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  • FIRST POST
    • FIRSTTIMER
    • By FIRSTTIMER 5th Aug 18, 8:50 PM
    • 414Posts
    • 63Thanks
    FIRSTTIMER
    Pension from Old Company - What to do?
    • #1
    • 5th Aug 18, 8:50 PM
    Pension from Old Company - What to do? 5th Aug 18 at 8:50 PM
    Hi,

    I have a old company pension with a transfer value of £65k. I am 35. The defined benefit pension scheme is now obsolete and the company have changed to a retirement savings plan. So my pension pot just increases with inflation up to a maximum of 5% yearly.

    The pension is just sat there and I cannot transfer it into my current government pension. I have been thinking would I get better growth by transferring this pension to a self invested SIPP? I do not want to just leave it with my old workplace and then realise I could have doubled my money instead by moving it. Any advice out there please?

    I currently have a mortgage and I!!!8217;m shortly due to be a higher rate tax payer. I currently invest £500 a month via Vangaurd LifeStrategy 100 in a Vangaurd S&S ISA. I also have a LISA with H&L and just invest £50 a month in that which is via BlackRock Consensus and HSBC Global Dynamic - £25 each.

    Is there anyway to top up my existing investments? Ultimately I want to use this old pension as cash ideally and then use my current government pension as my income on retirement.

    Thanks in Anticipation
    Last edited by FIRSTTIMER; 05-08-2018 at 10:20 PM.
Page 1
    • dunstonh
    • By dunstonh 5th Aug 18, 9:29 PM
    • 96,074 Posts
    • 63,881 Thanks
    dunstonh
    • #2
    • 5th Aug 18, 9:29 PM
    • #2
    • 5th Aug 18, 9:29 PM
    The defined benefit pension scheme is now obsolete
    Why do you say it is obsolete?

    I have been thinking would I get better growth by transferring this pension to a self invested SIPP? I do not want to just leave it with my old workplace and then realise I could have doubled my money instead by moving it. Any advice out there please?
    What does your adviser say?

    Is doubling the money enough? What if it doesnt?

    I also have a LISA with H&L and just invest £50 a month in that which is via BlackRock Consensus and HSBC Global Dynamic - £25 each.
    The LISA will be lower down the pecking order to pension when you become a higher rate taxpayer.

    Is there anyway to top up my existing investments?
    yes

    Ultimately I want to use this old pension as cash ideally and then use my current government pension as my income on retirement.
    Can't the LISA and ISA do that?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • FIRSTTIMER
    • By FIRSTTIMER 5th Aug 18, 10:12 PM
    • 414 Posts
    • 63 Thanks
    FIRSTTIMER
    • #3
    • 5th Aug 18, 10:12 PM
    • #3
    • 5th Aug 18, 10:12 PM
    Theyíve closed the scheme

    I donít have an advisor at the minute - I was just planning on transferring it via H&L or AJBell and investing in one of their managed SIPP funds - and just leaving it to grow - albeit i presume that is what is happening now with my old company, however I think rate of inflation growth seems poor?

    The S&S and LISA are my cash vehicles - itís just want to do with this old pension.
    • dunstonh
    • By dunstonh 5th Aug 18, 10:33 PM
    • 96,074 Posts
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    dunstonh
    • #4
    • 5th Aug 18, 10:33 PM
    • #4
    • 5th Aug 18, 10:33 PM
    They!!!8217;ve closed the scheme
    That doesnt make it obsolete. There are many excellent closed schemes out there which are far better than the replacements/open schemes.

    I don!!!8217;t have an advisor at the minute - I was just planning on transferring it via H&L or AJBell and investing in one of their managed SIPP funds
    You cant do that. It will need an adviser.

    and just leaving it to grow - albeit i presume that is what is happening now with my old company, however I think rate of inflation growth seems poor?
    That isnt how DB pensions work.
    The S&S and LISA are my cash vehicles - it!!!8217;s just want to do with this old pension.
    Pension trumps LISA for higher rate taxpayers.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • FIRSTTIMER
    • By FIRSTTIMER 5th Aug 18, 10:37 PM
    • 414 Posts
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    FIRSTTIMER
    • #5
    • 5th Aug 18, 10:37 PM
    • #5
    • 5th Aug 18, 10:37 PM
    Ahh well my transfer and statement documents just state that the scheme is closed and will continue to grow at the rate of inflation capped at 5% per annum until I retire officially - it then continues to grow at the same rate
    • Terron
    • By Terron 5th Aug 18, 10:46 PM
    • 350 Posts
    • 294 Thanks
    Terron
    • #6
    • 5th Aug 18, 10:46 PM
    • #6
    • 5th Aug 18, 10:46 PM
    You can't doble the money in the old DB pension because it is not a pot of money. Rather it is a promise to pay you a certain amount.
    Yes the company will let you transfer it as that will likely save them money.
    Maybe you could make more by doing so, maybe not.
    But you would lose the guarantee and be taking a riskier option.


    For myself I would find the guarantee quite attractive, Having a solid base would allow for taking more risks with other investments.
    • Dox
    • By Dox 5th Aug 18, 11:00 PM
    • 1,018 Posts
    • 795 Thanks
    Dox
    • #7
    • 5th Aug 18, 11:00 PM
    • #7
    • 5th Aug 18, 11:00 PM
    I donít have an advisor at the minute - I was just planning on transferring it via H&L or AJBell and investing in one of their managed SIPP funds - and just leaving it to grow - albeit i presume that is what is happening now with my old company, however I think rate of inflation growth seems poor?
    Originally posted by FIRSTTIMER
    Anyone seeking to transfer from a defined benefit scheme to a defined contribution scheme (a SIPP is DC), who has a transfer value of £30,000 or more, must demonstrate to the trustees of the DB scheme that they have received (doesn't mean 'followed') advice from an appropriately qualified and regulated advisor.

    Some SIPPs will insist on a positive recommendation from the adviser, others aren't bothered.

    That's your starting point.
    • xylophone
    • By xylophone 6th Aug 18, 1:16 PM
    • 27,671 Posts
    • 16,619 Thanks
    xylophone
    • #8
    • 6th Aug 18, 1:16 PM
    • #8
    • 6th Aug 18, 1:16 PM
    rate of inflation
    RPI or CPI?

    https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

    If you wish to transfer out of a DB Scheme where the benefits are valued at greater than £30,000, you will need the advice of a Pension Transfer Specialist which will not be cheap.

    https://www.moneyobserver.com/our-analysis/how-to-transfer-out-final-salary-pension

    https://www.telegraph.co.uk/pensions-retirement/financial-planning/will-no-one-help-cash-pension/

    https://www.fca.org.uk/consumers/pension-transfer

    https://adviserbook.co.uk/

    https://www.royallondon.com/Global/documents/GoodWithYourMoney/COMPANY-PENSIONS-FIVE-REASONS-TO-TRANSFER-OUT-AND-FIVE-REASONS-NOT-TO.pdf
    • FIRSTTIMER
    • By FIRSTTIMER 6th Aug 18, 3:32 PM
    • 414 Posts
    • 63 Thanks
    FIRSTTIMER
    • #9
    • 6th Aug 18, 3:32 PM
    • #9
    • 6th Aug 18, 3:32 PM
    Thanks for all advice - a FA has looked at it and has agreed with what has already been put on here. As its a defined benefit scheme - leave as it is and at retirement then look at options - the transfer value is irrelevant - its not a pot of money and not to look at it like that until retirement earliest 57 then look at options for cash/sipp withdrawals
    • CBX1985
    • By CBX1985 6th Aug 18, 4:12 PM
    • 26 Posts
    • 18 Thanks
    CBX1985
    I am qualified to give DB advice. I have to say, even the most liberal of advisers who will push anything through will think twice about doing this with you. I think you'll find it tricky to find someone willing to provide advice either way in case you try to go to a provider playing the "I have received advice" routine.

    At 35 you really are far far far to young and distant from retirement to be considering doing this. The transfer value is worthless of itself as it is just a notional number, you can't even begin to access for over 20 years and b) what you have at present is almost certainly not a bad deal at all.

    To quote Warren Buffett:

    "Sometimes the best most lucrative strategy is simply to do nothing at all"!



    Apologies. For some reason your last response did not appear when I looked at the thread, but I see you have taken sensible advice.
    Last edited by CBX1985; 06-08-2018 at 4:18 PM. Reason: Accuracy
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