Transferring pensions into other pensions
Discussion
Forgive my naivety about such important matters in my life! 
So I have worked in my industry for 16 years now for two different employers. I worked from 2000-2007 for one and when I joined my current employer in 2007 I started a new pension and my old one was frozen. With the benefit of hindsight I should have put them both in the same pot at the time.
I have asked about transferring my old one into my new one and essentially been advised that the 7 years of my old pension buys me 3.5 years of my new pension. My current salary being quite a bit higher than my old one.
Has anyone got any experience of this?
So I have worked in my industry for 16 years now for two different employers. I worked from 2000-2007 for one and when I joined my current employer in 2007 I started a new pension and my old one was frozen. With the benefit of hindsight I should have put them both in the same pot at the time.
I have asked about transferring my old one into my new one and essentially been advised that the 7 years of my old pension buys me 3.5 years of my new pension. My current salary being quite a bit higher than my old one.
Has anyone got any experience of this?
You really need some independent financial advice on this one.
You appear to be in a defined benefit scheme and are going to receive additional 'years' with your transfer from your old scheme. There are so many assumptions relative to you that need to be made that it's difficult to give anything close to half decent advice on a forum.
You appear to be in a defined benefit scheme and are going to receive additional 'years' with your transfer from your old scheme. There are so many assumptions relative to you that need to be made that it's difficult to give anything close to half decent advice on a forum.
It reads as if you have an historic defined benefit pension (frozen - deferred) and are also currently accruing pension in a defined benefit pension scheme.
Your frozen pension will broadly be increased in line with an inflation index until you reach retirement age/retire.
Transferring this pension into your current scheme (which is unusual these days as most schemes don't accept transfer-ins), you are being offered additional years service (from your post). The pension you earn from the additional years' service granted to you, will be based on (again, broadly) your earnings with your current employer, while a member of your current scheme. If your salary has increased materially over the years since leaving, then notwithstanding other factors, you may expect to receive fewer years service than you accrued in the transferring scheme; double the salary, half the years, but a similar pension.
This ignores the fact that earnings may be assumed to go up above inflation (hence reducing the comparable number of years secured), the different benefits provided in each of the pension schemes (better benefits in new scheme = fewer years secured in new scheme), and the different assumptions used by the schemes to calculate the transfer value, and to convert this transfer value into the number of years secured.
Edit: if you're after advice on whether to transfer, best use an IFA - all circumstances are different, personal and otherwise. Imagine transferring your pension into a scheme, only for the employer to go bust and for you to lose a chunk of it.
Your frozen pension will broadly be increased in line with an inflation index until you reach retirement age/retire.
Transferring this pension into your current scheme (which is unusual these days as most schemes don't accept transfer-ins), you are being offered additional years service (from your post). The pension you earn from the additional years' service granted to you, will be based on (again, broadly) your earnings with your current employer, while a member of your current scheme. If your salary has increased materially over the years since leaving, then notwithstanding other factors, you may expect to receive fewer years service than you accrued in the transferring scheme; double the salary, half the years, but a similar pension.
This ignores the fact that earnings may be assumed to go up above inflation (hence reducing the comparable number of years secured), the different benefits provided in each of the pension schemes (better benefits in new scheme = fewer years secured in new scheme), and the different assumptions used by the schemes to calculate the transfer value, and to convert this transfer value into the number of years secured.
Edit: if you're after advice on whether to transfer, best use an IFA - all circumstances are different, personal and otherwise. Imagine transferring your pension into a scheme, only for the employer to go bust and for you to lose a chunk of it.
Edited by number2 on Tuesday 10th May 13:56
Jockman said:
PurpleMoonlight said:
You really need some independent financial advice on this one.
PurpleMoonlight said:
You appear to be in a defined benefit scheme...
Indeed. Transferring final salary to final salary really is a complicated area.I do find it interesting, as an industry outsider, that the people who know more about their products than anyone else are unable to 'advise' on them!
'Hey Simpo you're a photographer. Can you advise us on your product?'
'No sorry you'll have to talk to a complete stranger and do what they say'.
It's very odd.
'Hey Simpo you're a photographer. Can you advise us on your product?'
'No sorry you'll have to talk to a complete stranger and do what they say'.
It's very odd.
Jockman said:
Not entirely sure on DB to DB but I know that it is not permitted to go DB to DC without first taking proper advice.
A friend of mine took his DB pension out and moved it to a DC - he apparently spoke to an advisor who appeared to give him the confidence it was a great idea.... When we spoke over a BBQ beer he had long since done that and I had to say sorry I think you've made a huge error - his response "it's easier now just one pension to keep informed of my address and correspondence" I decided to change topics as the decision had been made so why carry on discussing it as even if he realised oh f
k it was too late. Note he was a Finance mgr too.......
Personally I have a blend of DB DC and Career Average over all the years I've worked not once would I consider moving them to "one to make managing it easier" and NEVER DB to DC
Jockman said:
Welshbeef said:
If you can afford to pay in be it yourself or yourself+ employer to get to 14/16% of your annual salary that's the same effective rate as career average.
I reckon I'll be fine but that's an interesting calculation to know for the wife 
Rough numbers but a good guide.
Generally on DC people pay in 3% and that's matched by employers hence come retirement the gulf of incomes between DC and DB
This thread from just over a year ago makes reference to a problem which is now exploding onto the scene, and which will only get worse - defined benefit schemes going into protection. Ironically, it refers to the BHS scheme, and to John Ralfe who's opining on it this week to Frank Field's select committee.
http://www.pistonheads.com/gassing/topic.asp?t=147...
I'm not dogmatic about DB to DC transfer, in some cases not to transfer it would be conceivably daft. Now that a pension is no longer a whole of life product, there's a lot more flexibility to how it may be used but it remains the nuclear option and most advisers would run a mile from transferring it. Still never done one mind!
http://www.pistonheads.com/gassing/topic.asp?t=147...
I'm not dogmatic about DB to DC transfer, in some cases not to transfer it would be conceivably daft. Now that a pension is no longer a whole of life product, there's a lot more flexibility to how it may be used but it remains the nuclear option and most advisers would run a mile from transferring it. Still never done one mind!
Simpo Two said:
I do find it interesting, as an industry outsider, that the people who know more about their products than anyone else are unable to 'advise' on them!
1. The comments provided have emphasised the importance of receiving proper advice2. Surely you must be aware of the massive amount of regulation about providing financial advice to the public?
3. There is far too little information provided to be able to provide any sort of useful, if generic, comment for the OP.
Simpo Two said:
'Hey Simpo you're a photographer. Can you advise us on your product?'
'No sorry you'll have to talk to a complete stranger and do what they say'.
It's very odd.
No, a comparable analogy would be for me to tell you I was having problems with my camera and asking what camera you'd recommend me to buy. But without telling you what my current camera was, what problems I was having, what I was going to use the new camera for and what my budget was...'No sorry you'll have to talk to a complete stranger and do what they say'.
It's very odd.
Jockman said:
Not entirely sure on DB to DB but I know that it is not permitted to go DB to DC without first taking proper advice.
Yup.I was forced to transfer out a DB pension (because I had only worked for that employer for 1 year - scheme rules), and despite this has to sign a waiver confirming I had received independent financial advice before taking the transfer.
sidicks said:
No, a comparable analogy would be for me to tell you I was having problems with my camera and asking what camera you'd recommend me to buy. But without telling you what my current camera was, what problems I was having, what I was going to use the new camera for and what my budget was...
Absolutely, one would need to know many things to be able to give good advice. I could ask you questions and you could tell me. The real problem I think is that the industry has become so complex and is so wrapped up in regulations (due in part to its past behaviour) and so divorced from its customers that it can hardly move. So the part about interacting with customers has largely been subbed out, either voluntarily or involuntarily. I have a pension to move too (having been sold an unsuitable one); we'll find out how easy it is.
Anyway, sorry for rambling and I hope the OP gets his pensions sorted out
Simpo Two said:
Absolutely, one would need to know many things to be able to give good advice. I could ask you questions and you could tell me. The real problem I think is that the industry has become so complex and is so wrapped up in regulations (due in part to its past behaviour) and so divorced from its customers that it can hardly move.
It is 'wrapped up in regulations' due to governments trying to appease an ill-informed public who think 'more regulation equals better' and don't understand the consequences.Simpo Two said:
So the part about interacting with customers has largely been subbed out, either voluntarily or involuntarily.
The opposite - each customer is individual, hence the need for tailored device to ensure the product or transfer is appropriate.Simpo Two said:
I have a pension to move too (having been sold an unsuitable one); we'll find out how easy it is.
Anyway, sorry for rambling and I hope the OP gets his pensions sorted out
If you are moving from one DC pension to another it should be possible without having to take external advice.Anyway, sorry for rambling and I hope the OP gets his pensions sorted out
Edited by sidicks on Wednesday 11th May 11:12
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