Options for company pension after leaving

NStav

Hello,

I recently finished a one year contract and received a letter from the pension company that managed the company pension. I have ~6k in the fund, most of which was company contributions.

I have been given the options to either:

1. Receive my contributions back (less tax), losing the company contributions in the fund;
2. Transfer to a different pension.

I still need to call the company to confirm that I can't just keep on making personal contributions to the fund to keep it alive, but it wasn't an option that they presented to me (I'm waiting for their phone lines to open).

I am looking into moving the fund into a personal pension plan but was wondering if there are any common pitfalls or hidden charges I should watch out for when transferring from one fund to a new one?


Thank you in advance for any guidance.
Nico

dunstonh

I am looking into moving the fund into a personal pension plan but was wondering if there are any common pitfalls or hidden charges I should watch out for when transferring from one fund to a new one?

Charges are not hidden. They are disclosed. The only pitfall would be if it is a defined benefit scheme. These typically need an IFA to sign off on the transfer. If its money purchase it wont.

planteria

and if it's DB it is probably best to leave it where it is?

xylophone

You might find something here http://www.cavendishonline.co.uk/pensions/transfers-and-repensioning/

atush

If it is DB and you CAN leave it there (many say you need to be in the pension for 2 years to keep it there and defer it) then I would.

If you can't, transfer it. If most of that 6K is company contribs you could be getting just pennies in the pound for it. So transfer to a PP.

For PPs. look at do you want to control the investments, or get someone else to do it? Do you want a simple lifestyling fund that invests in a mix of equities and bonds (based on your age/risk profile). Look at costs of individual options.

NStav

Thank you for the responses.

I spoke to the pension company today and they confirmed that as I was in the scheme for less than 2 years, my options are to take my contributions or transfer elsewhere.

The employer contributions make up most of the pot, so it seems I do need to transfer.

I have an Aegon pension from a previous job, and from speaking to them they said I can transfer the newer pension into the Aegon fund. They said that I can continue personal payments into the pension myself (I'm taking a few months off contracting work at the moment) and their management fee is an annual 1%.

The pension I need to move is a Defined Contribution plan, so does this type need to be signed off and transferred by an IFA? The IFA managing my older pension quoted me a fixed fee of 500 pounds to do the transfer, but I'm not sure if this is normal for the industry and amount of work needed.

When I start earning again I will probably look at funds that can be managed a bit more for extra benefit, but for the time being I am just trying to not lose the employer contributions in the fund.

I really appreciate the feedback, it's very helpful to have some more experienced insight!

Nico

jamesd

No IFA sign off required for defined contribution pension pots. It's likely that any of the platforms aimed at the DIY pension market will be happy to take the pot with no charge. Places like Hargreaves Lansdown.

How is the Aegon money invested and what sort of approximate total value is it? It might be cheaper to manage that at a DIY place also, depending on the investments desired.

NStav

Thank you James,

The Aegon fund is ~8k. I haven't got access to their online portal at the moment so I'm not sure what fund it is invested in, so I will try to get access.

I'm not the most pro-active at dealing with savings and money, so for the time being I'm looking for a quick and safe place to combine the pots. I looked at the Hargreaves Lansdown SIPP but will probably need to speak to a professional to understand the best fund for my needs.

I'm speaking to an IFA this afternoon so that should give me another point of view/price. I'll also check with Aegon that I can handle the transfer myself as well in case I go for that.

Update : My Aegon fund is invested in the Scottish Equitable Universal Lifestyle Collection (the forum won't let me link to the PDF as a new user). The Aegon website ranks it as average risk on their scale.

atush

Tell us what your IFA says.

How much will you be contributing each month to any new pension you open? This and the two transfer values ie Aegeon and the one closing, will determine if the cost for advice is good value or not.

Small funds under 20K ( which I assume yours is) will not attract a good value quote, but if you are going to make ongoing contributions that helps.

NStav

I just spoke to another IFA recommended to me by the ifabrokers website (free consultation) and he told me:

1. If Aegon are happy for me to process the fund transfer myself without an IFA, to go with that;
2. If they need me to go through an IFA (shouldn't be the case for defined contribution) then the price quoted to me by my previous employers IFA team is a good price and I should stick with them.
3. For a pot the size of mine, at my age and considering I'm not earning at the moment, putting it into my existing Aegon fund will be a safe bet until I'm earning and ready to invest more proactively.

I am waiting back from Aegon to hear if they will allow me to do the transfer without an IFA.

xylophone

http://www.cavendishonline.co.uk/pensions/personal-pensions/scottish-equitable/

And you have compared the above?