Pension Help

[Progressive]

Apologies if this is the most boring question ever!

A couple of years ago, aged 23 I decided that I needed to start preparing for the future. The company I worked for offered a good pension scheme so I joined.

23 months on, I am leaving the company for a number of reasons. As the threshold for 'freezing' the pension is 24 months I have 2 options.

1) Take the insallments back as cash after tax
2) Transfer to another scheme

Problem is, I am going overseas to work, for an overseas company within which a pension isn't a benefit.

What should I be looking at doing? I've done some research but I'm quite ill-informed and don't really understand what I should do for the best.

[bogie]

transfer the money into a SIPP and manage it yourself

[ellroy]

bogie said:

transfer the money into a SIPP and manage it yourself

And seriously how much money do you thnik a 23 year old contributing for less than two years will have got together?

The flat rate annual costs alone in a SIPP would crucify him, never mind the set up costs.

Plus he said he's quite ill informed, hardly a candidate for self selection of investments. FFS.

There are offhsore versions of pensions available. I'd suggest speaking to a reputable IFA, fee paying, who could offer you some sensible advice rather than asking on here. Have a word with your parents/people you know for some recommendations about IFAs as a first step.

[98elise]

At your age take the money back, and enjoy it now.

[Progressive]

Thanks for the responses. I've accrued about £2,500 which is nothing in the grand scheme of things I know. I'll look into it and try and come up with something that works for me. I understood it as if I transferred it I would get some form of 'matched' amounts from the new institution as my employer used to contribute. Perhaps not.

[Progressive]

Further to my previous posts some time ago, I have now received the documentation through from my previous emplyer relating to my pension. My options are as follows:

1) Take an ex-gratia payment equal to my payments into the scheme over the past two years. This is subject to PAYE. The end result is not a massive amount to cash.

2) Transfer the balance of the scheme (around four times as much as option 1) into a private pension arrangement or that of the new employer.

Due to my situation of currently working overseas, there is no ‘new employer’s scheme’ for me to transfer to. I don’t really want to take the pitiful amount of cash either. Transfering into another scheme seems the most attractive (free money from previous employer) although I will not be able to / don’t want to continue paying into an arrangement at the moment.

Any advice?

[groak]

Progressive said:

.....the pitiful amount of cash.....

Just out of interest, after 23 months how much profit (ie amount in excess of your contributions) did this thing make ?

[wattsm666]

Transfer it to another fund if you don't need the cash.

[Progressive]

groak said:

Just out of interest, after 23 months how much profit (ie amount in excess of your contributions) did this thing make ?

Nil (or nothing of note).

[Progressive]

wattsm666 said:

Transfer it to another fund if you don't need the cash.

Thanks. Any recommendations on an appropriate fund? As mentioned, I don't want a 'pension' as I am unable (or unwilling) to maintain monthly payments into such an arrangement.

[groak]

Progressive said:

groak said:

Just out of interest, after 23 months how much profit (ie amount in excess of your contributions) did this thing make ?

Nil (or nothing of note).

So you'd have been as well putting the money into a box under your bed for all the difference it would have made profitwise. Hmmm.

Has anyone (eg 'investment professional' or whatever pension salesmen are called these days) told you that one day you buy an annuity with the (fairly profitless) fund which pays a paltry return, and then when you die the fund gets stolen?

That's often a bit they conveniently forget to highlight.

Never mind. They say pensions are next for the Scandal Circus and multi-billion compensation industry.

Edited by groak on Monday 16th July 13:29

[johnfm]

groak said:

Progressive said:

groak said:

Just out of interest, after 23 months how much profit (ie amount in excess of your contributions) did this thing make ?

Nil (or nothing of note).

So you'd have been as well putting the money into a box under your bed for all the difference it would have made profitwise. Hmmm.

Has anyone (eg 'investment professional' or whatever pension salesmen are called these days) told you that one day you buy an annuity with the (fairly profitless) fund which pays a paltry return, and then when you die the fund gets stolen?

That's often a bit they conveniently forget to highlight.

Never mind. They say pensions are next for the Scandal Circus and multi-billion compensation industry.

Edited by groak on Monday 16th July 13:29

Except part of what he has put away was matched by his employer AND 'free' money from the tax man.

Open a SIPPDEAL account or similar - seem to have very low fees.

Buy a bunch of shares - do you own research or just riak it aon AIM oil stocks, or APple or Farcebook and forget about them.

[kitz]

It's a pension buy 10 sovereigns . Groak is right ,pensions are a racket the ones I took out 30 yrs ago ( to sweeten a bank manager ) are the worst investments I have ever made .

[groak]

johnfm said:

Except part of what he has put away was matched by his employer AND 'free' money from the tax man......

....and they STILL managed to make zero gain from it??? (except for themselves, of course).

[sidicks]

groak said:

....and they STILL managed to make zero gain from it??? (except for themselves, of course).

You really are a tiresome individual aren;t you?

What investment choice did the OP make?

What was the return on those underlying investments?

Without knowing that information, your comments are, as usual, meaningless.

[northandy]

If you take the cash back you will lose the company contribution, then have the tax benefit taken back off.

[SirBlade]

sidicks said:

You really are a tiresome individual aren;t you?

What investment choice did the OP make?

What was the return on those underlying investments?

Without knowing that information, your comments are, as usual, meaningless.

he makes sense. you however, don't.

[sidicks]

SirBlade said:

he makes sense. you however, don't.

I'm sorry you can't understand basic financial products.

The return achieved on the pension will be dictated by what the funds were invested in. The investment choice is made by the policyholder, not the pension provider.

The fact that the return on the fund was low is likely to be primarily driven by the investment strategy chosen, NOT because a pension is poor value.

However, based on the information provided, it is impossible to tell.

That won't stop the ignorant making supid comments though....

[johnfm]

FAOD, I am not a big fan of pensions for a number of reasons..

BUT, the free money from employer and tax man is just too hard to ignore. Unless you make really big bucks and so can take various punts on start ups through EIS etc, the free money is worth it.

Just try and manage it a bit - 3 monthly check up with the advisor, punt in emerging or BRIC funds when young, somewhere more boring when you're older and have a bigger pot.

I suppose the difficulty is that most people are busy working and don't have the energy, time or inclination to also manage a pension - especially if it is tiny.

[kitz]

The money from the taxman is not free it is deferred .I pay tax on my pension and on a lot higher rate than the so called free money they gave me .