Combining small pensions

kissanpoika

I'm 48 and trying to work out where I stand in various pension matters. My UK workplace pensions are small because I have lived and worked overseas for about 11 years, I was an entrepreneur for seven years in the UK, two of my UK jobs totalling about five years had no pension included which leaves three positions that had something, with two of them very short term roles.

1. A final salary scheme I paid into for over two years. The current value of the deferred benefits is £1915. As I understand it, that isn't the amount in the pot but the amount I would be paid to me on an annual basis at today's rates, and this will hopefully increase in line with inflation.

2. A final salary scheme where I only paid in for about four months before I moved overseas the first time. This one doesn't show me a deferred benefits number like the above but it does say "Scale Pension at Date of Leaving is £94.13" which was in 2002. They've said I can "request a benefit statement, which provides you with details of your accrued pension at the current date and your estimated pension at your Normal Retirement Age". Not sure if it's worth it?

3. A 'stakeholder plan" where I paid in for about three months before I left to set up my own business. The "fund value" and "transfer value" there are about £1870.

From what I've read, it seems the general recommendation is to leave final salary schemes alone but I've also seen something about fees eating up a portion when you go to claim the pension, which with small ones like these would surely be even worse. Not too sure what those fees are though, or if I've misunderstood.

Would it be worth trying to combine these to reduce on those final fees? Or have I missed the point and they're better off left alone? Since final salary schemes seem to be so wanted, is there a chance one of them might accept a transfer in of the value from the other two or is that not allowed?

Dazed_and_C0nfused

1.  There is no "pot".  Think of it as deferred salary, payable from the schemes pension age for as long as you live.

2.  If you don't want it plenty of others will!

Final salary pensions don't have any fees (not from your perspective anyway).  You get what the scheme rules say.

kissanpoika

Sorry, badly worded on my part. I meant not sure if it's worth requesting the benefit statement at this point since retirement is still a way into the distance.

And thank you, good to know that about the final salary schemes. Very helpful.

Mark_d

Final salary pensions should be left alone.  They provide a guaranteed income and eat up very little of the lifetime allowance (if it is re-introduced).  There are no fees that you need to pay for these final salary pensions.

For money-purchase pension schemes, there are benefits in combining these.  There will be less fees to pay and it's also easier to manage the choice of investments

Albermarle

In the first scheme you accrued an income of £1915 pa. Like most people you are probably underestimating its real value. Depending on a number of factors, to purchase such a pension could cost over £50k.
Overall though your pension position is pretty weak, so you are right to be looking at it

kissanpoika

Albermarle said:

In the first scheme you accrued an income of £1915 pa. Like most people you are probably underestimating its real value. Depending on a number of factors, to purchase such a pension could cost over £50k.
Overall though your pension position is pretty weak, so you are right to be looking at it

Thank you. My overall pension will also have my overseas one which, if I continue contributing at my current rate, will be worth about €1700/month when I retire (I'm in the eurozone so thinking in that currency). Plus I'm shortly going to pay missing years of NIC contributions which, along with a few more future years, should mean I qualify for the full UK national pension which is currently about €1100/month.

I have some other plans that may not come to fruition but, at the least, I think I'm set to hit around €3000/month at today's rate. That seems a reasonable sum, I thought? Although, who can say for sure if the national pension will still pay anything like that by the time I retire. Even without it though, I should have enough to get by on at least but the above pensions I posted about are part of that calculation which is why I didn't want to see them disappear on fees.

Thankfully, my worries have been allayed by the kind posters like yourself. It seems like it's only number 3 where there might be a risk of that but I have nowhere that I can combine that since it's the only scheme I have like that, unless one of the final salary schemes would let me transfer it in.

LHW99

I have some other plans that may not come to fruition but, at the least, I think I'm set to hit around €3000/month at today's rate. That seems a reasonable sum, I thought?

There are people here who would think that was fine, some who would think it incredibly generous and some who would find it difficult to manage living on.

The important thing is what do you need? Have you worked out your normal monthly expenditure, taken off eg mortgage, work costs, added any extra for expensive new hobbies....... That will tell you if the sum is "reasonable" for you.

squirrelpie

kissanpoika said:

Thankfully, my worries have been allayed by the kind posters like yourself. It seems like it's only number 3 where there might be a risk of that but I have nowhere that I can combine that since it's the only scheme I have like that, unless one of the final salary schemes would let me transfer it in.

You could open a new pension (SIPP or otherwise) to transfer number 3 into but it might not be worthwhile unless the fees are very high or until you have some other reason to open a new pension. Just keep track of number 3 and its fees so you're aware of it, and they're aware of you.