Transfer a small Final Salary pension or leave it as is?

[toon10]

I have a pension from my first job after leaving uni in 1997. It is a final salary pension but unfortunately, I was only at the company a year and moved on after they shut the plant down. I think my total contributions at that time were < £600.

I’ve always had newsletters from the pension scheme but presumed as it is “frozen” that the total pot wasn’t worth worrying about. I was thinking a couple of grand at best. I decided to request that the pot be moved into my current DB pension just to make things easier and get rid of the extra paperwork. My forms arrived yesterday and to my surprise, the transfer value is about £14k which is way higher than I thought it would be.

I know final salary pensions are the holy grail of pensions but as I know longer work there and only contributed a small amount, I’m stuck as to what to do. Before I employ a financial adviser, I wanted to gather some opinions on whether it is better to:

a) Leave it as it is and just collect whatever extra pot comes my way in retirement
b) Transfer it to my current DB pension
c) Too many variables to say one way or the other!
d) Stop asking randoms on the internet and just go get that FA appointment

Be gentle, I’m a total novice at this pension malarkey.

[Ronstein]

Starting point - https://www.pensionwise.gov.uk/en/appointments

[LeoSayer]

e) transfer to a SIPP and the invest in a global equity index tracker.

I'm guessing the pension is probably worth c. £500 per year at best from the age of 60 or 65, so £14,000 (plus growth hopefully) is of far more use from age 57.

It's worth noting that the transfer value is below the £30,000 threshold so advice not required to proceed with the transfer.

[toon10]

Thanks to everyone for the advice. It looks like I may need to look into a SIPP. With my expert financial knowledge, I think I should be able to lose most of it within a year

[NickCQ]

toon10 said:

total contributions at that time were < £600 ... transfer value is about £14k ... I’m a total novice at this pension malarkey.

If you can consistently produce those kinds of returns I'd invest mine with you

[heisthegaffer]

LeoSayer said:

e) transfer to a SIPP and the invest in a global equity index tracker.

I'm guessing the pension is probably worth c. £500 per year at best from the age of 60 or 65, so £14,000 (plus growth hopefully) is of far more use from age 57.

It's worth noting that the transfer value is below the £30,000 threshold so advice not required to proceed with the transfer.

OP, hope you don't mind me jumping in here but I have a non final salary from a previous company with a similar amount. If I transferred that to a Sipp and transfer to a global equity tracker as you say, what roughly would happen between now and the next 20 years when I hope to retire?

[Catz]

This thread has reminded me about a pension I had from a job back in 1992. I was only there a couple of years but I guess it’s worth chasing it up!

[anonymous-user]

I had something similar (inc simiar balance), and ended up transferring into a SIPP with IM (see the sticky on here). It's a bit of fun, it's money I would have otherwise forgotten about, and you never know it may go mental...

[toon10]

Catz said:

This thread has reminded me about a pension I had from a job back in 1992. I was only there a couple of years but I guess it’s worth chasing it up!

Up until last week, I wasn't even aware that this old pension was a final salary one. I'm not sure if that has helped with the transfer value over the DB pensions you get these days? I'm not savvy on these things but the older I get, the more I wish I was.

[NickCQ]

toon10 said:

I'm not sure if that has helped with the transfer value over the DB pensions you get these days?

The majority of the uplift in the transfer value will have been driven by (i) low interest rates and (ii) increasing longevity. Both of those mean that the present value of a guaranteed income stream for life today is much much higher than it was back in the 90s.

[VR99]

heisthegaffer said:

If I transferred that to a Sipp and transfer to a global equity tracker as you say, what roughly would happen between now and the next 20 years when I hope to retire?

Unless someone has a crystal ball, then nobody can really say with 100% certainty....answer is 'it depends' on various factors.

However broadly speaking, investing in a global equities fund is still a sound approach (IMO) and hopefully should see a 'reasonable' return esp over a 20+ timeframe.... that's what I've done across Pensions, LISA and S&SISA though I am 100% Equities which is not for everyone.

[heisthegaffer]

VR99 said:

heisthegaffer said:

If I transferred that to a Sipp and transfer to a global equity tracker as you say, what roughly would happen between now and the next 20 years when I hope to retire?

Unless someone has a crystal ball, then nobody can really say with 100% certainty....answer is 'it depends' on various factors.

However broadly speaking, investing in a global equities fund is still a sound approach (IMO) and hopefully should see a 'reasonable' return esp over a 20+ timeframe.... that's what I've done across Pensions, LISA and S&SISA though I am 100% Equities which is not for everyone.

Thanks very much mate. I'm tempted to do this. Will. Report back in 10 years!

[anotherbigspender]

Any recommendations for low cost / good value global equity funds?

[chip*]

anotherbigspender said:

Any recommendations for low cost / good value global equity funds?

Here's a few samples of GE funds

https://monevator.com/best-global-tracker-funds/

You can go onto the Morningstar or Trustnet websites to filter out and research more GE funds too (or any other funds or etf if you wish).