dont understand pensions at all, its all deferred benefits, with profit funds, contracting out etc etc so im a bit lost when it comes to understanding what ive got.

my method over the years has been to just keep everything ‘pensiony’ thats come through the post and then when i (or my dependants) need it, theres a big pile to ‘hand over to someone’.

ive decided now to try and get my head around things, try and understand what im likely to get, what various plans are worth, and whether its worth transferring any to my present pension if indeed thats allowed.

so……..ive had 3 different employers in my life. job 1, job 2 and present job 3.

job 1 pension seems to have started in 1991 and gone through different ‘takeovers’, plus a ‘side’ pension with someone else when i contracted out, altho i have no idea what this means. so theres mebbes 2 different pensions there? id guess its just frozen now.

job 2 also seems to have 2 or 3 different companies handling the pension over the years, including a different one for AVCs which i didnt pay for long. so a frozen pension again?

job 3 is my present job, and again has been handled by different companies. just to confuse things, even tho its the same employer, theyve given me different payroll numbers for different positions over the years and i have 3 separate policies with them, one deferred, 2 still running (i do two positions at present).

itd be sooooo much easier if the old ones were transferred into current pension, but i dont know if i can, or indeed if itd be a good idea anyway as there may be costs which would decrease the value.

FWIW im doing this to see if i can retire early, so likely values at 55, 60, 65 would be interesting. the old pensions pay out when i retire at 65, but my present pension would i think allow me to leave early, obviously with penalties for that.

so, what do i actually need to do to look into this? find out a current value of each pension and ask if im allowed to transfer? ask for a transfer value? is the transfer value likely to be the same as the policies current value?

or just hand the lot over to a financial advisor and say “heres some wedge, feast yer eyes on them bad boys and tell me what im likely to get when i retire and whether i should move stuff around?”

thanks

If you can’t understand the documentation you have then I think it has to be

or just hand the lot over to a financial advisor and say “heres some wedge, feast yer eyes on them bad boys and tell me what im likely to get when i retire and whether i should move stuff around?”

but I’d treat their advice with some caution and not do anything in a hurry or under pressure. If you have any ‘Defined Benefit’ pensions be especially cautious about transferring them.

Is it better to save £500 a month in the TSB with not much interest or put it into my pension?

Do you already have all the bikes you want need?

Almost certainly put it in a pension, specifically because you get tax relief on the contribution, i.e. as a basic rate taxpayer you can put in 400 of your salary and the pension scheme gets 500. Better for higher rate taxpayers, 300 from your salary gets 500 in the pot (erm…numbers not guaranteed to be precisely correct).

Almost certainly put it in a pension

in A pension is key. that doesnt always mean “Your” Pension.

some pensions have piss poor performance and are eroding with fees and bloat

choose wisely – unfortunatly there is no one size fits all though. been looking at this recently for balancing out last years tax bill.

Really loads of factors to consider, I’d find out if they are final salary types or money purchase. Final salary are pretty much being phased out because they are costing so much, if you do have one perceived wisdom is to keep it and not to transfer it into a money purchase. It may be possible to ask for a cash value and it can be substantial as pension co’s are wanting rid of the final salary schemes.

Its likely that later pensions will be money purchase, the returns aren’t as good but they can be more flexible if you are thinking of retiring early or maybe going part time.

I’m really only starting to find my way around the pension minefeild but I’m not dissimilar to where you are at. My first employer had a superannuation scheme and it’ll be final salary, I’ll not be transferring it over and will take options on it at the time. My new employer is money purchase which I’m adding to, I’m hoping ot get to a point where I can start withdrawing cash and maybe working part time(this is still a long way away though.

Is it better to save £500 a month in the TSB with not much interest or put it into my pension?

I’d say not, your employer may match your contributions up to a point and your money should be safer as your pension pot increases. My pension investment regularly performs well, certainly better than the bank.

itd be sooooo much easier if the old ones were transferred into current pension, but i dont know if i can, or indeed if itd be a good idea anyway as there may be costs which would decrease the value.

If they are defined contribution ones then it’s very simple to transfer them.

If they are defined benefit (final salary style), then generally best left where they are as transferring looses all the guarantees associated with them.

Almost certainly put it in a pension

This. You get tax rebate and then (almost) tax free gains. Way better than a bank account.

My pensions made more money than I was paid last year, thanks to the continuing bull run on the markets. Sadly, they don’t do that well every year….

The accepted wisdom is to start a pension as early as possible.
I did this. Sadly the FA who advised us all at work to do this selected a Barings Fund to accept our cash, it still has some cash but my later started SIPP that I manage myself has comfortably more in its pot that the original Allied Dunbar one..

The accepted wisdom is to start a pension as early as possible.

Yep, this is one of mine plotted out over time – in the early years the fund was only worth what I’d put it, but over time cumulative interest has started its magic and its grown and grown…..

[url=https://flic.kr/p/XfZ43j]Capture[/url] by Ben Freeman, on Flickr

The bad news is my oldest pensions (RPI index linked, gold plated final salary) fell into the Pension Protection Fund and is now falling out of the PPF only the index linked bit has been dropped, so it’s worth a fraction of what it was 🙁

sadexpunk.

I did something similar to you recently. This is a useful page to describe some options, and shows you some circumstances where leaving it where it is, is the best option.

https://www.aviva.co.uk/retirement/pensions/transfer-your-pension-plans/
(Disclosure: I do work for Aviva, but I’m not in any way related to financial or pensions advice)

The major benefits of having it in one place for me is that now that I’m actively managing my pension it easier to see what going on, and when you want to change your investments, it’s much easier to do it in one place.

If I was in your position though I would probably seek advice from an IFA.

The major benefits of having it in one place for me is that now that I’m actively managing my pension it easier to see what going on, and when you want to change your investments, it’s much easier to do it in one place.

This is why I consolidated all of mine. Just filled in a form, posted it off and within a couple of weeks the funds were transferred.

Albert Einstein – Compound interest. Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it. Compound interest is the most powerful force in the universe.

The most important thing I don’t remember learning in school.

thanks for the help chaps, think it shows that i need an IFA, so thats the way ill go. just hope that doesnt cost me as much as my pensions worth! 😀

https://www.pensionsadvisoryservice.org.uk/

nice one paton, ill give them a try 🙂

thanks

It’s complicated. Having just one is not necesarily a good idea (eg what hapens if that company’s fund performs badly). To understand what you’ve got will need a good look at the paperwork. Proper advice but be wary of advisors just trying to make fees.

Be clear about about what type of pension scheme you are a member of; defined benefit or defined contribution.

Check out whether any/all of your schemes allow transfer of benefits on death – and, if so, to whom and what conditions apply.

In general, if you are in a stable and permanent relationship and you have defined benefit pension with a guarantee that dependants (wife or children under 18) wil benefit keep it where it is.

Defined contribution is, effectively, a money purchase scheme.

HMRC will take their share of any transfers out – possibly on emergency code basis which means that the onus is on you to reclaim any tax overpayment.

As for IFAs who specialise in pension transfers/management – be careful. Initial ‘consultation’ is free but they will give away nothing; when you’re signed-up they might get involved in a detailed discussion. Confirm their fees and charging sale before engaging with them. Check their stated level of qualification and experience; are your circumstances representative of their client base.

My suggestion….
– decide what you want to achieve
– get current valuations (entitled to a free one every two years)
– if any of your schemes are defined benefit, do financial health-check on company; apart from all the usual company stuff – trading performance, liquidity, market position etc – check out pension fund status inc surplus/deficit, future funding proposals, investment strategy
– be clear about your personal circumstances and wishes
– be clear about IFA charges (and sundry other charges if you start moving pension asserts around – platform fees, administration charges, advisor fees, annual fee etc); assume min 2%pa unless you move to automated market trackers at c0.2%
– do not transfer from defined benefit to defined contribution scheme
– understand investment strategy and risk profiling

Invest a lot of time in being clear about your circumstances and objectives; invest even more time in deciding what you want to do – and why.

As Jamba said ^^^ it’s complicated.

it bluddy is complicated mate, thats for sure!!

My suggestion….
– decide what you want to achieve

i want to find out how much money id get monthly if i retire at 55/58/60/63/65 to make balanced decision on if i can afford to retire early and live abroad.

– get current valuations (entitled to a free one every two years)

so ask each provider what the current value is? isnt that info on every statement each year? along with loads of other figures :-/

– if any of your schemes are defined benefit, do financial health-check on company; apart from all the usual company stuff – trading performance, liquidity, market position etc – check out pension fund status inc surplus/deficit, future funding proposals, investment strategy

how do i find out if theyre defined benefit, just ask them? and id not have a clue on how to health check them or even what the information would mean if i found out.

– be clear about your personal circumstances and wishes

as above ^^^

– be clear about IFA charges (and sundry other charges if you start moving pension asserts around – platform fees, administration charges, advisor fees, annual fee etc); assume min 2%pa unless you move to automated market trackers at c0.2%

yup, id try to find out what any advice and decisions would cost me

– do not transfer from defined benefit to defined contribution scheme

the key here then is to find out what my current pension is, i dontthink its a particularly good one. just to complicate matters, i think any values that i wanted to transfer would be converted to ‘years/days’ as this pension is based on ’30 years’.

– understand investment strategy and risk profiling

not a chance 😀

Invest a lot of time in being clear about your circumstances and objectives; invest even more time in deciding what you want to do – and why.

spose thats what im starting to do now…..

thanks a lot mate

I would avoid using an IFA until you are ready to take you pension. Once you get your head around what you have it’s easy to manage

Here’s what you need to do

Contact each of you pension funds by phone and ask them for a username and password to access their system

When logged in you should be able to figure out past growth and predicted pension from each fund. It’s then possible to move fund around within each company to meet your pension goals

It may cost you money to consolidate funds

I’ve just gone through this myself, I have 4 funds and it’s not difficult if you invest s but if time

Cheers

i did have a look at registering online, but so far ive only been able to do this with the ‘contracted out’ bit and my current. my oldest pension dont have this facility, neither does my ‘interim’ pension, altho they say its coming.

but yes thatd be easier.

tanks

Thread hijack…where does one start to go about finding a financial advisor for advice on inheritance tax and capital gains. Need to get advice for my mum and i as she has quite a few assets including a rental property which we share at the moment. Not got a clue about financial matters and as she gets older I think we should get some advice.

HMRC will take their share of any transfers out – possibly on emergency code basis which means that the onus is on you to reclaim any tax overpayment.

No they don’t. The fund gets transferred directly between pension providers with no HMRC involvement.

It’s complicated. Having just one is not necesarily a good idea (eg what hapens if that company’s fund performs badly).

It would be unusual (and foolish) to just be in a single fund, you would normally be split between a few. Pretty much every pension provider has access to 100s of funds e.g. all my company pensions have been split across a range of funds as are my current ones.

@footflaps – I wasn’t clear; transfers between providers are not subject to tax but withdrawals are.

For sure get some professional advice. Pensions are just a wrapper around an investment regarding money purchase schemes. It is not just performance that should be a consideration but also charges and risk.

Seek out a Chartered financial planner and you should be ok.

right, been looking at statements and im pretty sure my current two (plus a very small deferred section) are Defined Contribution. the bumph on the back states……

changes in the law introduced by the Pension Schemes Act 2015 mean that members of Defined Contribution (DC) schemes have greater flexibility over how they can access their pension pots from age 55. Transfers to such schemes are now longer allowed from the Firefighters Pension Scheme. This is to safeguard the security of the scheme.

A transfer must usually be requested a year before you reach normal pension age.

Think carefully before deciding to go ahead with a transfer – your deferred benefits are valuable benefits that keep pace with the cost of living both before and after you start getting your pension. And they include generous death benefits for your dependants.

am i right in thinking from the quote that its ‘desirable’ to transfer old pensions to these schemes but its not allowed now? or is it the other way round saying i cant transfer my current pension to a different scheme?

just spoken to one of the other lads who thinks that a DC scheme means theres no investment, that our contributions pay the pensions of retirees now and the young pups pension payments will be paying ours when we retire, is that correct?

off to look at some of my older ones now, see if i can suss those out.

thanks

That sounds like it’s a final salary pension (defined benefit) which has indexed linked provisions. You don’t want to transfer that as you’ll loose the index linked guarantees etc.

Looks like they don’t allow it anyway..

Transfers to such schemes are now longer allowed from the Firefighters Pension Scheme. This is to safeguard the security of the scheme.

just spoken to one of the other lads who thinks that a DC scheme means theres no investment, that our contributions pay the pensions of retirees now and the young pups pension payments will be paying ours when we retire, is that correct?

Nope. Defined Contribution means you pay in money and it gets invested in funds that you chose (or they chose for you). If the funds do well, your pot gains in value, if we have a 2008 style crash, your pot could lose 50% overnight and tough tity for you. All the risk is on you and the funds you’ve invested in. You have no guarantees whatsoever on what you get at the end.

Defined benefit (final salary) are where you pay in a fixed amount into a fund and the fund guarantees you a set pension (often linked to final salary typically each year you buy 1/60th of final salary). If the fund does badly, the employer has to pump in more money to make up any shortfall. These are getting rare now and are worth their weight in gold.

The state pension and many civil service pension have no fund and current pension liabilities are paid from current tax revenues i.e. each generation pays for the pensions of the generation before.

if defined benefit is different to defined contribution, then i think thats wrong isnt it? it quite clearly states DC? FWIW im pretty sure im not on a final salary scheme, im told its an average salary scheme.

just looking at some of the notes ive taken on trying to get hold of various pension providers, and my old engineering pension phone number is for the ‘defined benefits team’. thats promising isnt it?
also the statement mentions protected rights and non protected rights, that mean anything significant?

thanks

There is so much wrong in your post, you really do need advice from someone who understands pensions.

There is so much half right or plain wrong information in this thread I despair, it’s always the same 🙁

dont worry RB, i wouldnt do anything without proper advice, just trying to get a handle on what ive got and likely options available (if any) 🙂

just looking at some of the notes ive taken on trying to get hold of various pension providers, and my old engineering pension phone number is for the ‘defined benefits team’. thats promising isnt it?
also the statement mentions protected rights and non protected rights, that mean anything significant?

You have a defined benefit / final salary style pension, you don’t want to transfer this.

Protected and non protected rights refer to the types of funds invested. You’d have to look at the deads of the pension trust to work out exactly what they mean.

Footflaps has a pretty good grasp but specifically ‘Protected Rights’ relates to contracting out and can be DB or DC.

Footflaps has a pretty good grasp but specifically ‘Protected Rights’ relates to contracting out and can be DB or DC.

yes, I was thinking of with profits funds…

weirdly enough, the defined benefit scheme from my old engineering days is one that an old workmate has stated hes transferring into a new works ‘personal’ scheme as hes been told the old works DB scheme is actually losing money year on year.

looking at a recent ‘with profits’ statement, it says…….

number of former protected rights units – x,xxx
holding value of former protected rights units (£/p) – xx,xxx

number of non protected rights units – x,xxx
holding value of non protected rights units – xx,xxx

a similar pension statement from 2003 has the same layout but the figures are higher, slightly more units in 2003 and higher value.
obviously i cant ask specific advice here, but does this sound normal?

Number of units dropping does not sound normal and it is something I would query. With profits funds are unusual as they have a bonus element along with the change (hopefully up) in price. There could be a perfectly good explanation but I’d be asking

Yes.
Above you mentioned an “average salary” pension. That’s another type of defined benefit scheme, just based on the average salary instead of final salary.

One thing to look at when it comes to retirement, you can take up to 25% of the pension value as a tax free lump sum. Very worthwhile considering.

Obviously we don’t know (or need to) the actual numbers, but it seems you have a couple of final (or average!) salary pensions lined up, in addition to the state pension, so you should be in a reasonable place.

has stated hes transferring into a new works ‘personal’ scheme as hes been told the old works DB scheme is actually losing money year on year.

Doesn’t make sense….

A DB (defined benefit) scheme has a guaranteed payout, so even if the fund isn’t doing well, the company backing it has to cough up and fund the shortfall, so you can’t loose (unless the employer goes bust and the pension fund collapses into the Pension Protection Fund).

‘new works ‘personal’ scheme’ sounds like defined contribution with no guarantees whatsoever, so much higher risk.

At the end of the day both types of fund (DB and DC) invest in the stock market (or other funds / gilts) so could of equally well in terms of fund growth. The key difference is that in DB, someone else (the employer) is underwriting the fund and will make up any shortfall. With DC there is no one underwriting it, bad stock picks, 2008 style crash, you just loose money….

the old works DB scheme is actually losing money year on year.

As a scheme member this shouldn’t be your problem, if the funds are low the company have to pay in more money and you get the pension you were promised. That is why DB pensions are so good, no risk for you. Trouble is if the Co go bust you could be relying on the pension protection fund which is good but I can’t remember exactly the level of benefit they cover. (In the past you could have been left with little or nothing, Google Allied Steel and Wire or Mirror Pensions if you want some sad cases)

Trouble is if the Co go bust you could be relying on the pension protection fund which is good but I can’t remember exactly the level of benefit they cover.

Current pensioner, pretty much 100%.

Deferred pension 10% cut, fund index linked up to 2.5% per annum.

However, the kick in the teeth is that any contributions prior to 5 April 1997 don’t quality for index linking once the pension pays out (I’ve just suffered this), but do get index linked at up to 2.5% until retirement date.