Pension Transfer Help

liam602

Afternoon,

I have an old workplace DC Pension which has closed to further accrual currently at around the £2100 mark & is only increasing with inflation to a max of 2.5% (my employer moved to another provider not long after i started which is why its only a small amount in there)

I thought about transferring it into my current pension plan that my workplace is using so chased my old one up to find some details on transferring. They said my old plan has no safeguarding benefits, no charges to transfer but they will only give me a transfer value of £1215, so a loss of £885! Does this sound right or am i missing something ? I know nobody can really give advice on someone else's pension, but am i right in thinking if i take the loss it should recover that in my new pension overtime. I'm 30 if that matters so a fair bit of time to go yet. Or would you just leave it where it is. 

Thank you

Albermarle

Something seems not right with the info .

For example a DC pension is just a pot of money, that will normally move up or down with the financial markets. It would not just increase in value with inflation/2.5%, regardless of market conditions. Possibly this was a forecast/projection for the future. that you have misunderstood for the real value ?

but they will only give me a transfer value of £1215, so a loss of £885! Does this sound right or am i missing something ? I

No it does not sound right. When did you last check the actual value of the pot ? 

xylophone

I have an old workplace DC Pension which has closed to further accrual currently at around the £2100 mark & is only increasing with inflation to a max of 2.5%

Are you sure that this is a DC pension?

liam602

Albermarle said:

Something seems not right with the info .

For example a DC pension is just a pot of money, that will normally move up or down with the financial markets. It would not just increase in value with inflation/2.5%, regardless of market conditions. Possibly this was a forecast/projection for the future. that you have misunderstood for the real value ?

but they will only give me a transfer value of £1215, so a loss of £885! Does this sound right or am i missing something ? I

No it does not sound right. When did you last check the actual value of the pot ? 

I got an up to date value of the pot just last week, and the transfer value was about 2 weeks before that. Mercer is looking after it & i must say their customer service is shocking & have lead me in circles for the past 2 months. I requested the value at the beginning of May & they have only just sent it out. Whenever i ring them their operators aren't very helpful either, after waiting 1.5 hours to get through, which is frustrating

I assumed it was a DC pension going by what i read online & how the scheme worked before it closed. Maybe it's in fact a DB pension then, i have requested this information & they told me everything to do with my plan would be sent out but i'm still waiting 8 weeks later, i'll have to try find out for certain which it is. If its DB is it better to leave it as it is then, even with only a small amount in ? The difference in the 2 values seems odd to me.

Notepad_Phil

liam602 said:

Albermarle said:

Something seems not right with the info .

For example a DC pension is just a pot of money, that will normally move up or down with the financial markets. It would not just increase in value with inflation/2.5%, regardless of market conditions. Possibly this was a forecast/projection for the future. that you have misunderstood for the real value ?

but they will only give me a transfer value of £1215, so a loss of £885! Does this sound right or am i missing something ? I

No it does not sound right. When did you last check the actual value of the pot ? 

... If its DB is it better to leave it as it is then, even with only a small amount in ? The difference in the 2 values seems odd to me.

Is there any possibility that the 'pot' of £2100 is in fact some kind of pensionable salary that your pension is currently aiming to pay out, or is there any sign of a fund name that the £2100 is invested in which would make it more likely to be a straight forward DC scheme?

If it turns out it is a DB pension then personally I'd need a lot of persuasion to consider transferring it out if the transfer value really is only £1215, but it's not impossible and would heavily depend on what the DB deferred pensionable salary was.

xylophone

I assumed it was a DC pension going by what i read online & how the scheme worked before it closed.

Is the old scheme guide on line? If so, do you have a link?

Are you still working for the same employer?

Mothman

Some old style DC pensions had high transfer penalties especially if the OP holds mainly high charging initial units rather than accumulation units. 

Marcon

Mothman said:

Some old style DC pensions had high transfer penalties especially if the OP holds mainly high charging initial units rather than accumulation units. 

....and there could be a market value adjustment.

liam602 said:

Afternoon,

I have an old workplace DC Pension which has closed to further accrual currently at around the £2100 mark & is only increasing with inflation to a max of 2.5% (my employer moved to another provider not long after i started which is why its only a small amount in there)

I thought about transferring it into my current pension plan that my workplace is using so chased my old one up to find some details on transferring. They said my old plan has no safeguarding benefits, no charges to transfer but they will only give me a transfer value of £1215, so a loss of £885! Does this sound right or am i missing something ? I know nobody can really give advice on someone else's pension, but am i right in thinking if i take the loss it should recover that in my new pension overtime. I'm 30 if that matters so a fair bit of time to go yet. Or would you just leave it where it is. 

Thank you

Is it possible that the £2,100 is the projected pension payable when you reach the scheme's normal retirement age of 65 (or whatever applies to the scheme in question), and the £1,215 is simply the associated transfer value?

OP, you need to find out much more about the scheme before deciding whether or not to transfer.

xylophone

Some old style DC pensions 

It is not clear that this is a DC pension - given that the OP refers to

increasing with inflation to a max of 2.5% 

it looks more like a deferred DB pension.

https://www.barnett-waddingham.co.uk/comment-insight/blog/revaluation-for-early-leavers/

Pensions Act  2008	Post 6 April 2009 accrual	Allowed schemes to reduce the revaluation percentage from RPI capped at 5% a year (as above) to RPI capped at 2.5% for pensions accrued after 6 April 2009.
Pensions Act 2011	6 April 2011	Consumer Prices Index (CPI) replaced RPI as the basis for the minimum statutory revaluation.  Rules for the pension scheme will determine whether this change was applied to benefits.