Pension scheme with very little money: what to do with it?

Spir4

Hello,
My wife has a very small pension fund (about £130) from a previous employer. Since our third child she's decided to stop working for a while and become a house mum again. The pension provider charges £1.5 a month and 0.3% a year to maintain the fund. The thing is, with so little in it, that money is going to be gone in a matter of years. I've contacted the provider and they said there's only two options: leave the money, or transfer it to another fund. My wife doesn't have another pension fund.
So is there really nothing she can do? Can it perhaps be transfered to my pension fund?
It would be a shame to let the pension provider take the money month by month. I know it's not much, but still.

Thanks.

zemarcopolo

I would have thought there is the third option; continue to contribute to the fund. 
How old is your wife? If near 55, she can take it as lumpsum. 

Spir4

zemarcopolo said:

I would have thought there is the third option; continue to contribute to the fund. 
How old is your wife? If near 55, she can take it as lumpsum. 

Oh yeah sorry I should have mentioned that. No she's 37, so that won't be an option.
She won't earn any money anymore for a while, so it seems silly to put my money into it whilst I could just put more money into my own fund, which has better terms anyway.

Marcon

Spir4 said:

Hello,
My wife has a very small pension fund (about £130) from a previous employer. Since our third child she's decided to stop working for a while and become a house mum again. The pension provider charges £1.5 a month and 0.3% a year to maintain the fund. The thing is, with so little in it, that money is going to be gone in a matter of years. I've contacted the provider and they said there's only two options: leave the money, or transfer it to another fund. My wife doesn't have another pension fund.
So is there really nothing she can do? Can it perhaps be transfered to my pension fund?
It would be a shame to let the pension provider take the money month by month. I know it's not much, but still.

Thanks.

It can't be transferred to you, but it can be transferred to another fund which doesn't have a monthly charge. The obvious contender is for her to set up a pension with NEST (she doesn't need to be in employment and/or contribute to NEST unless she wishes to do so).

There is no 'contribution charge' (normally a hefty 1.8% on 'new money') if she transfers from another pension scheme into NEST, and the annual charges are 0.3%. See https://www.nestpensions.org.uk/schemeweb/nest/my-nest-pension/transfer-your-pension-pots.html

Spir4

Marcon said:

It can't be transferred to you, but it can be transferred to another fund which doesn't have a monthly charge. The obvious contender is for her to set up a pension with NEST (she doesn't need to be in employment and/or contribute to NEST unless she wishes to do so).
There is no 'contribution charge' (normally a hefty 1.8% on 'new money') if she transfers from another pension scheme into NEST, and the annual charges are 0.3%. See https://www.nestpensions.org.uk/schemeweb/nest/my-nest-pension/transfer-your-pension-pots.html

Thanks for that, that looks interesting. I assume there are no pension providers that are completely free?

Marcon

Spir4 said:

Marcon said:

It can't be transferred to you, but it can be transferred to another fund which doesn't have a monthly charge. The obvious contender is for her to set up a pension with NEST (she doesn't need to be in employment and/or contribute to NEST unless she wishes to do so).
There is no 'contribution charge' (normally a hefty 1.8% on 'new money') if she transfers from another pension scheme into NEST, and the annual charges are 0.3%. See https://www.nestpensions.org.uk/schemeweb/nest/my-nest-pension/transfer-your-pension-pots.html

Thanks for that, that looks interesting. I assume there are no pension providers that are completely free?

You assume correctly!

AlanP_2

Spir4 said:

zemarcopolo said:

I would have thought there is the third option; continue to contribute to the fund. 
How old is your wife? If near 55, she can take it as lumpsum. 

Oh yeah sorry I should have mentioned that. No she's 37, so that won't be an option.
She won't earn any money anymore for a while, so it seems silly to put my money into it whilst I could just put more money into my own fund, which has better terms anyway.

Yours might have better terms but it makes sense to ensure both of you have pension arrangements large enough to provide an income in retirment that uses both personal allowances.

£15k each is better than a £25/5K split.

Alos, whilst not working and earning your wife would still get 25% tax relief on a gross £3600 per year (£2880 nett) pension contribution. Are your terms good enough to offset a 25% return on Day One?

p00hsticks

Spir4 said:

Since our third child she's decided to stop working for a while and become a house mum again.

As an aside - ensure that the Child Benefit is in her name not yours, in orider for her to gain the NI credits to improve her State Pension forecast. Even if you are a high earner and so not eligible for/have to pay back the money, she can still claim just the credits.

Spir4

AlanP_2 said:

Yours might have better terms but it makes sense to ensure both of you have pension arrangements large enough to provide an income in retirment that uses both personal allowances.
£15k each is better than a £25/5K split.
Alos, whilst not working and earning your wife would still get 25% tax relief on a gross £3600 per year (£2880 nett) pension contribution. Are your terms good enough to offset a 25% return on Day One?

Yeah you make a valid point. I'm not sure if my terms are that good, I'll look into it!

Spir4

p00hsticks said:

As an aside - ensure that the Child Benefit is in her name not yours, in orider for her to gain the NI credits to improve her State Pension forecast. Even if you are a high earner and so not eligible for/have to pay back the money, she can still claim just the credits.

Yes we've arranged that, but thanks!

Marcon

AlanP_2 said:

Spir4 said:

zemarcopolo said:

I would have thought there is the third option; continue to contribute to the fund. 
How old is your wife? If near 55, she can take it as lumpsum. 

Oh yeah sorry I should have mentioned that. No she's 37, so that won't be an option.
She won't earn any money anymore for a while, so it seems silly to put my money into it whilst I could just put more money into my own fund, which has better terms anyway.

Yours might have better terms but it makes sense to ensure both of you have pension arrangements large enough to provide an income in retirment that uses both personal allowances.

£15k each is better than a £25/5K split.

Alos, whilst not working and earning your wife would still get 25% tax relief on a gross £3600 per year (£2880 nett) pension contribution. Are your terms good enough to offset a 25% return on Day One?

If you wife is going to put cash into her pension as a lump sum (assuming the pair of you have £2,880 to spare...), do it before transferring to NEST - that way you avoid their 1.8% contribution charge on new money. Before considering doing that, check first if her current scheme imposes any sort of 'exit charge' - if they do, it could rule out any saving.