Transferring pension - fairly urgent- help please!

AliceBanned

Hi all

I have eight months' worth of pension fund to transfer since I changed jobs. I was contracted out during this time in a final salary scheme. Unfortunately the new employer's scheme is money purchase and so they won't take the pension; they make take the excess if the old employer allows me to contract back in and repay the equivalent amount back into the state scheme, which I am enquiring about right now.

My question is, wouldn't I be better off simply transferring this fund into a Stakeholder? I only have another ten days to sort this out and the previous employer cannot guarantee an extension to this deadline, which is why I'm looking here for advice. Should I seek independent advice, even for a small sum (it totals £2.5k transfer value).

Thanks, if anyone can help.

AliceBanned

Oops - forgot to mention that I have protected rights on the pension, which is why I thought Stakeholder might be best? Dont know that much about pensions though and as time is running short I may not have the time to see an independent adviser, but will try. Thanks!

EdInvestor

Why don't you just leave this f/s pension where it is?It will increase by inflation or 5% every year until you retire, guaranteed and is probably inflation linked in retirement too. Just think of it as an add on to your state pensions.

AliceBanned

EdInvestor wrote: »

Why don't you just leave this f/s pension where it is?It will increase by inflation or 5% every year until you retire, guaranteed and is probably inflation linked in retirement too. Just think of it as an add on to your state pensions.

Hi Ed

Thanks for your reply - I don't have the option to preserve the benefits in the scheme; probably because I didn't stay with the company for two years +. I would do this otherwise but I only have until 15th May to move it or they will cash it in and give me back my contribution but I will lose out on the employer's contribution.

EdInvestor

Just open a personal pension with one of the big lifecos, Scottish Widows does a good one with a large number of external funds and low charges.PPs are a better bet than stakeholders, better fund choice and sometimes cheaper. Both take protected rights.

AliceBanned

EdInvestor wrote: »

Just open a personal pension with one of the big lifecos, Scottish Widows does a good one with a large number of external funds and low charges.PPs are a better bet than stakeholders, better fund choice and sometimes cheaper. Both take protected rights.

Thanks - this would be better than contracting back in for that period, and moving the excess to my new scheme? When I spoke to Scottish Widows this is what they suggested, although this wasn't independent advice of course. I hope this make sense - something to do with the protected rights and CEPS - they thought it might be best that I contract this part back in.

dunstonh

you cannot retrospecively contract back in.

When I spoke to Scottish Widows this is what they suggested

Scottish widows dont have any financial advisers (apart from tied sales reps at Lloyds). So they wouldnt have suggested anything or at least shouldnt have.

You cannot retrospectively contract back in if you have been contracted out. Any decision on contracting in/out looks forward only and will not change what has gone before.

Your options here are a section 32 buy out bond or a stakeholder or personal pension.

Also, IIRC, Scottish Widows will not accept final salary pension scheme transfers without an IFA signing off on them first.

AliceBanned

dunstonh wrote: »

you cannot retrospecively contract back in.


Scottish widows dont have any financial advisers (apart from tied sales reps at Lloyds). So they wouldnt have suggested anything or at least shouldnt have.

You cannot retrospectively contract back in if you have been contracted out. Any decision on contracting in/out looks forward only and will not change what has gone before.

Your options here are a section 32 buy out bond or a stakeholder or personal pension.

Also, IIRC, Scottish Widows will not accept final salary pension scheme transfers without an IFA signing off on them first.

Ok thanks dunstoh

I have mistunderstood what Scottish Widows have told me then, or not explained it; basically she said the CEPs part can go back into the state scheme and the excess only into my new employer's scheme? she didn't use the words "contracting in" that was just my way of explaining what I vaguely understand so sorry for confusing the issue.

Thanks

EdInvestor

To be honest, the amount is so small, and the complexities of getting it sorted so large in the time available, I would tend to just take your contributions in cash and then open either a new pension or stocks and shares ISA to pay them into.The company will contract you back into S2P for the period, so you won't lose out there.

AliceBanned

EdInvestor wrote: »

To be honest, the amount is so small, and the complexities of getting it sorted so large in the time available, I would tend to just take your contributions in cash and then open either a new pension or stocks and shares ISA to pay them into.The company will contract you back into S2P for the period, so you won't lose out there.

Thanks - do you mean that if I get a refund rather than a transfer, the company will reinstate me into the S2P for the period automatically?

I saw an independent advisor yesterday and he didn't suggest this option - maybe because I lose out about £1,000 - ie the employer contributions, but as you say that is a very small amount in terms of pensions; it will be left in a pot on its own unless I open a private pension and add to it! So I won't really see it again apart from in pennies when I retire? Have I understood you correctly?

many thanks

EdInvestor

AliceBanned wrote: »

Thanks - do you mean that if I get a refund rather than a transfer, the company will reinstate me into the S2P for the period automatically?

Yes. The company will deduct the tax relief and the contracted out rebate from the transfer value, contract you back in, and send the remaqinder (your contributions) to do with as you will.

I saw an independent advisor yesterday and he didn't suggest this option - maybe because I lose out about £1,000 - ie the employer contributions, but as you say that is a very small amount in terms of pensions; it will be left in a pot on its own unless I open a private pension and add to it! So I won't really see it again apart from in pennies when I retire? Have I understood you correctly?

That's it. Maybe better if you save it in your ISA where you can get at it if you need it.