Moving pension advice

tallpaullewis

Hi all,

I left my previous employer around 6 months ago. While I was with them I was paying into a Friends Life pension. My new employer doesn't offer any kind of pension.

Friends Life have written to me explaining that I need to either transfer the pension elsewhere or have it refunded. I have only paid in about £300 into it, which my previous employer matched. If I transfer it elsewhere, the full £600ish will be transferred but if I am refunded I will be refunded only my contribution of £300. I have no other pension scheme at the mo.

One of my work colleagues (a clever guy, but not in this field) said that I was probably better off getting the refund as the costs associated with transferring will be more than the extra £300 anyway.

Is he correct with this advice?

dunstonh

Is he correct with this advice?

No. he is wrong.

You can transfer it into any stakeholder pension and not incur any initial charges.

xylophone

Your employer will have to offer a pension within the next couple of years - what is his staging date?

https://www.gov.uk/workplace-pensions



- in the meantime, you could arrange a transfer to a stakeholder and pay in for yourself.

http://www.cavendishonline.co.uk/pensions/transfer-your-pension

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

might be of interest.

jamesd

Among other options, Virgin charge nothing to receive pension transfers of that amount. Their investment option isn't great or, for much larger amounts than you have, cheap but it beats losing half of the money while you research a better place to put it. Given the amount of money involved a temporary transfer to Virgin then one into your new workplace scheme when your employer has to offer one may be your best option.

What you can't do is transfer to any of the places linked to by xylophone because they have a minimum transfer value requirement of £10,000. The one-off fee of £35 is also far too high to accept for the amount involved in your case. xylophone probably just didn't notice that the total value to be transferred is around £600.

atush

Plus you would not get back 300 anyway. You pay tax and NI so around 100 quid so you'd only get 200.

Transfer it, and your friend isn't nearly as clever as he thinks he is. He night have cost you 400.

xylophone

minimum transfer value requirement of £10,000.

Even if he transferred it to a Friends Life stakeholder (his existing pension is with Friends Life) which Cavendish offers?

Is the £10,000 only for the Cavendish Fund Supermarket pension?

dunstonh

I think James is right with Virgin on this one as Cavendish have that £30 (or similar amount) charge. Virgin is expensive annually but has no initial.

£30 on £600 is 5%. Virgin is around 0.3% p.a. higher in charges which means it would be better for a good many years. Then later on the OP can transfer out of Virgin into something better.

xylophone

I wonder if FL would make any charge at all if he simply asked them to transfer to their stakeholder, without going through an intermediary?

Or perhaps this isn't possible?
He could check?

bigfreddiel

tallpaullewis wrote: »

Hi all,

I left my previous employer around 6 months ago. While I was with them I was paying into a Friends Life pension. My new employer doesn't offer any kind of pension.

Friends Life have written to me explaining that I need to either transfer the pension elsewhere or have it refunded. I have only paid in about £300 into it, which my previous employer matched. If I transfer it elsewhere, the full £600ish will be transferred but if I am refunded I will be refunded only my contribution of £300. I have no other pension scheme at the mo.

One of my work colleagues (a clever guy, but not in this field) said that I was probably better off getting the refund as the costs associated with transferring will be more than the extra £300 anyway.

Is he correct with this advice?

It's amazing how clever some people are, just be glad you asked for some advice here.

Cheers fj

jamesd

xylophone wrote: »

Even if he transferred it to a Friends Life stakeholder (his existing pension is with Friends Life) which Cavendish offers?

Is the £10,000 only for the Cavendish Fund Supermarket pension?

I just checked the page you linked to that gave the £10,000 requirement.

When I look at the Friends Life specific page I see a minimum transfer amount of £20 but still a £35 plus VAT fee for a total cost of £40. Same for the Aviva Stakeholder. Just doesn't make sense to pay that for a £600 or so transfer when a workplace scheme is going to arrive sometime and will probably be at least half-decent.

I'm not sure why Cavendish give a £10,000 minimum on the page you linked to, though. The details for the Friends Life personal pension say £3,000 minimum transfer, Aviva is £10,000 and Aegon £2,500. Maybe they used to offer just Aviva and haven't updated the minimum.

It would be worth giving Friends Life a call to see if they can just switch it to their Stakeholder product free, though.