Another work pension…of pennies

Having left my last employer, it has taken their pension company 3 months to catch up with the changes and send me information on what I can do with the pension pot (pretty measly amount) – I think it is current about £900! Wow – really going to support me in my retirement years. I had paid in over £1000 but the unit price has dropped considerably since then. (I was under auto-enrollment rules so had to join which has left me with this pennies pension!)

Anyhow, their paperwork has provided me with options:

  • continue paying regardless of my new employment status (self-employed, employed,etc)
  • continue paying with my new employer making payments into it.
  • stop paying and leave it invested
  • transfer the value to another provider.

To help me with the first 2 options they have provided me with an illustration (assume retirement at 65):

** if I keep the money where it is and “they achieve investment growth each year” (rates used:  -0.4%, 2.4% & 5.3%). I can receive a value between £35 and £162 per year!

** if I pay in a specified amount per month until retirement and investment growth is achieved using the same rates as above. I can receive anything between £868 and £2570 per year!  (The amount used to generate this illustration is actually below the £2880 amount that can be paid in by a non-working person per year under HMRC rules)

The pension company have not provided any details on how I can transfer and what the transfer value would be? They are bound to take a cut as my last employer scheme did when they forced me out of the scheme – I lost a third of its value. So much for fairness in the pension industry!

Again, something that is annoying me at the moment with these new pension reforms. We have existing pensions which the companies will not offer the ‘new rules’ on and say we have to move them to new schemes if we want to use the new rules such as draw down – oh – and in the process fall foul of the transfer fees which are excessive and detrimental to the final value received. Just another rip-off scandal in the making.

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