Transferring Workplace Pension

20RA14

Hi,

Until around six months ago my brother worked as an engineer for an energy company. During his time there he paid £1000 into the work's pension scheme. When he resigned he was told it was worth around £3000 if he wanted to transfer it to his new employer's pension scheme, or £1000 (minus tax) if he wanted to withdraw the money.

He is currently paying to be on a course for the next year, which has a guaranteed job at the end of it, assuming he passes all of his exams. However, until that date, he is not employed and has no pension to transfer the money into. His previous employers have told him that 18 months will be too long a gap between jobs to transfer the money between pensions and he will have to withdraw the £1000 instead. Is this correct?

Is there any way of him keeping the money in a/his current pension until he is employed at the end of this course? He wants to avoid having to withdraw the much lower amount now.

Thanks

dunstonh

However, until that date, he is not employed and has no pension to transfer the money into. His previous employers have told him that 18 months will be too long a gap between jobs to transfer the money between pensions and he will have to withdraw the £1000 instead. Is this correct?

If he doesnt want to transfer the pension then it is correct that he will have to withdraw the £1000.

Is there any way of him keeping the money in a/his current pension until he is employed at the end of this course?

The scheme administrator has already said no to that.

He wants to avoid having to withdraw the much lower amount now.

Which is the correct position for him to have. So, he just needs to transfer it into another pension of his choosing. But not wait 18 months.

greenglide

Assuming it is not a Defined Benefit (final salary) pension then he needs to open a personal pension and transfer the fund into that.

The personal pension does not require any contributions to open it.

If he wants to do it himself then consider the likes of Cavendish Online or similar.

xylophone

Presumably this was not a defined benefits pension?

He could transfer to a stakeholder?

Examples
http://www.cavendishonline.co.uk/pensions/stakeholder-and-personal-pensions/friends-provident/

https://www.standardlife.co.uk/c1/accounts-and-services/pensions/stakeholder-pension-features.page

http://www.legalandgeneral.com/pensions-retirement/pensions-explained/pensions-faqs/

20RA14

So if he were to set-up a private pension he could then move the money into his workplace pension in a years time?

Linton

20RA14 wrote: »

So if he were to set-up a private pension he could then move the money into his workplace pension in a years time?

Yes he should be able to transfer to a private pension but why wait 1 year? Wont that then equal the 18months the ex-employer said was unacceptable? Why not transfer now if he is no longer paying into it?

20RA14

Sorry Linton, I'm not sure I made myself clear.

He would set-up a private pension, transfer the money from his old workplace pension into it (rather than taking the £1000 withdrawl), and then when he is employed by the new employer, at the end of
this one year course, he could transfer it into their pension scheme.

I.e. Using this private pension scheme as a middleman to wait the one year and then move the balance on. He could do that?

Linton

20RA14 wrote: »

Sorry Linton, I'm not sure I made myself clear.

He would set-up a private pension, transfer the money from his old workplace pension into it (rather than taking the £1000 withdrawl), and then when he is employed by the new employer, at the end of
this one year course, he could transfer it into their pension scheme.

I.e. Using this private pension scheme as a middleman to wait the one year and then move the balance on. He could do that?

Probably - it would depend on whether the new employer's pension would be prepared to accept a transfer in. Normally they will but it's not guaranteed. Under those circumstances there would be nothing lost in simply leaving the £3000 in the private pension.

xylophone

His new employer's scheme might well accept the transfer, but he might prefer to keep his stakeholder/PP separate.

He might want the flexibility to draw it down earlier than his new scheme's Normal Pension Age.

He might want to use it to make additional pension contributions.
https://www.gov.uk/government/publications/pension-flexibility-2015