Pensions and babies!

Simmy_3 · 14 April 2003 at 9:21PM

Hi Martin

I've paid into my company pension for 8 years and have now left the company to care for my son full time. I am unsure if I should leave the pension where it is and to start a new savings scheme/pension, or to transfer (not sure who to yet) and continue to contribute. I will also benefit from my partners pension and will return to work in the next couple of years, but I'd like to cover my options. I must admit I have little knowledge of pensions (my leading subject at the moment is nappies!!)and would appreciate any advice.

Many Thanks
Simmy

MSE_Martin · 18 April 2003 at 9:53PM

I'm afraid pension transfers are one of those very dodgy issues to talk about. Rights and wrongs blur into shades of mirky grey.

Without knowing a lot more details there's little guidance i can give - these things need a full fact find from a qualified adviser who digs into the details of your company scheme. Was advice attached to the company offer?

Of course part of the dilemna is whether the advice is affordable - if the pension is small even a commission based IFA may not help - one of the reasons we're in sucha pensions quagmire at the moment.

Sorry to have been of such poor help - it's just one of those issues that can't be handled this way

martin

Pal · 28 May 2003 at 4:40PM

Transfer values from a final salary scheme use an assumed rate of return from Equities to value your benefits, and they normally assume about between 6-8% p.a.

If you think you can invest your transfer value somewhere that will earn most than 6-8% p.a. (after charges), every year until you retire then:

- it may be worth transferring out;
- please tell me where!!!!

Most sensible actuaries leave their pensions behind. Your pension will continue to grow in line with RPI so it will hold its absolute value, although the amount may look small by the time you retire.

The only downside is if your final salary pension scheme winds up and you lose part of your pension as a result. This situation is actually very rare, but it is worth considering carefully.

As Martin says, worth discussing with an IFA.

Pal

System · 22 July 2004 at 7:15PM

Just a cautionary note; when I was looking into early retirement last year, I applied to my Company for a Pension transfer value with a view to seeing what I might be offered via an annuity. At the time they declined as the government was looking into transfer values [becuause so meny schemes were having difficulties ci=overing thier liabilities]. When they finally provided a transfer value, they had taken full opportunity of the outcome to reduce the transfer value by 25% of what I had been quoted 2 years before. [In fairness to the company, the pension they quoted was better than any that an insurer would have quoted, even with 'life-style' [!] enhancements to which I would have been entitled - due to my ill-health and being a smoker. My company also provide a widow's pension and a degree of index-linking. Make sure you compare like-for-like.
MikeS

Pensions and babies!

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