"Urgent Action Required" Pension Letter - New Pension Scheme Required

5aq1b

Hi guys, looking for a bit of advice here. I received a letter a few months ago from my previous employer advising that because I've completed more than 3 mths, but less than 2 years of service, I will lose the rights to my pension benefits however I have the right to transfer-out my whole retirement account.

It doesn't help that I'm not too knowledgeable when it come to pensions but according to the letter, I have a few weeks left to take action otherwise I'll lose just shy of £4k. Can I really lose it? I was under the impression that it just stays in a pot - just like the money from jobs I had before my previous employment.

What should be my next course of action? I'm contracting now so I'm self employed and have a Ltd company, and have no pension plan! I presume I should be speaking to an IFA however I have no idea where to look and what to look out for as a simple google search throws you into a minefield

dunstonh

I was under the impression that it just stays in a pot

There is no pot in defined benefit schemes.

What should be my next course of action?

if it cant stay where it is then you transfer it.

I presume I should be speaking to an IFA however I have no idea where to look and what to look out for as a simple google search throws you into a minefield

you can either DIY or use an IFA. It will need a pension transfer specialist. So, when you search on unbiased.co.uk for an adviser, make sure you select pension transfer in your filters. If you DIY then you will have some restrictions on who you can use given its an occupational pension transfer.

xylophone

Transfer it into a personal pension and then continue to contribute?

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

http://www.contractorcalculator.co.uk/pensions_contractors_limited_company.aspx

greenglide

I'm contracting now so I'm self employed and have a Ltd company,

You are not self employed. You are an employee of the limited company as well as a director.

The difference is significant.

The company can pay contributions into a pension scheme of your choice which reduces their advance corporation tax liability which is good.

Initially open a personal pension and ask the scheme you open to transfer the existing scheme to them. I would also tell the existing scheme that you have done this to "stop the clock ticking"

5aq1b

dunstonh wrote: »

you can either DIY or use an IFA. It will need a pension transfer specialist.

xylophone wrote: »

Transfer it into a personal pension and then continue to contribute?

greenglide wrote: »

You are not self employed. You are an employee of the limited company as well as a director.

The difference is significant.

The company can pay contributions into a pension scheme of your choice which reduces their advance corporation tax liability which is good.

Initially open a personal pension and ask the scheme you open to transfer the existing scheme to them. I would also tell the existing scheme that you have done this to "stop the clock ticking"

Thanks for the replies guys.

So the link above to Cavendish - is that just a case of me going through their registration process, negating the need for an IFA? I spoke briefly with my accountant and he did say that IFA's can be relatively expensive. If the ability is there to do it myself, why the need for an expensive IFA?

dunstonh

As a limited company, will you have to comply with auto-enrolment in the near future?

If the ability is there to do it myself, why the need for an expensive IFA?

For the same reason you have an expensive accountant and not doing your own accounts. Much the same reason people employ you to do jobs.

That said, IFAs are more inclined to deal with larger investors. Although if you make a mistake on DIY, it can end up costing more than using an IFA. However, until you get to around £20k in your pot, it doesnt really matter how you invest.