Should son invest or take pension refund?

cathyk

My son has just finished a uni placement year with the CService. He has received a letter saying he is not entitled to a pension because he has not worked for them for 2yrs and given the option to (a) take his contributions back as cash (£700) or (b) transfer the whole pot (£2400) to another scheme. Being a student he doesn’t have another scheme. Can he open one, do the transfer but then not pay any more into that scheme until he graduates and (hopefully) gets a job? Googling hasn’t helped and he is too young to get free advice from Pensionwise. I thought he would just grab the cash but fell off my chair when he said he would like to invest it if he can!

Albermarle

He can open a new pension online . Takes a few minutes only . Then ask the new pension to transfer in the CS one . No need to make any new contributions until he can afford it.
Otherwise he is throwing away £1700, so he is making a good decision to keep it .

Edi81

Your son obviously understands the impact of compounding! 

If he doesn’t need the £700 for living expenses he should definitely invest it. 

threlkeld53

Absolutely get him to open a sipp and transfer the money into it.
It's not so much the amount of money at this stage. It's about the mindset. For someone of his age to think about investing and actually do something about it, will put him in good stead for the future.

Silvertabby

Edi81 said:

Your son obviously understands the impact of compounding! 

If he doesn’t need the £700 for living expenses he should definitely invest it. 

Nothing to do with compounding.  The refund would just be his own contributions less tax, whereas the transfer value is based on the pension he would have accrued had it not been for the minimum 2 years vesting period.

Dazed_and_C0nfused

Edi81 said:

Your son obviously understands the impact of compounding! 

If he doesn’t need the £700 for living expenses he should definitely invest it. 

With a mum actively in the picture with his finances I would say even if he does need the £700 for living expenses he shouldn't take it, the £2,400 in his pension is worth immeasurably more.

Marcon

cathyk said:

Googling hasn’t helped and he is too young to get free advice from Pensionwise. 

But anyone of any age can get free guidance and information from https://www.moneyhelper.org.uk/en/pensions-and-retirement

OldBeanz

Open Vanguard Pension. Apply to transfer. Buy him a book on investing. Wait for money to come through. Job done.

xylophone

He might consider opening a simple stakeholder with Standard Life and then asking SL to arrange the transfer in of the CS pension.

https://www.standardlife.co.uk/pensions/personal-pension/stakeholder

p00hsticks

xylophone said:

He might consider opening a simple stakeholder with Standard Life and then asking SL to arrange the transfer in of the CS pension.

https://www.standardlife.co.uk/pensions/personal-pension/stakeholder

I did the same when I was in a similar position a few years ago, but used Aviva rather than Standard Life

https://www.aviva.co.uk/retirement/aviva-pension/

Albermarle

p00hsticks said:

xylophone said:

He might consider opening a simple stakeholder with Standard Life and then asking SL to arrange the transfer in of the CS pension.

https://www.standardlife.co.uk/pensions/personal-pension/stakeholder

I did the same when I was in a similar position a few years ago, but used Aviva rather than Standard Life

https://www.aviva.co.uk/retirement/aviva-pension/

With Aviva , I do not think you can  open a new pension directly anymore, you have to go through a financial advisor.

The OP could also look at Nutmeg ; Wealthify or Legal and General SIPP . All simple options.