Merging pension schemes

[Targarama]

I've worked in a number of companies over the years, and now have a range of pensions sat sitting there growing but not getting any more contributions. They are worth £2.5k, £6k, £5k and £53k. I also have another much bigger pension also sitting with Fidelity, but I'll leave that one there (I like Fidelity).

I'd like to bring these smaller ones into the scheme run by my current employer and have asked 2 of the old ones for a transfer value/form. They included a form I need to send to my new provider (Scottish Widows in this case) which I understand. I also contacted Scottish Widows who sent me a bunch of info (your risk, we're not advising etc.) plus another form 'Confirmation of Execution-Only Status' - it really isn't clear what it means? Can someone explain?

All I want is to take the money (transfer values) and place it into a new fund at Scottish Widows. Why is it so complicated?

[Simpo Two]

I did a similar thing but with private pensions, though via an IFA which made it easy.

As far as this forum is concerned it sounds like a job for GingeR aka Captain Pension the PH Pension Boff... because pensions are a bloody nightmare.

[ellroy]

It's bloody complicated because there have been so many differing pieces of pensions legislation over the years. Each new bit toppling on top of the last.

As a result you need to ensure you don't give up a decent benefit that means you'll be worse off in retirement than you would have been if you had not transferred. For example, guaranteed annuity rates, higher levels of tax free cash, cheaper contracts which a new provider is unlikely to be able to match due to performance etc etc.

I agree it seems petty, especially for smaller amounts, such as those you mention, but overall I'm in agreement with why the protection of investors is like it is in this case.

You really do need advice on these kind of issues.

[Zigster]

I'd guess these old funds are defined contribution (aka money purchase) where it is simply an investment fund. The other type of pension is a defined benefit (aka final salary) where your (ex) employer promises a certain level of income in retirement.

Scottish Widows probably just want you to confirm that they haven't provided any advice with regard to the transfer - i.e. you are just asking them to execute the transfer rather than making a decision based on advice they have provided.

[Ginge R]

Targarama said:

I've worked in a number of companies over the years, and now have a range of pensions sat sitting there growing but not getting any more contributions. They are worth £2.5k, £6k, £5k and £53k. I also have another much bigger pension also sitting with Fidelity, but I'll leave that one there (I like Fidelity).

I'd like to bring these smaller ones into the scheme run by my current employer and have asked 2 of the old ones for a transfer value/form. They included a form I need to send to my new provider (Scottish Widows in this case) which I understand. I also contacted Scottish Widows who sent me a bunch of info (your risk, we're not advising etc.) plus another form 'Confirmation of Execution-Only Status' - it really isn't clear what it means? Can someone explain?

All I want is to take the money (transfer values) and place it into a new fund at Scottish Widows. Why is it so complicated?

It's complicated because compliancy and regulatory demands compel it. Financial Services abused its position of trust and application of common sense and now we're all paying the consequences of greed.

How old are you? Why not consider keeping the three small pots distinct from the one of £53k?

<<Separately, you can also exchange up to three pots, each worth £10,000 or less, for a cash lump sum – five times higher than the previous limit. This will benefit anyone who has more than £30,000 in pension savings but has up to three smaller pension pots from previous employment.>>

http://www.thisismoney.co.uk/money/pensions/articl...

Execution Only deprives you of much of the right to redress if things go wrong. I take your point though, it all seems simple enough. As an aside, I'd take considered, thoughtful and reflective advice on not touching Scottish Widows with a blummin' bargepole.

Simpo - that from the board cynic, I'm touched!!!

[anonymous-user]

I'm in a similar boat, so watching with interest.
1 good scheme (DB). A couple of other DB schemes which I'm still paying in to.
Aged 54
Another final salary scheme. I'll take proper advice... But a final salary scheme that pays 7K @ 60 has a transfer value of 180K. Surely its worth transferring to DB scheme & then take tax free lump & draw it down when I retire (to minimize tax)?
45K tax free. 135K @ 7K PA, even accounting for inflation rises etc. will surely last more than my lifetime? Assuming I live to a reasonable age but keel over with coke & hookers rather than in a pool of piss in a home @ 99!!

[Ginge R]

Jim,

Don't underestimate your longevity, sequential return risk and the ongoing costs which you'd now incur.

Many, unquestionably, might benefit from moving from DB to DC, but there's a shedload of factors that get overlooked or underplayed - including, more so these days, DB fund employer underfunding. That said, the mantra that DB is always best, clearly isn't so clear cut any longer.

Many savers, rightly so quite possibly, are disgruntled at having to pay for advice even when recommending an execution only service. But even box ticking exercises cost these days. Having said that, even IFA aren't excused from the need to show they took advice. Make of that what you will.

[timbo999]

Jimboka said:

I'm in a similar boat, so watching with interest.
1 good scheme (DB). A couple of other DB schemes which I'm still paying in to.
Aged 54
Another final salary scheme. I'll take proper advice... But a final salary scheme that pays 7K @ 60 has a transfer value of 180K. Surely its worth transferring to DB scheme & then take tax free lump & draw it down when I retire (to minimize tax)?
45K tax free. 135K @ 7K PA, even accounting for inflation rises etc. will surely last more than my lifetime? Assuming I live to a reasonable age but keel over with coke & hookers rather than in a pool of piss in a home @ 99!!

It might be my misunderstanding, but 135 divided by 7 is just over 19... surely you expect to live to longer than 79?... current life expectancy is probably mid to late 80s...

[Simpo Two]

Ginge R said:

Simpo - that from the board cynic, I'm touched!!!

Heh!

'Execution only' means 'Don't blame us if it all goes wrong' and if you use an adviser he will say 'Investments can go down as well as up'. Your choice

[Targarama]

Ginge R said:

Targarama said:

I've worked in a number of companies over the years, and now have a range of pensions sat sitting there growing but not getting any more contributions. They are worth £2.5k, £6k, £5k and £53k. I also have another much bigger pension also sitting with Fidelity, but I'll leave that one there (I like Fidelity).

I'd like to bring these smaller ones into the scheme run by my current employer and have asked 2 of the old ones for a transfer value/form. They included a form I need to send to my new provider (Scottish Widows in this case) which I understand. I also contacted Scottish Widows who sent me a bunch of info (your risk, we're not advising etc.) plus another form 'Confirmation of Execution-Only Status' - it really isn't clear what it means? Can someone explain?

All I want is to take the money (transfer values) and place it into a new fund at Scottish Widows. Why is it so complicated?

It's complicated because compliancy and regulatory demands compel it. Financial Services abused its position of trust and application of common sense and now we're all paying the consequences of greed.

How old are you? Why not consider keeping the three small pots distinct from the one of £53k?

<<Separately, you can also exchange up to three pots, each worth £10,000 or less, for a cash lump sum – five times higher than the previous limit. This will benefit anyone who has more than £30,000 in pension savings but has up to three smaller pension pots from previous employment.>>

http://www.thisismoney.co.uk/money/pensions/articl...

Execution Only deprives you of much of the right to redress if things go wrong. I take your point though, it all seems simple enough. As an aside, I'd take considered, thoughtful and reflective advice on not touching Scottish Widows with a blummin' bargepole.

Simpo - that from the board cynic, I'm touched!!!

Thanks. I'm just a young 46 (well 47 this month), so plenty of time to go. I wanted to consolidate simply to make keeping track easier. I'm with Scottish Widows for the current pension as my company pays 10% on top of my 10% so its free money (so to speak). I will see how they perform, their literature and website are not the best to navigate (hence why I'm keeping my other big pot with Fidelity, seems to be in good funds, growing well, easy to manage alongside my ISAs).

I'll have a think about what to do with the smaller pots.

[SunsetZed]

timbo999 said:

It might be my misunderstanding, but 135 divided by 7 is just over 19... surely you expect to live to longer than 79?... current life expectancy is probably mid to late 80s...

I'd suggest that left invested sensibly it should be growing at the same time so that it's not such a simple calculation.

I agree though that it may not last long enough. I'd also ask has the OP factored in inflation and any inflation linked increases in the final salary scheme?

[timbo999]

SunsetZed said:

timbo999 said:

It might be my misunderstanding, but 135 divided by 7 is just over 19... surely you expect to live to longer than 79?... current life expectancy is probably mid to late 80s...

I'd suggest that left invested sensibly it should be growing at the same time so that it's not such a simple calculation.

I agree though that it may not last long enough. I'd also ask has the OP factored in inflation and any inflation linked increases in the final salary scheme?

Yes, I absolutely agree on both counts - its not as simple a calculation as Jim suggests, I was just indicating that the logic was flawed as he will live longer than he seemed to suggest...

I agree it should be left invested... and given the tax benefits, a pension scheme is possible the best place...

[CaptainSlow]

timbo999 said:

Yes, I absolutely agree on both counts - its not as simple a calculation as Jim suggests, I was just indicating that the logic was flawed as he will live longer than he seemed to suggest...

I agree it should be left invested... and given the tax benefits, a pension scheme is possible the best place...

plus ~7 years for the £45k taken out tax free

[Tiggsy]

Simpo Two said:

Ginge R said:

Simpo - that from the board cynic, I'm touched!!!

Heh!

'Execution only' means 'Don't blame us if it all goes wrong' and if you use an adviser he will say 'Investments can go down as well as up'. Your choice

not quite the same though!

Execution only means if the idea to transfer is a bad one - that's his problem, not theirs.

If an adviser completes the transfer, and the idea is dumb, then he's responsible for that advice.

The fact that investment values fall and rise is common to either approach and not an advice issue in the same way (unless the investor was low risk and the adviser suggested high risk funds - but thats a different issue to "is the transfer a good idea" one)

[Ginge R]

Useful (?) table here. All nice and clear then, sorted..

http://www.professionaladviser.com/professional-ad...

http://www.professionaladviser.com/professional-ad...