What happens to an old pension?
Discussion
Apologies for what is likely an exceedingly dumb question.
I have a pension via a DB scheme from a previous employer. What happens to the money in that pension since I stopped contributing?
Presumably it is still invested (and hopefully increasing) i.e. the amount in it is not "frozen" once you're no longer a member?
Think "well known pension scheme for academia"
I have a pension via a DB scheme from a previous employer. What happens to the money in that pension since I stopped contributing?
Presumably it is still invested (and hopefully increasing) i.e. the amount in it is not "frozen" once you're no longer a member?
Think "well known pension scheme for academia"
You should be able to review the pension status on the scheme web site, if it's the scheme I suspect it is....
Currently, the deferred benefits are increased at CPI if CPI is 5% or less, and 5% plus one half of the increase in CPI above 5% up to 15% CPI. Increases are capped at 10% once CPI goes beyond 15% :-( .
Currently, the deferred benefits are increased at CPI if CPI is 5% or less, and 5% plus one half of the increase in CPI above 5% up to 15% CPI. Increases are capped at 10% once CPI goes beyond 15% :-( .
Contact the ex employer and ask them for a latest pension statement.
As it's a DB scheme you do not have your own dedicated fund in the scheme: you have a deferred pension of an annual amount calculated at the date you left the company. Depending on the scheme's provisions that deferred pension may increase annually between the date it was set up and when you start to arrange to have it paid to you.
Subject to the scheme's provisions, you may be able to apply to have a calculation made of the current transfer value of the deferred pension and you may then wish to consider transferring that value to another pension arrangement where it could be treated as your own dedicated fund. Note that in general such a transfer needs very careful consideration because of the rights that you may be giving up when taking the transfer. Seek advice.
R.
As it's a DB scheme you do not have your own dedicated fund in the scheme: you have a deferred pension of an annual amount calculated at the date you left the company. Depending on the scheme's provisions that deferred pension may increase annually between the date it was set up and when you start to arrange to have it paid to you.
Subject to the scheme's provisions, you may be able to apply to have a calculation made of the current transfer value of the deferred pension and you may then wish to consider transferring that value to another pension arrangement where it could be treated as your own dedicated fund. Note that in general such a transfer needs very careful consideration because of the rights that you may be giving up when taking the transfer. Seek advice.
R.
Contact the ex employer and ask them for a latest pension statement.
As it's a DB scheme you do not have your own dedicated fund in the scheme: you have a deferred pension of an annual amount calculated at the date you left the company. Depending on the scheme's provisions that deferred pension may increase annually between the date it was set up and when you start to arrange to have it paid to you.
Subject to the scheme's provisions, you may be able to apply to have a calculation made of the current transfer value of the deferred pension and you may then wish to consider transferring that value to another pension arrangement where it could be treated as your own dedicated fund. Note that in general such a transfer needs very careful consideration because of the rights that you may be giving up when taking the transfer. Seek advice.
R.
As it's a DB scheme you do not have your own dedicated fund in the scheme: you have a deferred pension of an annual amount calculated at the date you left the company. Depending on the scheme's provisions that deferred pension may increase annually between the date it was set up and when you start to arrange to have it paid to you.
Subject to the scheme's provisions, you may be able to apply to have a calculation made of the current transfer value of the deferred pension and you may then wish to consider transferring that value to another pension arrangement where it could be treated as your own dedicated fund. Note that in general such a transfer needs very careful consideration because of the rights that you may be giving up when taking the transfer. Seek advice.
R.
Contact the ex employer and ask them for a latest pension statement.
As it's a DB scheme you do not have your own dedicated fund in the scheme: you have a deferred pension of an annual amount calculated at the date you left the company. Depending on the scheme's provisions that deferred pension may increase annually between the date it was set up and when you start to arrange to have it paid to you.
Subject to the scheme's provisions, you may be able to apply to have a calculation made of the current transfer value of the deferred pension and you may then wish to consider transferring that value to another pension arrangement where it could be treated as your own dedicated fund. Note that in general such a transfer needs very careful consideration because of the rights that you may be giving up when taking the transfer. Seek advice.
R.
As it's a DB scheme you do not have your own dedicated fund in the scheme: you have a deferred pension of an annual amount calculated at the date you left the company. Depending on the scheme's provisions that deferred pension may increase annually between the date it was set up and when you start to arrange to have it paid to you.
Subject to the scheme's provisions, you may be able to apply to have a calculation made of the current transfer value of the deferred pension and you may then wish to consider transferring that value to another pension arrangement where it could be treated as your own dedicated fund. Note that in general such a transfer needs very careful consideration because of the rights that you may be giving up when taking the transfer. Seek advice.
R.
xeny said:
You should be able to review the pension status on the scheme web site, if it's the scheme I suspect it is....
Currently, the deferred benefits are increased at CPI if CPI is 5% or less, and 5% plus one half of the increase in CPI above 5% up to 15% CPI. Increases are capped at 10% once CPI goes beyond 15% :-( .
Thank you and it probably is Currently, the deferred benefits are increased at CPI if CPI is 5% or less, and 5% plus one half of the increase in CPI above 5% up to 15% CPI. Increases are capped at 10% once CPI goes beyond 15% :-( .
I found a calculator on their website that gives some projections based off the last statement they sent me.
My basic understanding is that as it's a DB scheme you need one seriously good reason to even think about moving it, and financial advice isn't free even if the final outcome is "don't move it", plus we're not talking a significant amount.
b
hstewie said:
hstewie said: My basic understanding is that as it's a DB scheme you need one seriously good reason to even think about moving it, and financial advice isn't free even if the final outcome is "don't move it", plus we're not talking a significant amount.
That was 100% the case until the pension freedoms started by the coalition govt. They allow you to take all of your DC pension in cash (taxable, suicide move if it's a lot) but as a result some people switched out of DB into DC to do this very thing. Hence all the pension scams. In response the companies with big DB pension liabilities have pushed up the cash-out rates to encourage people to move, because once you've gone they've lost all the risk. They carry stock market, inflation and interest risk and it's a minefield.
It's got to the point where it can be the right decision to leave, if you're sensible with the money that comes out, because of the extra flexibility that comes with it.
I don't have the numbers in front of me but from their modeler it was projecting something like £8k/year plus a lump sum which I don't recall.
Whatever the "pot" is (they don't give a transfer/cash-out value unless you ask) it's not massive which is why simply leaving it feels more sensible.
I read the whole "sausage and chips" British Steel debacle so I know it can be a minefield if you don't get good advice, and again it doesn't feel enough to worry about yet.
Whatever the "pot" is (they don't give a transfer/cash-out value unless you ask) it's not massive which is why simply leaving it feels more sensible.
I read the whole "sausage and chips" British Steel debacle so I know it can be a minefield if you don't get good advice, and again it doesn't feel enough to worry about yet.
bhstewie said:
hstewie said: I don't have the numbers in front of me but from their modeler it was projecting something like £8k/year plus a lump sum which I don't recall.
Whatever the "pot" is (they don't give a transfer/cash-out value unless you ask) it's not massive which is why simply leaving it feels more sensible.
I read the whole "sausage and chips" British Steel debacle so I know it can be a minefield if you don't get good advice, and again it doesn't feel enough to worry about yet.
Just remember that, depending on the exact details, £8k per year (with inflation increases) could be a transfer value of over £300k...!Whatever the "pot" is (they don't give a transfer/cash-out value unless you ask) it's not massive which is why simply leaving it feels more sensible.
I read the whole "sausage and chips" British Steel debacle so I know it can be a minefield if you don't get good advice, and again it doesn't feel enough to worry about yet.
bhstewie said:
hstewie said: I don't have the numbers in front of me but from their modeler it was projecting something like £8k/year plus a lump sum which I don't recall.
Whatever the "pot" is (they don't give a transfer/cash-out value unless you ask) it's not massive which is why simply leaving it feels more sensible.
I read the whole "sausage and chips" British Steel debacle so I know it can be a minefield if you don't get good advice, and again it doesn't feel enough to worry about yet.
£8k a year plus the 25% cash tax free the fund could be c£200k (purely based on some of the annuity tables)Whatever the "pot" is (they don't give a transfer/cash-out value unless you ask) it's not massive which is why simply leaving it feels more sensible.
I read the whole "sausage and chips" British Steel debacle so I know it can be a minefield if you don't get good advice, and again it doesn't feel enough to worry about yet.
sidicks said:
Just remember that, depending on the exact details, £8k per year (with inflation increases) could be a transfer value of over £300k...!
But presumably that transfer value increases as time goes by so right now any transfer value would be relatively low?When I was paying into it I wasn't on a massive salary and was just paying the defaults for about 10 years so it can't be a forgotten huge pile of money right now.
To be clear that £8k is what their projections calculator shows based off the statement when I left and if I draw when 65.
Seems to show a default lump sum of £27K (ish) and £8k/year (ish) assuming 2.5% inflation @ 65..
I'm not close to retirement yet, I've got 15 years if I even wanted to think about it in my 50's but I'm sure you all know the feeling where a pension goes from being that thing you just tick the box and pay into, to being that thing where one day you realise you're a little older and actually give it a some thought
bhstewie said:
hstewie said: But presumably that transfer value increases as time goes by so right now any transfer value would be relatively low?
That depends what happens to interest rates etc. Because interest rates are currently so low transfer values are relatively high - the amount that needs to be set aside now, for a benefit in the future, is higher as less interest will be earned.bhstewie said:
hstewie said: When I was paying into it I wasn't on a massive salary and was just paying the defaults for about 10 years so it can't be a forgotten huge pile of money right now.
I thought this was a DB pension? If so, the amount you were contributing was relatively small compared to the amount the employer / taxpayer was paying. That pension is guaranteed, regardless of what happens to interest rates, investment markets, inflation, longevity etc.bhstewie said:
hstewie said: To be clear that £8k is what their projections calculator shows based off the statement when I left and if I draw when 65.
Seems to show a default lump sum of £27K (ish) and £8k/year (ish) assuming 2.5% inflation @ 65..
I'm not close to retirement yet, I've got 15 years if I even wanted to think about it in my 50's but I'm sure you all know the feeling where a pension goes from being that thing you just tick the box and pay into, to being that thing where one day you realise you're a little older and actually give it a some thought
Not something to be enacted without proper thought and advice. Agreed!Seems to show a default lump sum of £27K (ish) and £8k/year (ish) assuming 2.5% inflation @ 65..
I'm not close to retirement yet, I've got 15 years if I even wanted to think about it in my 50's but I'm sure you all know the feeling where a pension goes from being that thing you just tick the box and pay into, to being that thing where one day you realise you're a little older and actually give it a some thought
Edited by sidicks on Tuesday 21st August 08:33
otherman said:
bhstewie said:
hstewie said: My basic understanding is that as it's a DB scheme you need one seriously good reason to even think about moving it, and financial advice isn't free even if the final outcome is "don't move it", plus we're not talking a significant amount.
That was 100% the case until the pension freedoms started by the coalition govt. They allow you to take all of your DC pension in cash (taxable, suicide move if it's a lot) but as a result some people switched out of DB into DC to do this very thing. Hence all the pension scams. In response the companies with big DB pension liabilities have pushed up the cash-out rates to encourage people to move, because once you've gone they've lost all the risk. They carry stock market, inflation and interest risk and it's a minefield.
It's got to the point where it can be the right decision to leave, if you're sensible with the money that comes out, because of the extra flexibility that comes with it.
sidicks said:
Not something to be enacted without proper thought and advice. Agreed!
£8k a year banked£27k lump sum banked
£8.5k state pension
Let’s say 65 to ? 85? oAP lifespan as such you could spread that £27k over those years too
As such total banked annual effective pension income of unst shy of £18k
£12k will be tax free and then the remaining £6k you’ll pay 20% tax on it (less the £1.35k spread of the tax free so £4.65k so £5.07k
All up tax take home of £17.07k banked nice
£17.07k banked now per year index linked for life.
You’ve 15 more years of work which you may choose to continue paying into a pension which will simply increase that position.
Add in the wife’s £8.5k state pension + whatever else she has and you are on a banked c£25k a year joint income. Call it £2,100 pcm - what bills will you have when retired? Clearly that already covers ALL living costs but not multiple Sandals holidays to pricy locations but plenty to do something.
You’ve 15 more years of work which you may choose to continue paying into a pension which will simply increase that position.
Add in the wife’s £8.5k state pension + whatever else she has and you are on a banked c£25k a year joint income. Call it £2,100 pcm - what bills will you have when retired? Clearly that already covers ALL living costs but not multiple Sandals holidays to pricy locations but plenty to do something.
Welshbeef said:
£17.07k banked now per year index linked for life.
You’ve 15 more years of work which you may choose to continue paying into a pension which will simply increase that position.
Add in the wife’s £8.5k state pension + whatever else she has and you are on a banked c£25k a year joint income. Call it £2,100 pcm - what bills will you have when retired? Clearly that already covers ALL living costs but not multiple Sandals holidays to pricy locations but plenty to do something.
Isn't the state pension for couples less than the sum of two singletons?You’ve 15 more years of work which you may choose to continue paying into a pension which will simply increase that position.
Add in the wife’s £8.5k state pension + whatever else she has and you are on a banked c£25k a year joint income. Call it £2,100 pcm - what bills will you have when retired? Clearly that already covers ALL living costs but not multiple Sandals holidays to pricy locations but plenty to do something.
I think that’s a hangover from the old days when women didn’t tend to work once they got married - if only the man had paid sufficient NI contributions, there would be a joint pension about 60% higher than the single pension.
These days, as long as both members of the couple have paid sufficient NI, they get a full Basic State Pension each.
These days, as long as both members of the couple have paid sufficient NI, they get a full Basic State Pension each.
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