Pensions Cash Transfer Fund Options - Advice?
Discussion
I recently received a letter about Cash Transfer Fund Options when I left my old company. I have been offered 2 sums of money by the ‘pension agents’; 1 sum detailed as Cash Transfer Fund and the other contributions – I assume this is my contributions to the fund.
I was then given 2 options on what I want to do with the money. 1: Transfer to other pension scheme or 2: Withdraw one of the sums of money to my personal account. The contributions amount.
Ideally, I would like to withdraw the full amount of both figures into my savings account. I am quite confused with the wording of the letter as it gives me the impression I can access one some of money, however, the other amount must be transferred to a Pension Fund?
The term of my service was 2 years so I am not fussed about pulling out all monies from this fund as it will help significantly towards a mortgage deposit.
I am correct in the above? Assistance would be appreciated here as I can quite get my head round this.
Thanks
I was then given 2 options on what I want to do with the money. 1: Transfer to other pension scheme or 2: Withdraw one of the sums of money to my personal account. The contributions amount.
Ideally, I would like to withdraw the full amount of both figures into my savings account. I am quite confused with the wording of the letter as it gives me the impression I can access one some of money, however, the other amount must be transferred to a Pension Fund?
The term of my service was 2 years so I am not fussed about pulling out all monies from this fund as it will help significantly towards a mortgage deposit.
I am correct in the above? Assistance would be appreciated here as I can quite get my head round this.
Thanks
You need to be really careful here. There is a scam around where independent companies say you can access the cash value of your rights in a UK approved pension fund, which is strictly illegal in the UK. What the company does is, in effect, offer you a cash sum in lieu of your pension rights after deduction of a fee based on your gross fund value, the fee being maybe 30-40%. When HMRC learn about it, they regard your cash receipt as being an unauthorised payment from the pension fund so you are immediately liable for tax on the GROSS amount at the rate of 55%. You end up with a cash sum of about 10-20% of your gross cash value, which can never be worth taking.
Who has written to you about the Cash Transfer? Is it the pension fund or is it another independent firm? If the latter, beware!
Is the offer actually sent from your current pension fund and is it simply a transfer to another approved pension arrangement? If so, this is perfectly legal. You don't get access to any cash at the time of the transfer, it just moves directly from one approved pension scheme to another.
More info is needed!
R.
Who has written to you about the Cash Transfer? Is it the pension fund or is it another independent firm? If the latter, beware!
Is the offer actually sent from your current pension fund and is it simply a transfer to another approved pension arrangement? If so, this is perfectly legal. You don't get access to any cash at the time of the transfer, it just moves directly from one approved pension scheme to another.
More info is needed!
R.
The Leaper said:
You need to be really careful here. There is a scam around where independent companies say you can access the cash value of your rights in a UK approved pension fund, which is strictly illegal in the UK. What the company does is, in effect, offer you a cash sum in lieu of your pension rights after deduction of a fee based on your gross fund value, the fee being maybe 30-40%. When HMRC learn about it, they regard your cash receipt as being an unauthorised payment from the pension fund so you are immediately liable for tax on the GROSS amount at the rate of 55%. You end up with a cash sum of about 10-20% of your gross cash value, which can never be worth taking.
Who has written to you about the Cash Transfer? Is it the pension fund or is it another independent firm? If the latter, beware!
Is the offer actually sent from your current pension fund and is it simply a transfer to another approved pension arrangement? If so, this is perfectly legal. You don't get access to any cash at the time of the transfer, it just moves directly from one approved pension scheme to another.
More info is needed!
R.
The company who has written to me is Mercer, on behalf of my employers. They have been involved since I started and are taking to do with this now I've left. The two sums added is around £5k. I was thinking I could withdraw one amount (the lesser, my contributions) although the other had to be transferred to a legal Pension Provider?Who has written to you about the Cash Transfer? Is it the pension fund or is it another independent firm? If the latter, beware!
Is the offer actually sent from your current pension fund and is it simply a transfer to another approved pension arrangement? If so, this is perfectly legal. You don't get access to any cash at the time of the transfer, it just moves directly from one approved pension scheme to another.
More info is needed!
R.
The transfer value will include both your & the employers contributions. This can only be transferred to another approved pension scheme & means that you will retain the full fund value.
The smaller figure will be cash refund of your contributions only - the employers contributions will be retained by the scheme & you will have no further claim. I've not seen a scheme that allows part contribution refund & part transfer, it's all or nothing.
Get proper advice before you make a decision.
The smaller figure will be cash refund of your contributions only - the employers contributions will be retained by the scheme & you will have no further claim. I've not seen a scheme that allows part contribution refund & part transfer, it's all or nothing.
Get proper advice before you make a decision.
Mercer is a reputable firm.....and I worked for them for 33 years! They will be acting in the capacity of administrators of the pension arrangement of which you are a member,appointed in such capacity (among others possibly) by the trustees. In that role Mercer is advising you of your option which looks like either a transfer value of the fund value or a refund of your own contributions. Seeking financial advice about this decsion is good but as the fund value is quite small, £5,000, you may need to weigh up the cost of the advice against the risks associated with the size of the fund value.
R.
R.
I agree - Mercer are a reputable firm (I also used to work for them, albeit not for 33 years!) so wouldn't be involved in anything dodgy.
I would guess it is an either/or - that is, either a transfer value to another pension scheme or a refund of your contributions (if you had less than 2 years' service).
I would guess it is an either/or - that is, either a transfer value to another pension scheme or a refund of your contributions (if you had less than 2 years' service).
I agree with Zigster and darreni here.
I work in Pensions and if you have had less than 2 year's service, you have the option of receiving a refund of your (the employee) contributions (subject to tax) OR to transfer the whole pot (including any employer contributions that have been paid in during your period of service) to your new employer's Scheme (if the new Scheme accept the transfer-in request).
I would assume you might have a third option of 'doing nothing' whereby you will become a deferred member of your old employer's scheme until such time that you reach retirement age and are able to begin taking the benefit from the Scheme, or until you decide to transfer-out and into another Scheme?
I am sure that Mercer will have a contact number to call where your options will be explained fully.
Different Schemes have slightly different rules about some of this stuff.
I work in Pensions and if you have had less than 2 year's service, you have the option of receiving a refund of your (the employee) contributions (subject to tax) OR to transfer the whole pot (including any employer contributions that have been paid in during your period of service) to your new employer's Scheme (if the new Scheme accept the transfer-in request).
I would assume you might have a third option of 'doing nothing' whereby you will become a deferred member of your old employer's scheme until such time that you reach retirement age and are able to begin taking the benefit from the Scheme, or until you decide to transfer-out and into another Scheme?
I am sure that Mercer will have a contact number to call where your options will be explained fully.
Different Schemes have slightly different rules about some of this stuff.
I work in the financial services industry - although not for Mercers (who are a reputable firm).
OP, you're receiving good information here regarding possible on your employer's contribution and on your own. There may also be a proportion of the value which is known as protected rights if you oped-out of SERPS.
Best thing to do is get advice or information as pensions are too important to get wrong. I'd also suggest you start with Mercers.
OP, you're receiving good information here regarding possible on your employer's contribution and on your own. There may also be a proportion of the value which is known as protected rights if you oped-out of SERPS.
Best thing to do is get advice or information as pensions are too important to get wrong. I'd also suggest you start with Mercers.
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