exceptionally small pension pot - what can i do with it ?

dhl600

Okay, i’ve spent hours reading about pension options for larger sized pots but i can’t seem to find much on small sized pots. And when i say small, i’m talking £600. I’m 61 and I hope that i can theoretically cash it in as “trivial” but before i can do that i need to transfer it from my ex-employer to someone else. And it needs doing fast before the deadline is reached. Help please. Anybody experienced something similar ?

PensionTech

What deadline? And are you sure you need to transfer it from your ex-employer; have you asked, and what have they said? Most will allow trivial commutation because it's a saving for them.

dhl600

My pension people have a deadline for me to move the pension pot. i am unable to just leave it because if nothing is done within 6 months, it is gone forever. The letter they sent to me informed me i could not just take the cash. i have talked with them and they have sent forms that need sending back when i transfer. Last december they converted the funds into cash. I’m looking for a firm that will allow me to transfer it to them so i can subsequently cash it in.

Being unemployed i cannot simply transfer it to a new employer.

jamesd

Transfer to the Virgin pension then at a time convenient to you take the whole amount out as a lump sum. No charges for this from Virgin. There are other option, this one is one of the cheap and easy ones.

No need for the old triviality rules in this case. Since the pension changes last April you can take out any amount you like whenever you like from age 55.

If you have the money to do it you can also pay in £2880 net a year that's grossed up to £3,600 even if you pay no income tax. Then you can take it out again and make a tax gain. If your whole taxable income is below your personal allowance that'll produce a tax gain of £720. If the 75% is at basic rate the gain is £180.

PensionTech

Ok - first of all, you can open a personal pension and transfer it to there (but you may need to look hard for one that is willing to accept such a small transfer). Start looking around if that's what you want to do. Others on here with more knowledge about the personal pensions market may be able to help.

However, I still don't understand the circumstances behind this ultimatum. This is important as it wouldn't usually be allowed; it may be that you need to challenge their decision. There are only two situations in which I can imagine a scheme being able to force you to transfer your benefits:
a) You have been in the scheme for less than 30 days (although this can be 2 years if we're talking about a "defined benefit" pension scheme - i.e. the kind where you build up a pension based on your service and salary in the scheme, rather than building up a fund based on your contributions).
b) Your scheme is winding up.

However, in both of these circumstances, there should be a facility to pay you the money (or at least some money) directly instead of making you transfer it. The only possible exception to this is if a) applies and you made contributions via salary sacrifice (or you didn't contribute at all but your employer did). Is this the case?

greenglide

And when i say small, i’m talking £600.

So is this a Defined Benefit (Final Salary) or a Defined Contribution scheme?

Is the £600 an amount you actually have in pension savings or is this pension actually worth £600 per year (or month)?

If you were in a DB scheme for a relatively short period of time it is quite common to be given the option of a refund of employee contributions less tax and NI (a bad deal) or the ability to transfer all the funds to another scheme.

Were you actually paying contributions to this scheme or was it a salary sacrifice scheme where all contributions are actually employer contributions so a refund of employer contributions would be nothing.

You need to clarify with the scheme or read the scheme booklet?

dhl600

jamesd - thanks for your comments. I was hoping a forum heavyweight would reply to me. I needed someone to steer me towards a firm who would happily deal with a pot having only a few hundred quid. I was too busy wanting to hang on to the pot to think about the idea of adding to it like you suggest. Brilliant. Oh, how long would i leave it in before taking it out ? I thought put it in this financial year then take it out next.

Pension Tech - the hours i spent on the net before i made this post was searching (in part) for someone who would deal with a tiny amount. I need to go thru my file at home to answer the rest. Thanks.

greenglide - another heavy hitter. Thanks for your reply. Not a final salary scheme, pretty sure its not DB which leaves just DC. The £600 is the total cash that is currently in this pot. To answer the rest i need to check my file at home. Get back to you all later.

woolly_wombat

dhl600 wrote: »

My pension people have a deadline for me to move the pension pot. i am unable to just leave it because if nothing is done within 6 months, it is gone forever. The letter they sent to me informed me i could not just take the cash. i have talked with them and they have sent forms that need sending back when i transfer. Last december they converted the funds into cash. I’m looking for a firm that will allow me to transfer it to them so i can subsequently cash it in.

Being unemployed i cannot simply transfer it to a new employer.

What is the pension scheme and how long were you a member?

It wasn't the Local Government Pension Scheme (LGPS) was it?

The reason I ask is because the vesting period for the LGPS changed from 3 months to 2 years from the 1 April 2014. It is therefore my understanding that if you were a member of LGPS prior to 1 January 2014 you should be able to leave your pension in deferment.

dhl600

so from the file, i can inform you:

it is a defined contribution plan and the pensionable service is less than 2 years. “ The only option is to transfer the fund to another pension provider. “
The information form itemizes a sum of “member contributions” as part of the total value. These must have come from my salary sacrifice.

woolly_wombat - the scheme was not LGPS.

Did anyone work out my ex-employer from the clues i left ?

In the meantime, i’ve been in touch with Virgin to talk about transfers ( it could take up to 6 weeks ) and request forms. I also, on a whim, rang HL to chat with them, mainly because i saw on their website that it would take 10 days to transfer. Turns out their min transfer value is 1k BUT i have the option to add cash to the £600 pot at the time of transfer to make it up to ( or beyond ) 1k. Given that i was thinking of adding to the pot - thanks jamesd - this option is the one i have decided to pursue.

So thankyou again to all who participated in this thread. If i have anything interesting to add to this as the story unfolds, i will do.

jamesd

Seems like a good plan. It would be nice if you could stop by and let us know how things went once the transfer is done.

[Deleted User]

dhl600 wrote: »

I also, on a whim, rang HL to chat with them, mainly because i saw on their website that it would take 10 days to transfer. Turns out their min transfer value is 1k BUT i have the option to add cash to the £600 pot at the time of transfer to make it up to ( or beyond ) 1k.

Interesting as I did a transfer from an old DC employer scheme to the an HL SIPP for £382.51 late last year. Perhaps it went through as I was doing another transfer at the same time ~£10k from a different provider...

Cheers