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Thread: Pension?

  1. #1
    Senior Member SilentDeath's Avatar
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    Pension?

    Ive been working for royal mail for just over a year. I intended it to be a temporary job whilst I found something better...however I never pulled out of the pension scheme.. and Im not 100% sure how everything works.

    So I have now payed about £750 into it. Id like to change job... and could use the money if I can get it back.


    So can I get the money back?

    Will this small amount be worth anything if I left it in there (a) if I never payed any more into it, or (b) if I did pay into it, is that even possible when working for another company?


    Thanks

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    Welcome to stampytown! Salazaar's Avatar
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    Re: Pension?

    It's always worth having a pension these days, the bigger the better. You're unlikely to be able cash in the pension right now, however you should be able to transfer it to another pension scheme, say with your next job.
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    Seething Cauldron of Hatred TheAnimus's Avatar
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    Re: Pension?

    £750 is a good start for a pension, but is only a start.

    You can't cash it in until your quite old (far to old for me to remeber the age, 40's i think).

    You can transfer your money from pension provider to provider.

    Most providers operate a set of 'funds' you allocate your money between their funds which dictate where your money is put, ie East Asia developments, UK commercial property, FTSE 100. The fund will then charge a management fee (normally about 1-1.5&#37 often the better funds will charge more of a fee, as you will make more money. Some charge a performance fee, but this is rare in pensions.

    You can claim back tax on the money when you pay into a pension.

    Lots of companies will match contributions you make.

    Even when your my age (22) if major problems happened, i could borrow against the equity of my pension. So its not quite completely out of play.
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    Senior Member JPreston's Avatar
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    Re: Pension?

    To answer your questions:

    a) No, it will not be worth anything and it is not possible for you to leave it in there.
    b) No, that is not possible either.

    You can cash it now, but you'll be taxed on it when you do (so it is as though you had been paid it in wages). Therefore it won't be £750.

    Thanks to Gordon Brown you also now get to keep your employer's contributions as long as you worked there more than 3 months, which you did. However you still need to work somewhere for 2 years before you can stay in the scheme as a deferred member, which is a shame because you would otherwise had had a foot in the door of a nice bulletproof scheme. £750 is obviously not much but if you ever worked for RM again after they close the final salary scheme to new members (which I think they already did, a couple of months ago at the time of the stirkes?) then you could have resumed contributions on the same favourable terms you had from your earlier employment.

    Because you will be there less than 2 years though I reckon you should (in order of preference):

    1. Transfer it to your new employer scheme if it is final salary (although transfers in do not accrue the same benefit as contributions from employment).
    2. Sign up to a personal stakeholder plan if 1. does not apply and stick it in there.
    3. Transfer it to your new employer scheme if it is defined contribution (not as good as personal plan IMO because you do not control the scheme and it can be wound up from under you)
    4. Take the (reduced) cash because you could be hit by a bus tomorrow anyway.

    1 - 3 are all much of a muchness really. 4 is not as good in all likelihood, but depends on your age, do you really need the cash, etc.
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