Pension choices when facing redundancy

MardyBum

Hello all

I was placed on notice of redundancy a few weeks ago and I’ve been trying to get my finances in shape. But when it comes to my pensions I’m at a bit of a loss on what the best action is, so would appreciate some pointers.

I’ve had a private Zurich (old Allied Dunbar) Adaptable Pension Plan that I’ve been paying into directly for the last 15 years along with work based Aegon Group Person Pension Plan (Univ Lifestyle) running for about the same time with salary/employer contributions etc. I pay around £100 per month into the Zurich pension which (unless there’s a good reason not to) I’d like to reduce to cut back on outgoings while I find other work.

I’ve heard that just leaving pensions dormant can be a bad idea as fees start to impact, so my question is what’s the best thing to do keep the pensions ticking over whilst I'm not employed?

Is it better to pay smaller amounts into both pensions rather than just stop?
Should I look to transfer one of the pensions into the other and keep paying direct into the combined pot?
What sort of information should I be looking at/asking for from each provider to find the best option?

Thanks for any help

bigadaj

The main issues with any pension are charges and investment choices. Older policies tend to be more expensive so it often makes sense to transfer these but you need to check for any penalties or guaranteed rates that may have.

I maintained a group personal plan when I left one employment a couple of years ago and maintained a small standing order as this maintained reduced charges, the same might be true for you.

The older Zurich plan may well be xpensive so worth looking at and transferring to a personal pension or sipp if the charges are lower, you'll need to ask the providers as there is no consistency in charging and people on similar plans with the same provider may be paying wildly different rates.

westv

When I too redundancy from my previous employer in early 2010 I just left the DC pension "as is". It's risen from roughly £125k to £170k. Whether I would have been better taking another course of action I don't know.

MardyBum

Thank you for your help. I have requested details from both pension providers to see the charge structures that are in place. Investment performance aside charges look to be the most important factor in deciding what to do next.

Is there specific terminology for fees triggered by stopping payments that I should look out for?

bigadaj

MardyBum wrote: »

Thank you for your help. I have requested details from both pension providers to see the charge structures that are in place. Investment performance aside charges look to be the most important factor in deciding what to do next.

Is there specific terminology for fees triggered by stopping payments that I should look out for?

Just ask them directly, my Scottish widows maintained lower charges if I continued to make a low monthly payment so I've continued doing that, though I do need to move it as a flat fee sipp would be cheaper.