Changing jobs - need pension advice

ragingbull

Hi there,

I'm 40 and have been in a local government final salary pension scheme since 1997 where I contribute 6% as does my employer. I'm now considering new job offer where there is a Norwich Union stakeholder scheme with the employer contributing 5% and me a minimum 2% which I can choose to increase.

I'm unsure as to just how much worse off I may/may not be in the new scheme? Should I look to increase my contributions as much as possible? Also, what happens to the funds in my present scheme? Are these just frozen or is there any way I can transfer them over into the new scheme/look to invest them elsewhere?

Any advice would be much appreciated!

dunstonh

have been in a local government final salary pension scheme since 1997 where I contribute 6% as does my employer.

What you get has no relation to the 6% you pay or any amount documented what the employer says. That only applies to money purchase schemes and not final salary.

there is a Norwich Union stakeholder scheme with the employer contributing 5% and me a minimum 2%

This is a money purchase scheme.

I'm unsure as to just how much worse off I may/may not be in the new scheme?

You need to cost and compare the two schemes.

Should I look to increase my contributions as much as possible?

Its a long term investment and any contribution is going to help your retirement.

Also, what happens to the funds in my present scheme?

You have no funds in the present scheme. You have retained benefits which will provide a pension in retirement based on your years of service and the leaving pensionable salary (increased annually).

is there any way I can transfer them over into the new scheme/look to invest them elsewhere?

Many (most) personal pensions will insist on an IFA signing off on the transfer. An LGPS final salary pension to an insurance company would need some damned good justification for doing so.

jonathon_hart

Hi.

Its hard to quantify how well off/ worse off you will be. The new scheme you are moving into will be affected by the performance of the investment funds you are invested in via it. Also any difference in salary between the jobs could be a factor

Generally Final Salary schemes and particularly Public sector ones such as the Local Government one will provide a better return than a stakeholder.

As to how much you should contribute that will depend on how much you can afford to contribute and the level of income you want to receive in retirement.

If you do change then you LG scheme will be frozen. You can transfer this to your new pension or another pension if you wish, however this is very unlikely to be advantageous to you (generally an IFA will never recommend this type of transfer).

Hope this helps

EdInvestor

Note: "frozen" is a misnomer.The pension will increase in value by inflation or 5% until maturity.This is not the same as getting a 5% return on an invested pension pot! The 5% return is on the pension you will get at retirement which is a known amount based usually on x/60ths or x/80ths of your final salary X no of years service when you leave.

ragingbull

Many thanks for all responses.