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is this allowed

mark11
Posts: 16 Forumite
Final salary has stooped at work. my pension pot will be index linked with a maximum of 5%. My new pension is 5% of my salary and the company will put in 17% which is excellent. I asked about taking my money out of the pot to start a SIPP knowing I would lose some of it in penaltys etc. The old pension stops Dec 31st the new pension starts Jan 1st. My company have said if I take my pot they will not give me 17% but only 10%. Surly these pension are seperate. :mad:
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Its allowed.
You would be wiser to leave the accrued final salary pot alone. And take them up on their offer of 17%. If you want to contribute more than 5% of your own money, you can use a separate SIPP (or stakeholder pension plan) for that.0 -
Have you calculated the critical yield required on the SIPP to match the final salary scheme?I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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Have you calculated the critical yield required on the SIPP to match the final salary scheme?
This is all new to me so what you have asked needs to be explaind in a simpler format.
all I know is my pot will increase by a maximum of 5% in a year thats if inflation gets that high. im sure I could get more than that if I self invested, or maybe not. You guys know best and it's advice I need as you can proably tell.
Why are my company allowed to punish me by 7% if I take my pot, the pensions are completley seperate ?.
Thanks inadvnce.0 -
This is all new to me so what you have asked needs to be explaind in a simpler format.
You probably find you wont be able to do a final salary scheme transfer without a G60 qualified IFA signing off on it anyway.
However, in simple terms, your final salary scheme will have a number of guarantees and a defined level of growth based on indexation (typically similar to inflation). The pension will be payable in a certain way as well. For example, 50% spouse in the event of your death and annual increases by inflation.
So, you cost up the SIPP against matching those options in the scheme to see what growth you would need on the SIPP to get the same benefits. In most cases, it isnt cost efficient to move it.
im sure I could get more than that if I self invested
You are not comparing like for like. You would only get the transfer value in the SIPP. You wouldnt get the full retained value. So whilst you could expect to get more than 5%, you will be working from a lower fund value and a lower annuity income in retirement.Why are my company allowed to punish me by 7% if I take my pot, the pensions are completley seperate ?.
Because the benefits of the scheme are costed on you staying until retirement and taking an income. If you withdraw the funds you are impacting on every other member of the scheme. So, you have to pay for that, not the other members.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
Final salary pensions (indeed any pensions which are guaranteed and index linked with spouse's pensions) are expensive to match.
For instance you would need a build a fund of approximately 150,000 pounds in order to get an equivalent income to basic state pension - 87 pounds a week - on the market.Trying to keep it simple...0
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