shall i move my stakeholder pension into company scheme?!?

Question

Until recently I worked at a company with no pension plan. So I started a stakeholder about six years ago.

Now I have moved to a new company that has a pension plan - and they'll make contributions based on how much i contribute.

My question is this, shall I:

a. move my stakeholder over into the company plan
b. keep the stakeholder where it is - but start paying into the company plan
c. keep going with the stakeholder and don't do anything

Now I am sure a or b is the answer - but any guidance would be muchos appreciated!

Answer 1

Either (a) or (b) ...

I'll assume the Company Scheme is 'money purchase' (i.e. similar to stakeholder) .. so I would say FIRST check actual total performance of the Company Scheme against the Stakeholder .. if Company has done better, move your Stakeholder asap. if not, leave it where it is.

NB. its the overall PERFORMANCE that counts (not the actual charges == although since the Company will almost certainly be paying the Scheme charges, moving is guaranteed to save costs).

IF they REALLY ARE willing to make contributions based on how much you put in, put in the MAXIMUM you can afford ..

Answer 2

Whether you choose a,b,c you should first ask for:
1) Current and Transfer value
2) Unit statement
3) Projection of benefits to your chosen retirement age

Once this has been received contact your existing company scheme and using the transfer value given to you by the provider of your stakeholder ask them to do projection of benefits to the same retirement age.

Both companies will produce the projection using standard industry growth rates of 5%, 7% & 9%. The pension with the highest projected fund values will have the cheapest charges.

Remember that just because the projection uses 5%, % & 9% this does not guarantee the growth rates. The value of your pension can go down as well as up.

Charges are just one thing to consider. The other is fund choice. It is important to be able to select a diversified portfolio of funds from the UK, USA, EU, Far East, Fixed Interest and Property. The exact % in each will depend on your attitude to investment risk. You should contact a Financial Adviser for further details. Quite often your company scheme will have one.

With regard to where you pay your monthly contribution this really depends on the rules that your current employer has set with regard to the company pension scheme. Often they will pay in 3%, and then in additional match your contribution. I.e. if you pay in 3% they will pay in a further 3%. You should contact the pension scheme administrators for further details.

You should not make your decision from what people have said in this site. It really depends on the charges that the pension schemes have and the fund choice.

Hope this helps.

Answer 3

(c) is a non-starter. There's no penalty for stopping stakeholder contributions and your employer's contributions are worth having.
(b) is probably the best choice. Your stakeholder fund will roll up and can be consolidated with your other pension arrangements when you retire.
Only go for (a) if the charges on the Company scheme are lower than for a stakeholder (unlikely) or the investment choice is sufficiently exciting to make up for the higher charges.

Answer 4

You'll get free, expert and impartial help and information (NOT financial advice, by the way) from the Pensions Advisory Service:

http://www.pensionsadvisoryservice.org.uk/About_TPAS/

They will be able to talk you through the pros and cons and are very helpful.