Pensions Act 2006?? very confused

AliceBanned

I am getting more and more confused, the more info I try to get about pensions!!

I spoke to Scottish Widows today - I have a pension fund with them which I want to transfer. My previous employer's contract stated that employer contributions would be lost if leaving before two years' service. I left after 8 months and now Scottish widows tell me that there was a new bill passed by the government which prevented employers from enforcing this? She also said my employers rules were probably just not updated, and they have quoted me a transfer which includes the employer contributions, and have told me over the phone that there is no fee for transferring. I find this a bit strange, as i tcontradicts what I have in writing from the employer.

I am very confused about whether to take out a new company pension, and what to do with the old one, and what would benefit me most. (I tend to switch jobs too often to build up one lump sum in one place, which is where my dilemma lies).My new company will not put the old fund into the same pot as theirs, and it is a small sum of £3000 which I don't know what to do with; it is worth £700 if I cash it in so wondering whether to cash it in to pay off debts, as in pension terms £3000 is nothing??!

Thanks for any clarification..

jonathon_hart

AliceBanned wrote: »

My previous employer's contract stated that employer contributions would be lost if leaving before two years' service. I left after 8 months and now Scottish widows tell me that there was a new bill passed by the government which prevented employers from enforcing this?

Scottish Widows are broadly correct. The rules are now that if you leave within 3 months then you will lose all employer contributions and receive a refund of any of your contributions less tax.

If you leave within 3 and 24 months (as you will) then the employer has to offer you a transfer value (of the entire plan employer and employee). You will be given a fixed period of time (not less than 3 months) to transfer. If you don't you will lose your employer contributions and receive a refund of any employee contributions less tax. If you want to you can choose to receive a refund of your contributions (less tax), but will lose and employer contributions.

If you leave after more than 2 years then you are entitled to keep all your benefits within the pension plan.

This is the minimum terms the pension is allowed to offer, they scheme can be more generous if they wish. They probably have updated their rules, and you just have an old copy of them.

Hope this helps;)

EdInvestor

The Scottish Widows personal (not stakeholder) pension is a good one with a wide fund choice and reasonable charges.If you have that, why not transfer the company pension into it?

AliceBanned

Thank you Jonathan and Ed. This does clarify things.

I don't have a personal pension plan (Scottish Widows or otherwise), but will speak to them about this; seems a good idea.

Thank you