Redundancy & Multiple Pensions

Nildesperandum

Hi folks

I wonder if anyone has any general advice on my position. I plan on calling the pension provider but thought it might be useful just to get an outline idea of where I stand first. I am 52 & have recently been made redundant. I have organised to retrain, but in a totally different sector with a different pension provider to the one I have had up to now, so that fund is now closed in terms of any further contributions.

The situation with my original fund is that until recently is was a defined benefit (career average) scheme, but the provider closed that & replaced it with a contribution scheme a couple of years ago. The provider sends separate statements for each part. Whilst the main part will obviously be a pension for me, the smaller one only has around £15K in it & seems relatively useless as a pension.

The provider has a clause that says if I'm made redundant post-50 & am not intending to resume contributions, I can take the pension (at a reduced amount of course) early. Hence the crux of my query. Would I have to retire from the whole scheme or can I just 'retire' from the small one to take the lump sum & leave the big one where it is until I fully retire?

Hope that makes sense!

ermine

You'll have to ask the pension provider for their specific Ts and Cs. Sounds like your protected pension age of 50 applies to the DB scheme, not the DC scheme started a couple of years ago.

You may be able to transfer the DC portion to a SIPP and take that from 55. I'd be most surprised if a DC scheme started two years ago had a pension age of 50 since the law was earliest at 55 when the scheme was started. But your pension provider is the final arbiter, so go to them.

Nildesperandum

Thanks for the reply. The contributory one came about because the provider claimed that the DC one was no longer viable, so in effect all employees on the scheme (known as SHPS; the Social Housing Pension Scheme run by the Pensions Trust) were forced to stop one and start the other. Would that make any difference?

ermine

known as SHPS; the Social Housing Pension Scheme run by the Pensions Trust

In that case the details in the membership guide available from

http://www.tpt.org.uk/schemes/shps-dc/resource-library

explicitly say for the DC part under Options available for retirement

You can take the benefits from your Scheme at any time after the age of 55;

which is different from the case under the FAQ for the DB part

http://www.tpt.org.uk/schemes/shps-db/FAQs

Can my pension be paid early? (SHPS DB Scheme) Yes. You may arrange for your pension to be paid at any time after you have reached age 55. However if you joined the Scheme before April 2006, you will retain the right to retire from age 50 but you must leave the employment to which the benefits relate. If you are a deferred member who joined the scheme before April 2006 and you are no longer employed by the same organisation, you may take your benefits anytime from age 50.

If your pension starts before Normal Pension Age (NPA), it will be reduced to allow for early payment.

so it appears that you have the option to take your DB pension early if you were working for them before 2006 but you don't have the option to take the DC pension before 55. And your DB pension will be actuarially reduced should you draw it earlier than (it seems to me) 60.

So it would appear that what you are planning do do cannot be done within the rules of the scheme as it stands, but it would be prudent to ask this question of the pension provider themselves as only they have the definitive answer. But from the published material I would suspect the answer is a no, unfortunately.

Nildesperandum

Thank you ever so much for taking the time to give such a detailed answer; it's very useful information & good to know before I call them.

Much appreciated.

kidmugsy

What you could consider is transferring the DC portion to (say) a SIPP, with a view to taking money out after age 55, as a way of helping you to afford to defer taking the DB pension until (say) age 60.

But maybe the scheme itself offers you the flexibility of drawing on the DC section after age 55 while leaving the DB section untouched. That would be worth checking.

Nildesperandum

I'd never even heard of SIPPs before I came here, but have read a little & will certainly see if that's an option as I think, if practical, would open up the possibility of what I want to do.

Thanks for your reply.

dunstonh

There are three types of pension for the mainstream retail market.
Stakeholder pensions - niche option nowadays mainly aimed at very small contributions. Not cost effective for £20k+
Personal pensions - tend to offer most of the investment options in a stakeholder pension but also much wider investment ranges. Can be very low cost (0.4% bottom line achievable with under £100k values).
SIPPS - advanced option for experienced investors. Whole of market investment choice. Generically, the most expensive option but in some scenarios can be the cheapest.

SHP and PPP get 100% FSCS protection with no upper limit. SIPPS get £50,000 FSCS protection on the product and individual FSCS protection on the investments if the investment has FSCS protection.