DB pension finishing.

maxie014

Ive had a final salary pension and have about 30 years in it,just been told its ending and being replaced with a dc pension,9% company contribution and a max 9% from me.
I also have been paying avc and will have about 10k by april when it closes.I was thinking of stopping these as the fees are 1%.
What i was wondering is whether id be better paying the 9% or opening a sipp with a fund with less charges,we havent been told what our options are yet.
I hope to retire in 5-7 years.
Also my wife has a sipp set up in vanguard40,she will never be a tax payer in retirement,would i be better paying more into hers rather than mine?She is 4 years younger than me so would maybe not retire at the same time.

Linton

The company probably wont pay into your SIPP. You would be very foolish to turn down the company's 9%. That is likely to far exceed the effect of any charges.


On charges - the 1% for your AVC or new pension would probably include the platform fee. If you go for a SIPP it is an added extra.



You could pay into your wife's SIPP but again turning down the company's 9% seems a bad idea. Also her being younger would mean that access to the pension would be 4 years later. This could be a factor if you are retiring early. Could you pay into both? Are you a higher rate tax payer?

ColdIron

Will your company pay their 9% into a SIPP of your choice? Many won't due to the high admin. That would be a lot of free money to throw away

maxie014

Sorry to confuse things i was meaning to take the companies 9%, but maybe not match it with my own 9%,put it elsewhere.
Just a basic rate taxpayer.

Paul_Herring

Sorry to confuse things i was meaning to take the companies 9%, but maybe not match it with my own 9%

Just to be clear - you'd get that 9% regardless of what you contribute?

Specifically it's not they'll 'match your contribution up to 9%' type of thing, which is more usual.

enthusiasticsaver

Are you sure that they will pay the 9% even if you don't match it? My husband had the same incentive offered to him when his pension changed from DB to DC albeit he had to pay 10% per annum and his company paid 20% reducing by 1% a year over the next 10 years.

El_Torro

maxie014 wrote: »

Sorry to confuse things i was meaning to take the companies 9%, but maybe not match it with my own 9%,put it elsewhere.
Just a basic rate taxpayer.

If your pension contribution will be paid by salary sacrifice you're still better off paying into your company scheme, as you save on National Insurance contributions that way.


If you're concerned about the high admin fee you can always transfer some of the value to a SIPP periodically. Check that they don't charge a fee for this, in my experience most don't.

Albermarle

Normally a workplace DC scheme will have lower ( or no higher ) charges than you can get yourself in a Sipp/personal pension. This is because the employer can negotiate a low charging regime with the provider.
So you need to check the charges for the proposed new DC scheme as the current avc scheme is different . If they are less than 1% ( including all charges ) then you will struggle to get lower charges yourself as an individual.

maxie014

Thanks for the replies i have a meeting next month to find out more.