Ericsson Pension

jack*tigger

Hi,

I was in the Ericsson Company pension scheme for 11 years until I left the company in 2000. They have recently sent out a letter stating that the Cash Equivalent Transfer Value will be reduced unless I transfer my pension out before September. If I do transfer it out then they will pay 110% of the CETV into another pension scheme.

I have talked to my bank (HSBC) and they have said they will need to analyse the pension to see if it is best to leave it alone or to transfer it to a new pension scheme. They said that this would cost me either £1300 in fees - payable now - or £3000 - paid from the commision from the new pension.

Can anyone tell me where to get cheaper pension advice? Or would I be better off transfering the pension and doing it myself?

Thanks for any advice given,

Sandie

dunstonh

I'm surprised the HSBC would look at it. I didnt think the bancassurers got involved with occupational pension transfers.

Occupational pension transfers are high risk business from an advice point of view due to changing goal posts on what is right and what is wrong. In addition, the transfer analysis is a little time consuming and costs the IFA money.

£1300 seems a little high but then thats a bank for you. They always charge more. £800 would be closer to the mark.

As for transferring it yourself, do you know if its better to transfer it or not? Will the receiving scheme accept transfers in from you without advice being obtained?

jack*tigger

Well this is the problem. I don't really know if it is best. Ericsson is a bit unstable as a company - but then aren't a lot of companies ??? And who's to say that a safe pension today will still be there tomorrow.
And of course I haven't a clue where to transfer it to - a stakeholder pension I would presume but which one.
I was just wondeing if I was being ripped of by the bank - lots or just a little bit.

Regards,

Sandie

EdInvestor

Hi Jack

Want to try posting a few details about the scheme? Final salary or money purchase? Approx ballpark amount of the transfer value? Benefits offered under the current scheme? It might at least offer some clues about whether it's worth paying for the advice or not.

Occupational pension transfers are high risk business from an advice point of view due to changing goal posts on what is right and what is wrong.

You get this situation sometimes where system seizes up and the IFAs have no clue what to do and thus end up refusing to advise.No choice but to find out as much as you can, take potluck and DIY.

jack*tigger

Well its a final salary scheme. The transfer value is about £45,000. The scheme itself offers death benifits of a spouses pension - 50% of members pension - and childrens pension - 60% of members pension. As far as I can tell these are payable for 5 years.

What else would you need to know?

Regards,

Sandie

EdInvestor

If you leave it there, what pension will you get at your "normal retirement date"?

Then you need to take the 45k and try to project how much how much it could grow over the years compounded to the NRD, at say a rate of 7%. Then look at annuity rates to see what that total translates into as an annual pension.

If you were contracted out of SERPS that may be an added complication.

The Actuarial Profession is just in the process of drawing up new guidelines on Early Leavers' transfer values, recognising that they have been much too low in the past.
This would benefit you, BUT the complication is that the new improved transfer value can still be reduced if the scheme is underfunded and the members left behind would be disadvantaged.

The timing may be interesting however. :cool: What's the urgency? Can you find out of the scheme is underfunded in any serious way (has a deficit)?

If it isn't, it may benefit you to wait until the new guidelines come in.

These people may be worth calling:
http://www.opas.org.uk/

Debt_Free_Chick

dunstonh wrote:

I'm surprised the HSBC would look at it. I didnt think the bancassurers got involved with occupational pension transfers.

Perhaps they're going to pass it on to their Actuarial & Benefit Consultants division?