- Helping members of occupational pension schemes to better understand their benefits.

23rd June 2018
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This thread: Closure of company pension scheme Post No.
22/06/2013 14:14

Post Count: 1
Join Date: 22/06/2013

Hello. I am new here and need some advice on what to do with my pension.


The company I used to work for, and who currently hold my pension fund, are changing pension providers and shutting down the existing scheme. They have written to me with four options. I am only 24, so nowhere near retirement age, but I still want to make the right decisions now to ensure I am comfortable when I retire (hopefully at 55...!!). Having worked for them from the age of 18 to 23 I have just under £5,000 in my pension. I am not due to start work at my new employer for another week, 1st July 2013, and I suspect (although I haven't checked) I will have to wait about three months before I can set up and start paying into the pension scheme they provide - and therefore can't transfer this existing pension pot into it. 


The options I have been given are as follows:-

Option 1 - Have my benefits automatically secured through the purchase of a Section 32 Policy chosen by my previous employer. They have said that this is the default option and will be actioned if I do not respond.

Option 2 - Transfer benefits to my own pension arrangement. For this I assume I would need to set up my own Section 32 Policy (which may better suit my needs/circumstances compared to the default one - ??) as I am [probably] unable to action the pension arrangement with my new employer.

Option 3 - Draw your pension - not applicable to me as I am not over 55.

Option 4 - Exchange benefits for a Winding Up Lump Sum (WULS). The description for this states that 25% will be tax free and the remaining 75% will be taxed with an emergency tax code - I assume 20%, so that is fine, as it's only on 75% of the pot rather than the whole lot. I've calculated I will be entitled to £4,171 plus change (using the actual amount, £4,907.11, although it says this is NOT guaranteed, as I had based it overseas = more risk and fluctuating markets. 


I am getting married next year and have recently bought a house, so the money would come in handy, but I also want to ensure I am more than comfortable in my retirement - it's only £5k, will that make much of a dent in my final pension pot given I have another 31 years of working and contributing until my planned retirement?? Would withdrawing it affect anything to do with my drawing my pension later in life? Is it more advisable to just keep it in there (in the default Section 32 Policy - or my own? - until I can transfer it to my new employer's pension scheme. 


I'm really not sure what to do and would appreciate any help, guidance and/or information from anyone in the know or with more experience than me.





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