Stakeholder AND company pension?

waynef_2

Hi All,

I have just started a new job and would welcome some advice.

My situation:

I left my old job with an existing pension, in which there is around £3,000 of accumulated funds.

My new company will not let me join their scheme until I have been here for one year, at which point I can contribute 3% of my salary and they will contribute nothing. After two years, the company will contribute a further 3% (and will not increase this if I increase my own contributions).

My questions:

1. What should I do now? I want to get my own personal pension, and contribute 10% of my salary into it. (for reference, I am 26). If this is the case, should I go for a Stakeholder pension?

2. What should I do in a year's time? Can I contribute a further 3% of my salary into the company's scheme, and have this and a stakeholder pension running simulataneously?

3. What can I do with the accumulated funds from the pension I had in my previous job?


Thanks in advance!

Wayne

dunstonh

1 - yes you can contribute to a stakeholder this year as you have no occupational scheme available. If you decide to see a financial advisor, make sure its independent as most tied advisors will not be able to recommend a stakeholder to you due to their internal rules. IFAs can or you can buy one direct.

2 - You should join the scheme as soon as you can. You should then investigate what "top up" options are available within the scheme. These may or may not be better than a stakeholder but until you investigate them you wont know. Depending on the type of scheme and your income, you may or may not be able to pay into a stakeholder in addition to the occupational scheme.

3 - You can leave it where it is or transfer it. It depends on the type of scheme you were in, the one you are going into and the charges involved. Pension transfers require in depth invesigation and you should seek independent financial advice on that.

waynef_2

Excellent stuff; thanks for your help!

One more question: If I contribute into a Stakeholder for a year, then join my company scheme and stop contributing to the Stakeholder, what happens to the Stakeholder?

Do I just leave it, or (if I've chosen the correct one) can I transfer the balance elsewhere (ie. my company one, if it allows you to?)

dunstonh

Think of the stakeholder as a savings account.  Just the ultimate long term savings account  ;D  You can start your contributions or stop them whenever you like.   The fund sits there doing its business until you hit your selected retirement date.  Whether you use it again after the year is irrelevent.  

However, like the old company scheme, it may be beneficial to move it into the new one, if the terms are better.   It may not be though.

So about there being lots of "if" and "maybe" but there are different types of occupational schemes and what they offer varies a lot.   So without looking at the documentation from the scheme providers, it isnt possible to give you the definitive answer.  

However, at least you have an idea of what needs to be looked at. An IFA could help you further (a tied advisor cannot).

waynef_2

OK, I think I'm more clued up on all this now...

The key thing for me to do now is to choose one!

*gets the impression today will be a loooooong day* :-/

dunstonh

OK, I think I'm more clued up on all this now...

The key thing for me to do now is to choose one!

*gets the impression today will be a loooooong day* :-/

Let us know who you come up with as your choice....so we can pick holes in it

waynef_2

At the moment, I'm erring towards something from Halifax, but haven't quite yet decided on which fund.

dunstonh

Err away from Halifax or any bank or building society for that matter. Unless you mean Clerical Medical who are owned by HBOS.

Milarky

My new company will not let me join their scheme until I have been here for one year, at which point I can contribute 3% of my salary and they will contribute nothing.  After two years, the company will contribute a further 3% (and will not increase this if I increase my own contributions).

This looks a bit restrictive to me - although it must be 'legal' I imagine.

Employers have to offer access to a workplace stakeholder pension except where...

..they already offer a group persional pension into which they pay at least 3% of your salary...

.. On stakeholders, they must offer access within 3 months [I think] but thereafter if you don't take them up they only have to reoffer access twice annually [which stops people starting and stopping contributions all the way through the year]

So I'm a little curious how your employer justifies offering you no scheme to join for a whole 12 month period?

waynef_2

Err away from Halifax or any bank or building society for that matter.  Unless you mean Clerical Medical who are owned by HBOS.

Do you have any "quick" recommendations of reputable providers whom I can check out, in that case? ???

waynef_2

So I'm a little curious how your employer justifies offering you no scheme to join for a whole 12 month period?

Indeed, this is somewhat of an annoying point, and one which I have enquired about, but have not yet received a response. I shall update this post when I get a response.