Very short final salary pension

bigk12

I have a final salary pension from my first job back in 1999. My salary when I left was a hefty £17,500 and I was only in the job for about 2 years. I've requested a statement from the plan as I want to see if it's worth transferring into my main pension pot. My understanding is that final salary pensions are usually worth hanging on to, but I think in this case it's worth moving. Just wondering if I could get a sanity check to see if I'm not about to make an awful mistake.
I'm now 45 years old, so I've got a good 20 or so years to go and I'm on an ethical fund which seems to be doing rather well for itself.
According to my statement the old pension is currently worth just over £1000 a year, so I think that means it would be worth about £30,000 as a lump sum transfer.
According to the pension calculator with my provider a lump sum of £30,000 is going to be worth about £2000 in todays money on retirement.
So on the face of it I'd say it's worth moving it, especially as it means all my pension funds will be in one place.
Any thoughts?

atush

First of all, do check with them as it (ie the salary base) will most likely have been increasing with inflation over the years so likely to be far higher than 17.5K.  Second, call them and ask for a CETV- this is the amount it would be worth if transferred.  if over 30K it will mean you have to pay for advice and it wont be cheap as transferring out of a DB is high risk for the adviser.  Third, ask for how the pension will increase during retirement (again there should be some inflation adjusting each year) and if there are guarantee periods (ie if you die early on it might still pay out for 5 years) and any spousal/dependent pension.

Then decide, but i would think of it as a guaranteed underpin to your other pension arrangements and keep it in place.

DT2001

If it is over £30k I think you’ll need a report to recommend or not if you should transfer. Costs are relatively high because of the indemnity insurance needed and there are fewer firms carrying on this type of business. You’ll pay irrespective of their decision. I assume from the information you’ve given the pension is increasing in deferment and in payment?
Personally if this is the case I’d leave it however you need to find out the exact CeTV and costs to see how much could be transferred.

Albermarle

Its always a difficult decision but when the transfer amounts are relatively modest but at the same time over the £30K limit , then the cost and hassle of transferring probably tips the balance against it .

bigk12

Thanks all. I've requested the CETV. I'm pretty sure it'll be just over £30k. I think the suggestion of keeping hold of it so there's a guarantee of some money coming in is a good one.

Albermarle

According to my statement the old pension is currently worth just over £1000 a year,

If this was the figure you were given when you left the employer , it will almost certainly have increased with inflation in the meantime. As well as the CETV you should get a copy of the scheme rules , if you do not have them . This will say exactly how it works with inflation, when you can take it etc 

MallyGirl

bigk12 said:

Thanks all. I've requested the CETV. I'm pretty sure it'll be just over £30k. I think the suggestion of keeping hold of it so there's a guarantee of some money coming in is a good one.

You might be surprised when the figure comes back. I have an old DB pension from my first job. It will pay me £1800 a year - the transfer value, for me at 53, is £108,000.

Brynsam

bigk12 said:

So on the face of it I'd say it's worth moving it, especially as it means all my pension funds will be in one place.
Any thoughts?

That's not a good reason to transfer - especially not from a DB scheme. Remember that when your CETV arrives, you only have 3 months in which to get advice and let the DB scheme know if you wish to transfer. Your IFA will need every day of that period, so make sure you have one lined up and ready to go if you're serious about considering transferring out.