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The company I work for is sitting on it's arse and not setting up pension schemes. The auto-enrolment date for us is about 6 months away. I'm fed up of waiting for one to be set up, and others that have been here longer than me have been waiting a few years and still not got anything set up for them.
I've got a pension from a previous job that I need to transfer. I've deferred transferring that for a while but it needs to be done soon.
I can either wait about 6 months (may even be longer) for the company to set up a *group* pension on the auto-enrolment date, or look for alternatives. I've heard that if I set up my own private pension fund off my own back then the company still has to pay into it at 3%. If I wait for the company's group pension then it will still only be the minimum 3% it can get away with.
1. What is a group pension vs personal pension? The company is 'planning' on setting up a group pension but I think there might just be an option to have a personal pension.
2. If I set up a private pension off my own back, is it correct that the company still has to contribute towards it?
3. When the company does eventually get around to setting up a pension scheme (which will be as late as it can get away with judging by things at the moment) then it will be the legal minimum it can do, i.e. minimum payments etc. Would I be better off taking things into my own hands?
Thanks for any advice. Previous jobs have been helpful at setting things up and transferring funds. This company is less than useless, but the job is great so I'll be staying here a while and need to sort something out. Advice needed!
I've got a pension from a previous job that I need to transfer. I've deferred transferring that for a while but it needs to be done soon.
I can either wait about 6 months (may even be longer) for the company to set up a *group* pension on the auto-enrolment date, or look for alternatives. I've heard that if I set up my own private pension fund off my own back then the company still has to pay into it at 3%. If I wait for the company's group pension then it will still only be the minimum 3% it can get away with.
1. What is a group pension vs personal pension? The company is 'planning' on setting up a group pension but I think there might just be an option to have a personal pension.
2. If I set up a private pension off my own back, is it correct that the company still has to contribute towards it?
3. When the company does eventually get around to setting up a pension scheme (which will be as late as it can get away with judging by things at the moment) then it will be the legal minimum it can do, i.e. minimum payments etc. Would I be better off taking things into my own hands?
Thanks for any advice. Previous jobs have been helpful at setting things up and transferring funds. This company is less than useless, but the job is great so I'll be staying here a while and need to sort something out. Advice needed!
In reply to NottsRich:
No offence intended but I suggest you go speak to a friendly IFA about this for some initial advice. You would need their advice to set up a personal pension anyway.
> Advice needed!
No offence intended but I suggest you go speak to a friendly IFA about this for some initial advice. You would need their advice to set up a personal pension anyway.
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In reply to NottsRich:
Your company will get another company to come in and set up a pension. Your company will then only pay into that pension as they will have signed a contract to that effect and they will be getting the service for free. The company that your company employed will then pass the costs onto the employee in the form of ludicrous charges for 'management'. You will pay into the pension your company set up because it is 'free' money and there is no other way to get it. Your company will limit pay rises to compensate for being forced to pay into the scheme. The company your company employed will then make lots of money over the following 30 years and when it comes to withdrawing it as a pension you will realise that your company didn't actually pay in that much, you paid in quite a lot, the company your company employed took lots of it back out and the Chancellor ran away with a big chunk too.
Rock and a hard place.
Your company will get another company to come in and set up a pension. Your company will then only pay into that pension as they will have signed a contract to that effect and they will be getting the service for free. The company that your company employed will then pass the costs onto the employee in the form of ludicrous charges for 'management'. You will pay into the pension your company set up because it is 'free' money and there is no other way to get it. Your company will limit pay rises to compensate for being forced to pay into the scheme. The company your company employed will then make lots of money over the following 30 years and when it comes to withdrawing it as a pension you will realise that your company didn't actually pay in that much, you paid in quite a lot, the company your company employed took lots of it back out and the Chancellor ran away with a big chunk too.
Rock and a hard place.
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In reply to NottsRich:
Why? What's the rush?
Not sure why you are referring to 'group' stuff with quotations - a group pension just means that it's set up for all of the employees pay into the same scheme. It doesn't mean you share the money - your contributions are your contributions. The company has a legal obligation to set up an auto-enrolment compliant pension scheme and start paying into it on the roll out date. I'm assuming that since this is some time away you work for a very small company (roll out dates are based on company size with the largest companies having to do it first) so presumably you have a bit more flexibility to go and talk to them about it.
The company doesn't have to pay 3% into anything. When autoenrolment comes into effect for your company it has to pay in 1% alongside your minimum contribution of 0.8% (rising to 3% and 4% respectively by 2018)
See above. You are mixing up terms here. You will have a personal pension as part of a workplace (group) scheme. The workplace scheme will be, in the main, managed for you, probably with options for you to select from about risk profile etc. You'll have to do all the management of a personal pension if you set it up yourself. You may have greater control over where your contributions are invested if you set one up yourself (though probably not).
Nope. They have to provide a workplace pension scheme. There is no obligation to contribute to a personal scheme, though they may have a policy in place to do so.
nope - see above.
I think you should seek some proper advice but, in the interim, you can find out a lot about auto-enrolment etc at a variety of sites:
http://www.pensionsadvisoryservice.org.uk/
https://www.gov.uk/workplace-pensions/about-workplace-pensions
> I've got a pension from a previous job that I need to transfer. I've deferred transferring that for a while but it needs to be done soon.
Why? What's the rush?
> I can either wait about 6 months (may even be longer) for the company to set up a *group* pension on the auto-enrolment date, or look for alternatives.
Not sure why you are referring to 'group' stuff with quotations - a group pension just means that it's set up for all of the employees pay into the same scheme. It doesn't mean you share the money - your contributions are your contributions. The company has a legal obligation to set up an auto-enrolment compliant pension scheme and start paying into it on the roll out date. I'm assuming that since this is some time away you work for a very small company (roll out dates are based on company size with the largest companies having to do it first) so presumably you have a bit more flexibility to go and talk to them about it.
> I've heard that if I set up my own private pension fund off my own back then the company still has to pay into it at 3%. If I wait for the company's group pension then it will still only be the minimum 3% it can get away with.
The company doesn't have to pay 3% into anything. When autoenrolment comes into effect for your company it has to pay in 1% alongside your minimum contribution of 0.8% (rising to 3% and 4% respectively by 2018)
> 1. What is a group pension vs personal pension? The company is 'planning' on setting up a group pension but I think there might just be an option to have a personal pension.
See above. You are mixing up terms here. You will have a personal pension as part of a workplace (group) scheme. The workplace scheme will be, in the main, managed for you, probably with options for you to select from about risk profile etc. You'll have to do all the management of a personal pension if you set it up yourself. You may have greater control over where your contributions are invested if you set one up yourself (though probably not).
> 2. If I set up a private pension off my own back, is it correct that the company still has to contribute towards it?
Nope. They have to provide a workplace pension scheme. There is no obligation to contribute to a personal scheme, though they may have a policy in place to do so.
> 3. When the company does eventually get around to setting up a pension scheme (which will be as late as it can get away with judging by things at the moment) then it will be the legal minimum it can do, i.e. minimum payments etc. Would I be better off taking things into my own hands?
nope - see above.
> Thanks for any advice. Previous jobs have been helpful at setting things up and transferring funds. This company is less than useless, but the job is great so I'll be staying here a while and need to sort something out. Advice needed!
I think you should seek some proper advice but, in the interim, you can find out a lot about auto-enrolment etc at a variety of sites:
http://www.pensionsadvisoryservice.org.uk/
https://www.gov.uk/workplace-pensions/about-workplace-pensions
Post edited at 13:09
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In reply to Edradour:
I'm hugely cynical of our financial services industry. The first part (at least) is based on personal experience.
> Nothing like a bit of scaremongering!
I'm hugely cynical of our financial services industry. The first part (at least) is based on personal experience.
4
In reply to NottsRich:
Are we talking large or small amounts of transfer values?
Unless you are looking to retire soon, there really is no rush. Take your time and work through the optons.
Are we talking large or small amounts of transfer values?
Unless you are looking to retire soon, there really is no rush. Take your time and work through the optons.
1
In reply to neilh:
Relatively small amounts by most people's standards, but I don't have much and need it to start doing something for me. Fair point about looking at the options though, but I think time is against me.
My previous pension could either be withdrawn as cash, or transferred. I was out of work for 4-5 months and so didn't have a pension to transfer it into, so asked them to defer doing anything, to which they agreed. Started a new job and the contract said I'd get a pension after a 6 month probationary period. So I rang the previous pension company and asked to defer it longer - they said up to a maximum of a year. That time is soon up, and it's not looking likely that I'll get a pension at the end of my 6 month probationary period at this company, contrary to what I'd been led to believe before. Several others have been year a few years and still not got one. Waiting for the auto-enrolment date would be beyond the end of the 12 month deferral the previous pension company agreed to.
Edradour, thanks for the clarification on a lot of my points, particularly the group pension idea. As I've only dealt with company arranged pensions before a lot of this terminology is new to me. Turns out I knew quite a bit of it already, just not the terms used for it.
If it looks like I'll not be getting a pension set up for another 6 months, and the previous pension company won't hold the fund any more, I'll consider taking it out as cash and putting it in a savings account, then making it a lump sum payment into a new pension when I get one. I'll look for an IFA in the meantime.
Toccata, comments like that worry me. Not saying you're wrong mind! I think there's a lot of people around my age that don't really know what to do. A lot of people are saying pensions are worthless and investing in other things (eg property) is better. That's great if you have the capital to do it, but if not, we're stuck with pensions with a nagging suspicion that they'll be worthless when we eventually get to retirement age.
Skyfall, no offence taken, valuable advise.
Thanks all, much appreciated.
Relatively small amounts by most people's standards, but I don't have much and need it to start doing something for me. Fair point about looking at the options though, but I think time is against me.
My previous pension could either be withdrawn as cash, or transferred. I was out of work for 4-5 months and so didn't have a pension to transfer it into, so asked them to defer doing anything, to which they agreed. Started a new job and the contract said I'd get a pension after a 6 month probationary period. So I rang the previous pension company and asked to defer it longer - they said up to a maximum of a year. That time is soon up, and it's not looking likely that I'll get a pension at the end of my 6 month probationary period at this company, contrary to what I'd been led to believe before. Several others have been year a few years and still not got one. Waiting for the auto-enrolment date would be beyond the end of the 12 month deferral the previous pension company agreed to.
Edradour, thanks for the clarification on a lot of my points, particularly the group pension idea. As I've only dealt with company arranged pensions before a lot of this terminology is new to me. Turns out I knew quite a bit of it already, just not the terms used for it.
If it looks like I'll not be getting a pension set up for another 6 months, and the previous pension company won't hold the fund any more, I'll consider taking it out as cash and putting it in a savings account, then making it a lump sum payment into a new pension when I get one. I'll look for an IFA in the meantime.
Toccata, comments like that worry me. Not saying you're wrong mind! I think there's a lot of people around my age that don't really know what to do. A lot of people are saying pensions are worthless and investing in other things (eg property) is better. That's great if you have the capital to do it, but if not, we're stuck with pensions with a nagging suspicion that they'll be worthless when we eventually get to retirement age.
Skyfall, no offence taken, valuable advise.
Thanks all, much appreciated.
In reply to NottsRich:
The problem with investing in property is that you have to maintain it. And insure it.
An analogy would be if you had £1million. (Nice!) You could keep it in the bank, who would then likely use it to make a profit, but that's neither her nor there although it is your loss. Or you could keep it as 50,000 £20 notes in suitcases in your house. In which case you might lose the lot all at once, but no one would be making a profit. Or, you could keep the suitcases in a bank vault, who would charge you some sort of monthly fee.
Or you could invest in some tax advantaged account (pension) where it might or might not grow depending on all sorts of things that you have absolutely no control over. Over the last 100 years or so, this has been the smart move unless you are lucky or spectacularly unlucky (i.e a german between 1916 and 1930 or, less so, anyone investing a lump sum in the mid 1920s)
> Toccata, comments like that worry me. Not saying you're wrong mind! I think there's a lot of people around my age that don't really know what to do. A lot of people are saying pensions are worthless and investing in other things (eg property) is better. That's great if you have the capital to do it, but if not, we're stuck with pensions with a nagging suspicion that they'll be worthless when we eventually get to retirement age.
The problem with investing in property is that you have to maintain it. And insure it.
An analogy would be if you had £1million. (Nice!) You could keep it in the bank, who would then likely use it to make a profit, but that's neither her nor there although it is your loss. Or you could keep it as 50,000 £20 notes in suitcases in your house. In which case you might lose the lot all at once, but no one would be making a profit. Or, you could keep the suitcases in a bank vault, who would charge you some sort of monthly fee.
Or you could invest in some tax advantaged account (pension) where it might or might not grow depending on all sorts of things that you have absolutely no control over. Over the last 100 years or so, this has been the smart move unless you are lucky or spectacularly unlucky (i.e a german between 1916 and 1930 or, less so, anyone investing a lump sum in the mid 1920s)
In reply to NottsRich:
Well I would ignore what your new company is proposing and get on and sort out your pension so that it is set up for your needs . It is after all in your own interest to be financially secure and not anybody else's. After all you could have 2 pensions running side by side.
Well I would ignore what your new company is proposing and get on and sort out your pension so that it is set up for your needs . It is after all in your own interest to be financially secure and not anybody else's. After all you could have 2 pensions running side by side.
In reply to NottsRich:
That does not sound sense to my (non-expert) ears.** How about setting up a SIPP (which you can do yourself, anytime, e.g. see link below) and transfering it into that? (Ask the SIPP provider for a form, and get them to do it for you.)
http://www.hl.co.uk/partners/search/sipp
**Edit: In fact it's not even legally allowed (I think?) to turn a pension fund into cash until you retire. All you can do is transfer it.
> If it looks like I'll not be getting a pension set up for another 6 months, and the previous pension company won't hold the fund any more, I'll consider taking it out as cash and putting it in a savings account, then making it a lump sum payment into a new pension when I get one.
That does not sound sense to my (non-expert) ears.** How about setting up a SIPP (which you can do yourself, anytime, e.g. see link below) and transfering it into that? (Ask the SIPP provider for a form, and get them to do it for you.)
http://www.hl.co.uk/partners/search/sipp
**Edit: In fact it's not even legally allowed (I think?) to turn a pension fund into cash until you retire. All you can do is transfer it.
Post edited at 20:54
In reply to Coel Hellier:
My understanding is that if you have worked at a company with a pension plan for less than a certain time (2 years I think) then when you leave you can either get a refund of your contributions into the fund, or transfer the entire fund elsewhere.
My understanding is that if you have worked at a company with a pension plan for less than a certain time (2 years I think) then when you leave you can either get a refund of your contributions into the fund, or transfer the entire fund elsewhere.
In reply to pneame:
Nice analogy, thanks.
neilh, that's what I'm tending towards at the moment. Perhaps I'll hold off and see what the next month brings before making a decision. Afterall a month won't make a difference (up until my 12 month limit with the previous pension fund).
Nice analogy, thanks.
neilh, that's what I'm tending towards at the moment. Perhaps I'll hold off and see what the next month brings before making a decision. Afterall a month won't make a difference (up until my 12 month limit with the previous pension fund).
In reply to NottsRich:
As an aside - it's interesting how different countries have different philosophies about tangible assets. This from Bloomberg:
http://www.bloomberg.com/news/articles/2016-03-18/starwood-hotels-gets-bind...
"Chinese investors put a premium on owning real estate. Anbang Chairman Wu Xiaohui told Harvard University students a month before buying the Waldorf how solidly it was built. By contrast, U.S. companies such as Marriott and Starwood have been trying to shed real estate, seeing buildings as a capital burden requiring constant upkeep and favoring the high returns from managing and franchising hotels."
So that would likely make my philosophy a US-centric one!
As an aside - it's interesting how different countries have different philosophies about tangible assets. This from Bloomberg:
http://www.bloomberg.com/news/articles/2016-03-18/starwood-hotels-gets-bind...
"Chinese investors put a premium on owning real estate. Anbang Chairman Wu Xiaohui told Harvard University students a month before buying the Waldorf how solidly it was built. By contrast, U.S. companies such as Marriott and Starwood have been trying to shed real estate, seeing buildings as a capital burden requiring constant upkeep and favoring the high returns from managing and franchising hotels."
So that would likely make my philosophy a US-centric one!
In reply to NottsRich:
Your understanding is out of date - the rules changed last year (see link below).
There should be no pressure / conditions imposed by the operator of your old pension scheme to transfer it - you have saved money for your retirement and entitled to it when you retire. In reality, you can leave whatever contributions you have made to that pension in that scheme until you get to retirement age. The only real benefit of transferring is ease (and an incremental amount of compound interest).
http://www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change...
Your understanding is out of date - the rules changed last year (see link below).
There should be no pressure / conditions imposed by the operator of your old pension scheme to transfer it - you have saved money for your retirement and entitled to it when you retire. In reality, you can leave whatever contributions you have made to that pension in that scheme until you get to retirement age. The only real benefit of transferring is ease (and an incremental amount of compound interest).
http://www.pensionsadvisoryservice.org.uk/about-pensions/when-things-change...
Post edited at 13:52
In reply to NottsRich:
A property investment could be equally worthless, and a pension has the advantage that it will pay out forever.
Currently, annuity rates are poor so pensions aren't as good as they used to be. There is plenty of choice for investments these days, so an IFA will be able to guide you through all the options. Be aware that they have been known to recommend products which give them more commission than ones which are best for you, so once they've explained the rules of pensions and investments and given you the skills to read pension bumf you should be able to make a properly informed decision for yourself.
> A lot of people are saying pensions are worthless and investing in other things (eg property) is better. That's great if you have the capital to do it, but if not, we're stuck with pensions with a nagging suspicion that they'll be worthless when we eventually get to retirement age.
A property investment could be equally worthless, and a pension has the advantage that it will pay out forever.
Currently, annuity rates are poor so pensions aren't as good as they used to be. There is plenty of choice for investments these days, so an IFA will be able to guide you through all the options. Be aware that they have been known to recommend products which give them more commission than ones which are best for you, so once they've explained the rules of pensions and investments and given you the skills to read pension bumf you should be able to make a properly informed decision for yourself.
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