Previous employers to SIPP transfer?

gwebbie

Hi


I am not up to speed on pensions so if this is basic then sorry in advance. I have tried to research an answer but cannot find one.


I have a pension from a previous employer that started in 2012 and ended in 2015. It wasn't final salary or anything like that.


When I logon it states that the Retirement pot is at £55k.
When I click on a transfer value to look at moving it into my SIPP I get a quote of £29K.


1. Why is the value so different and why is the transfer value less then what my employer will have put into the fund when employed?


2. I believe I would be better off transferring this amount into my SIPP on the basis that I have 20 years of a larger pot to earn more compound interest V the static pot only growing with inflation, am I correct in my assumptions?


3. What else should I be considering?


Thanks in advance

Linton

It depends on the details of the scheme. It doesnt sound like a simple DC scheme. With a quoted transfer value, retirement pot, and apparently some dependency on inflation it sounds like there must be some sort of guarantee involved. Perhaps you can give us more information - a simple DC scheme would just have the current pension value.

Without further information my guess is that the Retirement pot is what you get at retirement and this increases with inflation. The Transfer Value is what the scheme holds now on your behalf. It will need to invest this money to achieve the Retirement pot when due. That is the uprating that you would have to match were you to transfer out, not just the inflation rise.

Jerben

gwebbie,


1. You need to give more info on what type of pension this is and exactly what the 29k/55k meanings and situation is!
2. Probably not. You have some misconceptions.
3. Nothing until you have a clear picture of no. 1, above.

gwebbie

Thanks for the replies I will check the details tonight and post a reply.

jappiem78

Agree with the others that a bit more detail of your plan would be useful.
Some providers will charge you a hefty exit charge if you 'leave early' although many providers have eradicated exit fees altogether.

Looking at the length of your employment and assuming a standard pension scheme with average employer contributions, £52k sounds a lot of pension money in just a couple of years. £29k sounds more realistic.

Your new SIPP provider should be able to help you too. As always, you can always ask a financial adviser to look into this if you're still unsure.

gwebbie

Hi Thanks for replies so far.


So there are no additional benefits in this scheme now that I have left.


The documentation says that the £55k is the amount in the pot that I will receive at retirement which is linked to inflation to a max of 2.5%.


So I think my original question stands do I leave the £55k alone or add the £29k transfer to my SIPP?


If I have calculated correctly if the 55k grows at 1.5% a year not guaranteed and my SIPP grows at 7% per year which I believe is the reasonable assumption used. Then the values will be equal after 11 years therefore leaving an additional 8 plus years for additional growth???


Any further guidance?

xylophone

You worked for Morrisons?

https://www.mymorrisonsretirementsaver.co.uk/ive-left/ive-left-the-retirement-saver/what-happens-to-my-benefits-remaining-in-the-retirement-saver

gwebbie

Yes although I am little scared that you worked that out! lol


The link you provided though just confirms my choices I was after a view of the best way forward.

Linton

gwebbie wrote: »

Yes although I am little scared that you worked that out! lol


The link you provided though just confirms my choices I was after a view of the best way forward.

There was discussion on this forum when the Morrisons scheme first started. See here. The conclusion was that people leaving the scheme should transfer out because the the capped CPI growth was extremely low.

xylophone

The link you provided though just confirms my choices I was after a view of the best way forward.

I was simply trying to establish the type of pension that you had ( it seemed from what you said to be a "cash balance scheme" and I seemed to remember discussion of Morrisons in this connection back in 2012).

Is the £55,000 the maximum that would be available to you at age 65 (assuming revaluation at the maximum 2.5%) if you left your benefits in the scheme?

https://www.mymorrisonsretirementsaver.co.uk/en/ive-left/ive-left-the-retirement-saver/what-happens-to-my-benefits-remaining-in-the-retirement-saver

gwebbie

xylophone wrote: »

Is the £55,000 the maximum that would be available to you at age 65 (assuming revaluation at the maximum 2.5%) if you left your benefits in the scheme?

That's my understanding yes, but it is unlikely to grow at 2.5% in fact last year no adjustment was made and in the previous year just less than 1%.