Can I transfer to a new scheme and then draw money out?

franchesca

Hi, I am 60 and have a small pension dating back years with Unilver. It's a defined benefit scheme so I can't draw it all out in April as I could a deferred benefit scheme. However, they have said I am allowed to transfer it. Would I be able to transfer it to a new scheme and then still draw it out in April when the new rules apply? If so how do I find a company to do this? I think the pot is around £18,000 and as we are on a DMP I was going to try to pay our debts off. I am not very well informed and don't know where to go but if I could get this money it could save us having to sell our house so I am keen to pursue this.
Any help gratefully received.
Thank you
PS. I have a pension with my current employer (also defined benefit) which I will keep for my retirement in 4 years ish.

molerat

You would be able to transfer but the receiving company would generally insist on an IFA to sign it off as being in your best interests to do so. This advice will cost you.

xylophone

What you have with Unilever is a deferred Defined Benefits Scheme as opposed to a Defined Contributions Scheme /old Group personal pension to which you no longer contribute.

You will no doubt know that in general, it is not considered a good idea to transfer out of such a scheme.

You are very likely to find that under the current rules,any receiving scheme will require you to have consulted an IFA qualified in pension transfers (although one poster seems to have got round this)

https://forums.moneysavingexpert.com/discussion/5053691



and it would seem that after April 6, this will certainly be the case.

xylophone

Have you and OH obtained state pension statements for future planning?

https://www.gov.uk/government/news/millions-more-offered-free-pension-statement

jamesd

Why would you have to sell your house? There are probably alternative ways to avoid that, like an equity release mortgage.

zagfles

molerat wrote: »

You would be able to transfer but the receiving company would generally insist on an IFA to sign it off as being in your best interests to do so. This advice will cost you.

Not necessarily with a small pot, see https://forums.moneysavingexpert.com/discussion/5167831

Or google "ministers water down final salary safeguards" and click on the FT article.

molerat

The good news is that my leisure sector shares and dividends should increase with all this money being !!!!ed up against the wall

franchesca

Thank you all, By the way molerat I'm not wasting the money, I'm paying off my debts so I don't have a milestone round my neck when I retire so it won't help your shares.
Thank you especially to zagfles for the information. I googled as advised and also found this link http://www.ftadviser.com/2015/01/27/pensions/advice-exemption-for-final-salary-transfers-extended-2SRJ9w8ZB6tSG3VaWi5TFK/article.html
So it seems that with 18,000 I can transfer without paying for an IFA, this is great news.
Now I just need to find out where it would be best to transfer it. It won't be in there very long so I just need somewhere safe. Does anybody have any recommendations?
Thanks again.

molerat

My comment was not aimed at you and your personal situation but at the change to the current system which is going to allow anyone to take their future income with no checks and balances and blow it all at once. There are many, the live now and !!!! tomorrow brigade, that will take this option then rely on the rest of us to support and feel sorry for them in their old age.

I am certain that many of the large pension providers will still insist on the advised route as it will keep them out of the next mis-selling scandal.

xylophone

Have you considered your tax position if you go ahead with the plan?

You indicate in another post that you are currently employed.

atush

Yes, you will not receive the whole 18K if that is indeed what it is worth in CETV now.

At a bare minimum, you will get 4500 tax free and pay basic rate or higher tax on the remaining 13.5K with a min tax paid of 2700. So in fact you would only get 15,300 total. Is this enough to pay your debts.

then, if you retire, and are on a lower income and no longer have this pension, how will you be able to stay out of debt? have you reduced spending? How long before you retire? Could you in fact save monthly the money you used to pay the debt with? therefore giving yourselves an emergency pot of money to help stay out of debt?

Have you considered downsizing your home to help with debt, running costs, retirement?