Pension, paid into fund, now left company

arctan

quick question.

I was paying into a pension scheme for 2 and a half years, the regular 6% and the employer makes up some of the rest of it.

I vaguely remember having an option before the 2 year mark whether to continue paying in, or pulling out of the fund.

Obviously that time has passed, and I have since left the company I was working for which was paying it in.

Just wondering where I stand on this.

I rang the pensions company and they said my contributions, minus my employers contributions, will be taken from the fund and set up in it's own account, which I am locked into, so I can either:

a)continue contributing or
b)leave it as is and it will wittle down to nothing over the years through charges

is this correct? as it would be a handy couple of grand to have from what I make it out to be.

coylemj

Are now in a company with a pension scheme? If you are then the best plan would be to move the money from the old scheme into your current scheme, that's assuming the present scheme is defined contribution which it almost certainly is.

arctan

is that possible? I'm moving from Ireland to the UK and their scheme is UK based

yeah, I'm almost 100% sure it was defined contribution.

edit: sorry yes it was and the new scheme is pretty much the same as previous, 6% contribution.

SBarrett

I blogged on this a couple of weeks ago. I've cut and pasted it below for you. First thing though, if you were in the scheme for 2.5 years, you are entitled to the employers contributions by law. You need to get that clarified as it's important.


There are a number options that are open to you.

Leave your pension where it is

Your pension is set up under trust, which means that it is not an asset of the company and therefore safe from the liquidator and creditors. If you wish, you can just leave the pension where it is and wait until your retire before maturing it.

You have no control over the investment funds. This means you can only invest in the funds made available by the trustees. You cannot switch between funds without the trustees signature.
You have to keep in contact with the trustees of your pension. If you are a long way from retirement, this may prove difficult as trustees die, companies merge, are bought out or close down.
If you are in a defined benefit pension, you need to be aware of the scheme funding levels. Most Irish defined benefit schemes are in deficit and if your company is making people redundant, it is likely your pension scheme is too. The issue of defined benefit schemes is a bit more complex and I wrote a piece on this previously.
Transfer pension to a Buy Out Bond

A Buy Out Bond is a pension designed specifically to receive the retained pension benefits from employer pension schemes. They are also know as Personal Retirement Bonds.

You will have complete control over the investment process and can make investment changes yourself.
You will have access to the full investment range on offer from the chose insurance company, whereas under most company paid pension schemes, there is a limited fund choice to members.
You are bound by the same rules as the company pension scheme, so things like the retirement age will remain the same. You also have the option of drawing down your pension benefits from age 50 if you want.
If you were in a defined benefit scheme, you will now be assuming all the investment risk and it is unlikely you will receive the same benefits at retirement as a fully funded defined benefit scheme. Again, read my previous piece on this before making a decision.
If you transfer to a buy out bond, you can always transfer the benefits to a new employer pension scheme in the future.
When you mature the bond, you can either take up to 150% final salary as a tax-free lump sum (dependent on years service) and purchase an annuity with the remainder or take 25% of the fund value tax-free and invest the remainder in an ARF.
Transfer pension to a PRSA

A PRSA is a different type of pension that was set up by the government. It is similar to a Buy Out Bond in that you can have a great fund choice. If transferring from a company pension plan, there are some stipulations before you can transfer.

You must have been in the scheme for 15 years or less; or
The scheme is being wound up or you are changing employment.
If the fund is worth more than €10,000, a Certificate of Comparison is required. This document compares the benefits that would be received if you stayed in the scheme and the benefits if you move to a PRSA. The cost of having this completed varies.
At retirement under the PRSA, you take 25% of the fund value tax-free and you can either purchase and annuity or invest in an ARF with the remainder.
Transfer pension to a new employer scheme

If you get new employment and there is a company pension plan in place, you may transfer your benefits to the new scheme.

You keep your benefits in once place.
Under company schemes, you have to be a member of the scheme for 2 years to be legally entitled to the value of the employers contributions. If you transfer the retained benefits into the scheme, the service under your previous employer count towards the 2 year requirement under the new pension scheme!
Get new employer to take over as trustee

Your new employer can elect to take over as the trustee of the old pension plan and start contributing to the plan. This really only applies to one man executive pension plans. It is especially useful if you start up your own business and your company can act as the trustee.

Steven

arctan

went to the site to see the layout better (great site btw)

Ideally (for me, possibly not financial wise) I'd like to transfer my pension (from my previous Irish companies defined benefit scheme) into my new employers pension scheme (defined benefit and in the UK)

how messy would this be?

I ran this by my pension company in Ireland, and they only gave me the two options as I mentioned in the original post, I guess I was being fobbed off ?

SBarrett

Thanks, I was going to post a link but didn't want to get done for advertising, I'm only a newbie here!

You can't transfer defined benefit to defined benefit. You have to take a transfer value from your Irish plan. The value is dependent on the solvency levels of the DB scheme. This can be then transferred to the UK. There is an arrangement between the Irish Revenue and HM Revenue that you can transfer pensions between Ireland and the UK. A pension plan has to be "QROPS approved" for it to happen.

It is unlikely the people you would speak to at customer service would know how to do it.

arctan

how do I find out the transfer value, find out if both pensions are QROPS approved and who would I talk to, to put the ball in motion?

sorry about the numerous questions, I haven't a notion at all about pensions or how they work. to me, all they were was a deduction from my pay that I'd see at retirement age. Never thought I'd be trying to negotiate transfers from Ireland to the UK a few months back.

SBarrett

It's no problem.

For a defined benefit pension scheme, you have to ask the trustees to calculate the value for you. The best thing to do is ask HR.

If you were only in it 2.5 years, it won't be worth very much.

To transfer it, you're best doing it from the UK. You have to have a plan to transfer it to over there, so you need a UK advisor or be a member of the UK scheme. Any advisor worth his salt will know about QROPS approved schemes. It's not very difficult, just a load of forms to fill out.

arctan

thanks for all the info :-)