Having another pension pot on a DB scheme

crystal_pixie_2

I am hoping someone can give me some advice about starting and transferring pensions pots when you are in a final salary scheme.

I found out a few weeks ago that I have an old SERPs opt out pension pot from 1991 sitting there doing nothing but getting smaller. Its about £15k.

I wondered if I could transfer to another scheme and put something to it? I thought about something simple like a stakeholder pension but I am not sure I can have one when I am in a final salary scheme and I am paying about £250 pm into that.

Because its such a small sum I am struggling to get an IFA to assist me with this and I am a little reluctant to put it into my company AVC.

Would appreciate some guidance on this.

rpc

You can certainly run a personal pension alongside a DB occupational pension - I do (and I have AVCs too).

I think you can transfer the opt-out pension anywhere now - they used to be called "protected rights" and had some strings attached but those limitations were removed a wee while ago.

For what it is worth (and this is not a recommendation) my personal pension is with Scottish Life and I went through Cavendish Online.

greenglide

I found out a few weeks ago that I have an old SERPs opt out pension pot from 1991 sitting there doing nothing but getting smaller. Its about £15k.

So it will have a GMP attached which could be of value. It may have other attached goodies (guaranteed annuity rate springs to mind) which could be worth much more than the face value.

If it truly has gone down in value (what makes you think it is getting smaller?) then look at the underlying investments.

And have a proper read of the scheme documentation (post back here if you struggle) to find out what you really have.

Your_Hero

crystal_pixie wrote: »

I am hoping someone can give me some advice about starting and transferring pensions pots when you are in a final salary scheme.

I found out a few weeks ago that I have an old SERPs opt out pension pot from 1991 sitting there doing nothing but getting smaller. Its about £15k.

I wondered if I could transfer to another scheme and put something to it? I thought about something simple like a stakeholder pension but I am not sure I can have one when I am in a final salary scheme and I am paying about £250 pm into that.

Because its such a small sum I am struggling to get an IFA to assist me with this and I am a little reluctant to put it into my company AVC.

Would appreciate some guidance on this.

You can indeed have a separate pension. But it might not be the best thing for you to transfer as it may contain guarantees.

Have a look at your policy booklet, or request a new one. Have a look at the charges, penalties, guarantees, fund choice etc. and compare it to your new, proposed scheme.

Cyberman60

It will have a guaranteed minimum pension (GMP) so not a good idea to cash it in at all IMHO.

crystal_pixie_2

Thank you for all the replies.

I must admit I am waiting for the paperwork on this scheme because I had forgotten about it!

Its a Friends life scheme and when I look at the projection it doesn't seem to be growing all that well. I also thought about trying to add to it now I have more disposable income.

I am also a 40% tax payer and I wondered if I could save in a taxfee way by doing this (my ISA is already filled up).

Once I have the paperwork I will have a look at the GMP etc. If it is prudent to leave it where it is could I still open a stakeholder or SIPPs as well? Sorry I don't know anything about pensions at all...

My Final salary scheme is a good one so I am thinking I could use these pots for investment purposes - I don't have a mortgage at the moment but I may be wanting to buy a house in the future.

Oh and I forgot to say I am 43 and don't plan on retiring early at the moment.

Your_Hero

crystal_pixie wrote: »

Once I have the paperwork I will have a look at the GMP etc. If it is prudent to leave it where it is could I still open a stakeholder or SIPPs as well? Sorry I don't know anything about pensions at all...

You can open as many pensions as you like. Your annual contributions will be limited to £40,000 or your relevant income (as you are paying HRT, then it will be £40k). You are allowed to carry forward unused allowances from the previous 3 tax years too.

Be aware, that your DB scheme works differently to an ordinary [DC] pension when it comes to annual allowance calculations. It works on the increase in accrued benefits (multiplied by 16) rather than the amount you/your employer has paid in. Just to make it even more confusing, these accrued benefits are counted between "pension input periods" (PIPs) and do not necessary run in same period as a tax-year would (i.e. 6 April 2014 to 5 April 2015)

greenglide

My Final salary scheme is a good one so I am thinking I could use these pots for investment purposes - I don't have a mortgage at the moment but I may be wanting to buy a house in the future.

Remember that a scheme like this will have GMP which is almost certainly more than the value of the fund and currently the fund must meet that. You need both the rules of the scheme and an up to date detailed valuation.

Cyberman60

greenglide wrote: »

Remember that a scheme like this will have GMP which is almost certainly more than the value of the fund and currently the fund must meet that. You need both the rules of the scheme and an up to date detailed valuation.

That is exactly the situation I am in with one of my funds and why I urge people not to cash in DB schemes. I've not ever met or heard anybody that realised it was a good idea afterwards, only their regrets !! :eek:

crystal_pixie_2

I am certainly learning lots here!

Nope I have already realised that the best thing is to keep my DB scheme as is. The company is putting in a good amount and looking at my last statement there is realistic chance that I could use this to live on in retirement. My thoughts are to take the whole amount as "wage" rather than taking out a lump sum - does that make sense?

So I was thinking of using my other pension pots for investment purposes and using one for riskier investments such as SIPPS.

With the new pension regulations this seems like a good way of saving on a longer term basis.

So should I find out from my company scheme about the benefits accrued? I doubt I will go over my limit but would it be worth checking?

Linton

crystal_pixie wrote: »

....

Nope I have already realised that the best thing is to keep my DB scheme as is. The company is putting in a good amount and looking at my last statement there is realistic chance that I could use this to live on in retirement. My thoughts are to take the whole amount as "wage" rather than taking out a lump sum - does that make sense?
......

It is usually better, all other things being equal, not to take a DB lump sum. Whether that is the case depends very much on the scheme - you would have to see the numbers.