Transfer SERPS pension- protected rights?

pinkhairedfreak

Hi,
having now been educated by the wonderfull martin, I am planning to transfer my pensions to stakeholders, using Cavendish as my discount broker. This is all good.

The problem is that I opted out of SERPS about 7 years ago, and hence have a seperate SERPS pensions pot as well. My documentation for this pension mentions "Protected Rights" but has not given any details. I assume these are standard for all "contracted out of SERPS" pensions. Does anyone know what these rights are, and more importantly what I will loose if I transfer this SERPS pension? (It currently has about £6k in it.) It seems strange that it should have protected rights, when my corresponding normal pension doesn't!
I would really like to transfer it, since it is a personal pension, bought directly. I feel that by transfering to a stakeholder and buying through Cavendish I should save my self a lot, but I am worried about these "Protected Rights".

Many thanks in advance for any help/advice,
Geraldine.

dunstonh

having now been educated by the wonderfull martin, I am planning to transfer my pensions to stakeholders

is that really the right thing to do? stakeholders are budget pensions with limited invesmtent options. You could be limiting your invesmtent potential by using a stakeholder. Plus, dont assume that they are cheaper than existing pensions or those arranged by advisers. A lot of legacy pensions had upfront charges which were high but ongoing charges that were lower than current alternatives. As the up front charges have gone and you can do nothing about those, you can only look at ongoing charges. Have you compared those to the stakeholder of your choice?

Have you also checked to see if the existing plan has any guarantees?

The problem is that I opted out of SERPS about 7 years ago, and hence have a seperate SERPS pensions pot as well. My documentation for this pension mentions "Protected Rights" but has not given any details. I assume these are standard for all "contracted out of SERPS" pensions. Does anyone know what these rights are

Protected rights come in two forms, pre and post 1997 (pre royal ascent period doesnt matter any more post A day). These relate to your contracted out funds.

more importantly what I will loose if I transfer this SERPS pension? (It currently has about £6k in it.)

You could have a transfer penalty. You would need to check that.

It seems strange that it should have protected rights, when my corresponding normal pension doesn't!

Not really. If you have two pensions, one where you contracted out and one where you didnt then only one would have protected rights. The other would only have ordinary rights.

I would really like to transfer it, since it is a personal pension, bought directly.

Thats not grounds for transfer. Many personal pensions are better than stakeholder. Indeed, many modern personal pensions can actually be cheaper than stakeholder (NU and AXA come to mind immediatly)

I feel that by transfering to a stakeholder and buying through Cavendish I should save my self a lot, but I am worried about these "Protected Rights".

You shouldnt act on a feeling. You should act on facts. If you dont know the facts you could be doing more damage than good.

EdInvestor

dunstonh wrote: »

You could have a transfer penalty

Are transfer penalties allowed on protecteted rights pensions?


I agree that you shouldn't just transfer old pensions to new ones without checking that the new ones offer better terms than the old ones.

Get the folowing details on the current pensions

Current value
Transfer value
Fund the money is invested in now
Annual charge
Alternative fund choice
Any guarantees


Then get the following info on the proposed new pension

Annual charge
Fund choice
Restrictions on later transfer (that's the main stakeholder advantage these days)


Then you can make a properly informed decision on what to do by comparing the terms.The protected rights aspect is not really a major factor.

dunstonh

Are transfer penalties allowed on protected rights pensions?

Yes. .........(to use up min characters required )

WhatIFAsDontTellYou

Does anyone know the answer to this please? (I've spent weeks learning about pensions and still know nothing .....)

I have a protected rights pension with Zurich of which I could withdraw a badly needed 25% tax-free cash and turn the remainder into a not very attractive annuity with Prudential or another company of my choice. At this stage I don't want an annuity as I have 13 years until I retire. I'd like to take the 25% and reinvest the remainder. Zurich don't do this. I transfer it and that's that.

So having got precious little assistance from the financial advisor (who bought the business from the much more helpful person who arranged this for me!) I called Zurich today who said why not ring various companies myself and ask what they can do for me.
Scottish Widows said someone would ring me back. The person at Legal & General didn't know and said they'd send me a pack. I said No. He eventually agreed that someone would call me back.
Cavendish Online said they couldn't take over my Pension plan at all as it's protected.
HSBC (my bank) said a local branch would call me back. (sigh ...)

I thought banks wanted our money?
Anyone know who I should go to next? Please??????

:eek:

EdInvestor

To get your 25% cash out and leave the rest invested to grow, you would normally transfer the pension to a SIPP and then put it into "income drawdown", but without taking any income.

Problem: Protected rights (Serps) pensions are not yet allowed into SIPPs.The current projected date for this is September next year.

How big is your fund?It is alleged that some insurers will do drawdown for PR funds of 50k or more.

dunstonh

I called Zurich today who said why not ring various companies myself and ask what they can do for me.
Scottish Widows said someone would ring me back. The person at Legal & General didn't know and said they'd send me a pack. I said No. He eventually agreed that someone would call me back.
Cavendish Online said they couldn't take over my Pension plan at all as it's protected.
HSBC (my bank) said a local branch would call me back. (sigh ...)

I doubt any of those tied companies can do your transaction. Income drawdown is typically a G60 qualified adviser transaction with most IFAs.

There are providers that will do drawdown on protected rights for funds above £3600 so that isnt a problem. It's who you are approaching that is the problem.

EdInvestor

dunstonh wrote: »

There are providers that will do drawdown on protected rights for funds above £3600 so that isnt a problem.

And they are....?

blackanchorage

EdInvestor wrote: »

Are transfer penalties allowed on protecteted rights pensions?

Then get the following info on the proposed new pension

Annual charge
Fund choice
Restrictions on later transfer (that's the main stakeholder advantage these days)


Then you can make a properly informed decision on what to do by comparing the terms.The protected rights aspect is not really a major factor.

Where can I find a list of pensions that accept transfers of protected rights pensions? Plus all that other information (fund choice etc.). I think I'm probably paying too much right now.

Thanks, Roger

purch

having now been educated by the wonderfull martin, I am planning to transfer my pensions to stakeholders, using Cavendish as my discount broker. This is all good

I realise this is probably akin to blasphemy :eek: , ( and will probably get me banned for life ) but can you fill me in on what is so wonderful about Stakeholder Pensions compared to other wrappers ?

dunstonh

Where can I find a list of pensions that accept transfers of protected rights pensions? Plus all that other information (fund choice etc.).

From an IFA.

AFAIA, all the providers that allow it at present (or allow it with decent investment options) require an IFA.