Short Term Company Pension and Existing SIPP

zharrt

I have been self employed for a number of years, and have been paying into a SIPP which is starting to look very healthy.

I am going to be joining a company with a pension scheme but will probably only stay with them 18 months or so, they have a pension scheme which will pay in 6%.

I have two choices, pay into their scheme (I will add 10%, giving me 16% in total) and just freeze my SIPP and let it just tick over reinvesting dividends.

If I leave before 2 years I understand my contributions will be returned to me (minus any fees etc) which I can then put in my SIPP, I this case would my employers 6% also be returned to me?

If its just my contributions returned would ut make sense I then simply ignore their pension scheme and just keep contributing to mine directly?

TIA

Linton

I would have thought that you will have the choice of either getting your contributions back as taxable cash, losing the employers contribution, or transferring the lot, including employers contribution, to another pension elsewhere. The latter would seem to meet your needs.

zharrt

I was under the impression if less than two years the transfer option is not open?

If that is the case then no problems, however I would need to know now what will be allowed in two years!

jem16

zharrt wrote: »

I was under the impression if less than two years the transfer option is not open?

If that is the case then no problems, however I would need to know now what will be allowed in two years!

Then check your scheme rules as that's the only way to know for sure.

bigadaj

Unless the 10% is required to gain the employers 6% contribution then there's no reason why you can't continue with the sipp as well. If contribution from you is needed then this could be deducted from your sipp contribution, so if matched you could put 6% in company scheme and continue to put 4% into the sipp for a similar overall situation.

Whether you do this would primarily come down to fees and costs and investment options of both schemes.

xylophone

It would have been the preferred option to transfer the short service pension into another pension rather than take a refund because taking a refund meant payment of tax etc.

It would appear from this that the refund option might no longer be available anyway in the circumstances you describe?

http://www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change/leaving-your-pension-scheme/taking-a-refund

Playing_with_Fire_2

Check the scheme rules and have a search of the board. I have a recollection of people receiving about 2/3 of their contributions and none of the employer's contributions when transferring out due to the high fees.

Are you set on staying for only 18 months. I've delayed joining pension schemes before for this reason but ended up staying longer.

OldBeanz

Another option may be that if you transfer a pension in to the company pension then they will allow you to transfer out before 18 months. You may want to check that out and could always start another pension and put £50 in allowing you to transfer in so that you meet the criteria.
This site has a number of people who put off starting a pension for the same reason as you who then stayed with the company for 20 years.