortgaging at a better rate.

An exception would be if opting for another pension contribution let you avoid 40% tax, or exploit Salary Sacrifice.

gele

Thanks Kidmugsy. I have 15000 in an Isa for emergency if necc. Mortgage is steep I know but I only have 18 months left so am not overly worried as long as I can overpay. We have approx. 13,000k on interest only [endowment forecast at only 2.5% growth is 19,000] and just over 6000k on endowment. I would like to overpay to have more endowment cash spare in 18 months. Do you agree?

atush

I agree that mtg rate is steep.

I don't like the idea of using pension money for anything other than a pension. but the high rate, along with you now having access to LGPS, means that could be a good idea for the wining up LS. Just make sure, as soon as your mtg is paid off, to save all you would have been putting against the mtg. Either in your AVC, or S&S isas (which you didn't mention having)

puddy

is 4.74 steep for a mortgage rate? we are on a fixed rate until 2017 with that rate, but when I looked into remortgaging which would be simple with our LTV, even on rates around 2% wouldnt save any money on monthly payments, I couldnt understand it

gele

Thanks atush for all your posts. Sorry didn't mention ISA. I try not to think about it so I wont be tempted to touch it! In reality with interest rates as they are I would probably be better using that for the mortgage too but Im not going there. I like the idea of having a bit of savings to show for all my working years! Anyway based on the replies I am going to reinvest the CIS pot of 4k+ in another pension, take the 8k cash from the wind up and use a good portion, if not all of it, to pay towards mortgage. Once mortgage is paid off, all being well and no distasters having happened, I will pay my pension pot back with endowment surplus or mortgage monies I will no longer be paying.
Now to find a pension for the £4600 ! I think I will need a FA for this as I am clueless although Im gonna have a good read of these boards.
Thanks again everyone:)