Closure of employers pension scheme

carlos1973

I work for a major retailer who has just closed their pension scheme and created a retirement savings scheme. I have the option to transfer what I've already accrued, around £25k, to the new scheme or to transfer it to a private pension scheme.
I'm going to continue my current contributions into the new scheme to take advantage of the matching that my employer does. However, I would rather put the £25k into a private plan as I think this would give a better return and be safer.
I'm not in a position to put any further contributions into a second pension plan, although I could make a token payment of say a £1 a month for the next few years.
I'm not overly familiar with pensions and would appreciate any advice as to whether any companies would allow such a transfer without making a regular contribution.

AnotherJoe

would appreciate any advice as to whether any companies would allow such a transfer without making a regular contribution.
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Many companies will.

What you want is called a SIPP.

However, I'd challenge your assumption that "I would rather put the £25k into a private plan as I think this would give a better return and be safer."

What is your basis for thinking this? Both on the investment growth and the safety? What would you invest in in your SIPP (the £25k lump sum?).

carlos1973

Yes the £25k.

ScottyLP

What type of scheme was the old one? Was it defined benefit? If so, you may actually be better off leaving it where it is.


Would you be able to transfer it to your new plan? Your company may have negotiated lower fees if they're a major retailer and would have introduced a lot of business to the new administrators.

greenglide

Is the previous scheme not a Defined Benefit scheme (final salary or CARE) scheme? It's not Tesco is it?

If it was a DB scheme were does the £25 come from? These schemes promise a level of benefit, not a cash pot.

Do you not have the option of leaving the money where it is?

ScottyLP

I imagine if they had closed a DB scheme there would be some sort of closure statement outlining the options which probably enclosed a cetv.

If that's the case, and OP had less than 2 years service in the scheme there may be limited options available such as transfer out or get a refund of contributions.

carlos1973

Thanks for the answers so far.
The old scheme was a DB, the new one is a DC.
I can leave the money in the new scheme, there would be no transfer cost involved, or at least we have not been told of any.
The figure comes from the closing statement.
I've paid into the scheme for over 9 years, so I cannot take it as a refund of my contributions.
Unfortunately, I can't say which retailer.

xylophone

I can leave the money in the new scheme,

Do you mean that you can leave your DB in the old scheme and can start to contribute to the new DC scheme?

Unfortunately, I can't say which retailer.

Why not? Have you signed a confidentiality clause?

The ending of a DB scheme is not normally a state secret.

http://www.thisismoney.co.uk/money/markets/article-3217202/Supermarket-Tesco-tells-staff-end-final-salary-pension-scheme.html

http://www.professionalpensions.com/professional-pensions/news/2364225/standard-life-to-close-db-scheme-to-future-accrual-from-april-2016-upgrades-dc-alternative

http://www.telegraph.co.uk/finance/personalfinance/pensions/8995176/Shell-closes-last-FTSE-100-final-salary-pension-scheme.html

RickyB2000

carlos1973 wrote: »

Thanks for the answers so far.
The old scheme was a DB, the new one is a DC.
I can leave the money in the new scheme, there would be no transfer cost involved, or at least we have not been told of any.
The figure comes from the closing statement.
I've paid into the scheme for over 9 years, so I cannot take it as a refund of my contributions.
Unfortunately, I can't say which retailer.

Are you saying there is no option to leave the money in the DB scheme? The only options are move it to the new scheme or move it to a personal pension?

carlos1973

Sorry, I can leave it the DB scheme but it will only increase inline with inflation, They claim up to 5% a year. My future contributions will be in the new scheme alone.

RickyB2000

So how much yearly income are you swapping for £25k and what other benefits? How long to retirement?