Pension Terminology Question

jintyb

What is the difference between a transfer value and a pension pot? My employer has roled out a new website where you can see the potential pension you would get. It allows you to enter details of any pensions from previous jobs to give an overall picture but the terminology stumps me! Thanks in advance.

mania112

Pension pot (aka fund value) means the value of your investments.

Transfer value is the value you would get if you were to transfer it. If there are exit penalties in place the transfer value would be lower. If there were final bonuses in play (in the case of a With Profits fund) the transfer value could be higher than the fund value.

kidmugsy

jintyb wrote: »

What is the difference between a transfer value and a pension pot?

Also, for final salary pensions there is no "pot" because what is defined is the benefits you'll eventually get, not the capital required to pay for them. There is a transfer value, though, being the money that would be moved over if you transferred to, say, a personal pension.

dunstonh

What is the difference between a transfer value and a pension pot?

transfer value is an official term that indicates the transfer value (if moved to another pension). Pension pot is a made up term generally used to indicate your whole retirement planning and nothing specific.

jintyb

Thanks for your replies and explanations. After a wee bit of research I've found out that one of my pensions is a GPP and has a TV of £20k and the other is a final salary scheme Deferred benefits with a TV of @£23k. A few years ago a IFA advised me to leave the latter where is was and not transfer it.
Of course this was all discussed when I was much younger and didn't give a toss about pensions. Now I'm nearly 55 and its a different story!

Triumph13

jintyb wrote: »

What is the difference between a transfer value and a pension pot?

Easy.

Your pension pot is the collection of plants growing in the basement under lights that you are hoping will fund your retirement. Your transfer value is what a football club would pay for you.

mgdavid

jintyb wrote: »

Thanks for your replies and explanations. After a wee bit of research I've found out that one of my pensions is a GPP and has a TV of £20k and the other is a final salary scheme Deferred benefits with a TV of @£23k. A few years ago a IFA advised me to leave the latter where is was and not transfer it.
Of course this was all discussed when I was much younger and didn't give a toss about pensions. Now I'm nearly 55 and its a different story!

good advice; almost always best to keep the DB (final salary) pension.