Contracted out of SERPS-v-final salary pension scheme

wifey43

Hi,

I'm puzzling over a pension-related issue (and I'm sure I'm not alone!). Many years ago, I contracted out of SERPS and opened an Allied Dunbar pension plan - now Zurich. It's been ticking along uninspiringly for 10+ years.

My new job means that I can join the Local Government Pension Scheme/final salary scheme. I've transferred one of my small paid-up pensions into the scheme and I'm now wondering whether or not to transfer the Zurich one into the LGPS or not. The catch with it is that I work on an "as and when" basis so I won't know what my annual salary has been until the end of each year - unless, of course, I change jobs within the Council.

I'm 43. I've got a paid-up policy with Standard Life through my old employers that I'm leaving where it is.

As I see it, there are a couple of pros and cons to leaving the SERPS contributions where they are:

Pros

- Can retire at 60 (specified age when taking out policy)
- Final year salary irrelevant

Cons

- Zurich poor performing(?)
- LGPS more secure?

I could, of course, review my decision to remain contracted out all together ... but who knows what future governments will do to the State Second Pensions between now and 2024 ...

We're not talking big sums of money: the non-protected rights value is about £4,500 and the protected rights value is about £14,000.

I don't have a financial adviser - but I thought I'd better get one? Anybody know (roughly) how much an IFA would charge for advice when there's no commission-related sale involved?

Any advice greatly appreciated!! I've got to make my decision by 29th February and I wouldn't be able to transfer the benefits after that date if I don't go ahead at this stage.

Wifey43

dunstonh

I'm puzzling over a pension-related issue (and I'm sure I'm not alone!). Many years ago, I contracted out of SERPS and opened an Allied Dunbar pension plan - now Zurich. It's been ticking along uninspiringly for 10+ years.

AD used unit linked funds and had a range available. They may not be the cheapest but there is no reason for the investments with them to be unispiring.

I'm now wondering whether or not to transfer the Zurich one into the LGPS or not.

You will almost certainly find you wont be able to. Final salary schemes tend not to accept protected rights.

Pros

- Can retire at 60 (specified age when taking out policy)
- Final year salary irrelevant

Its age 55 (from 2010) and you can take a 25% tax free lump sum.

Cons

- Zurich poor performing(?)
- LGPS more secure?

Zurich are not poor performing. They are not great but not bad. You are probably just invested in a default fund or dont fully understand how investments work.

I don't have a financial adviser - but I thought I'd better get one? Anybody know (roughly) how much an IFA would charge for advice when there's no commission-related sale involved?

Probably around £500 for a transaction like this with a recommendation report. Some may not be that interested and may price themselves out of contention. Others may just tell you what to do without going through the full works as part of the free initial consultation.

purch

Zurich are not poor performing.

Quite right (as usual )

Just taking the bog standard Managed Fund (which is usually the default Fund)

Zurich Managed 2EP is 1st out of 64 funds over 10 yrs
Zurich Managed 1EP is 3rd out of 64 funds over 10 yrs
Zurich Managed 1AP is 4th out of 64 funds over 10 yrs

I think the AP fund is the 'olde' Allied Crowbar one, but ranked 4th certainly isn't 'poor' performance within it's sector

wifey43

dunstonh wrote: »

AD used unit linked funds and had a range available. They may not be the cheapest but there is no reason for the investments with them to be unispiring.

You will almost certainly find you wont be able to. Final salary schemes tend not to accept protected rights.

I've double checked with the LGPS scheme that I'm a member of and they *will* accept protected rights. However, I can see that Zurich are pretty sound so I think I'll just leave things are they are.

Thanks for the information/advice!