Withdraw Cash from Old Pension?

Poppy15

A pension scheme I was a member of through a previous employer in 2002 has written to me to say that I can no longer leave the money where it is and I need to withdraw the cash or transfer it to another pension.

I am in the NHS pension scheme and my current NHS employer has advised I can't transfer the pension to them as I only had the option of doing this for the first year of working there and I have been there 4 years.

Would there be any disadvantage to withdrawing the contributions? I only paid into the scheme for a year.

molerat

It depends on the reasons for why you cannot leave it there. How old are you - over 55 ? Is the pension winding up ?

Poppy15

I don't know why I can't leave it there they just said that isn't one of the options. I'm 39 so it can't be to do with my age but they are a large employer; I would rather have left the money in the scheme.

If I wanted to transfer it I would have to open another pension presumably as unable to transfer to NHS one. It would be easier to let them return the payments to me but I wondered if I would be losing out by doing this.

molerat

It is unusual for a pension to be withdrawable after such a long period of time, you are usually given a short window or lose it. The reason makes a difference as to what you will receive. If you are being allowed to simply withdraw it due to leaving employment you would likely only receive your contributions (not the employer's) less tax back. If the pension is closing down you would receive the whole value, 25% tax free and the remainder subject to tax.

Poppy15

I believe it is the first option, to receive my contributions less the tax back. Out of interest I will query with them why I have to leave the scheme.

molerat

Have you been given values for the different options ?

Kynthia

It sound like you had to work for a minimum period of time with your previous emoloyer to qualify for a pension, and as you left after only 1 year you didn't qualify. Where I work it's two years otherwise you get a refund of your contributions or you can transfer both your and your employer's contributions to another scheme. This probably should have been done within a year of you leaving but perhaps you didn't get the letter after you left or didn't act on it.

So as you can no longer transfer it into your current employer's scheme you can either open a private pension/SIPP or accept just your own contributions back. Would you be interested in having a seperate private pension, as if the retirement age of your NHS one is higher than you'd like to retire you could use this private pension to fund the gap between the two?

AnotherJoe

Open a low cost SIPP, transfer the money. Why give up the employers comtributions.