# Made redundant- what should I do with pension scheme?



## Carpenter (11 Feb 2008)

I know there is a similar thread already in existence but I don't want to hijack it. I had a personal pension plan with New Ireland for a number of years before my current employer introduced a company scheme of their own. To avail of the new company scheme I had to make my own plan "paid up", which I did; this allowed me to avail of pension contributions from my employer with no contribution from me. As I will be leaving the company in the next few weeks the company have informed me of the options available to me, with regard to the company scheme, as follows:

1. Transfer to a Buy Out Bond
2. Transfer to a new employers pension plan.
3. Defer benefit until retirement age.

The BOB appears to be the most appropriate option for me, given that I don't know where I'm going to be working yet and whether there will be an employers pension plan available.  I always have the option of re-starting the old New Ireland policy, presumably saving on set up charges incurred if I were to start a new policy altogether?

Any thoughts?


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## Fisher Black (11 Feb 2008)

You can't transfer from a Company scheme to a Personal Pension type scheme...you only have the three options mentioned in your post.


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## LDFerguson (11 Feb 2008)

The BOB has the advantage that you sever your ties with your employer and obtain control of the pension fund - you can choose and change BOB funds / providers going forward.  Leaving the fund in your employers scheme (option 3) means that you have to retain some level of contact with the scheme trustees and they can still make decisions about the fund, e.g. switch the whole scheme to another provider.  

The same selection criteria should apply to choosing a BOB as to choosing any other form of pension / investment.  Check out charges (entry costs and ongoing annual charges) and choice of funds.  You don't have to purchase your BOB from your employer's pension consultant, but you should still check their offering out to see how well it compares with the competition.  

Yes you have the option to re-start your New Ireland Personal Pension going forward, but before you do, check out what charges will apply to your contributions if you do.  You might think it's a no-brainer that the charges on a re-started policy should be lower than starting a new one from scratch, but it doesn't always follow that this is so.  If the charges were high on your New Ireland policy in the first place, they will still be high when you re-start.  

Best of luck in the future.  

Liam


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## Carpenter (11 Feb 2008)

Fisher Black said:


> You can't transfer from a Company scheme to a Personal Pension type scheme...you only have the three options mentioned in your post.


  Sorry, I don't understand your post; I've outlined the three options open to me, there are no others.


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## Fisher Black (11 Feb 2008)

I thought you felt you could even transfer your company pension to a Personal Pension, but you seem to already have known that it is not an option?


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## Carpenter (11 Feb 2008)

Liam, thank you for that, this confirms some of what I already felt; I want to sever ties with my current employer and I will investigate the charges in relation to the BOB on offer.  I will also look into the charges with the New Ireland product before deciding on whether to restart this or not.  Thanks.


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## Brendan Burgess (11 Feb 2008)

You might want to check out if there is any interplay between the different options and your redundancy payment. I doubt if there is, especially if you are getting just statutory redundancy.

Brendan


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## ClubMan (11 Feb 2008)

Carpenter said:


> Liam, thank you for that, this confirms some of what I already felt; I want to sever ties with my current employer and I will investigate the charges in relation to the BOB on offer.  I will also look into the charges with the New Ireland product before deciding on whether to restart this or not.  Thanks.


Another issue to consider is the possible benefit of being able to transfer the fund to another occupational scheme in the future and thereby also transfer in vesting time. See here. Basically if you think that you may get a job with an occupational scheme and employer contributions any time soon then just parking the pension where it is for now may make sense.


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## Fisher Black (11 Feb 2008)

ClubMan said:


> Another issue to consider is the possible benefit of being able to transfer the fund to another occupational scheme in the future and thereby also transfer in vesting time. See here. Basically if you think that you may get a job with an occupational scheme and employer contributions any time soon then just parking the pension where it is for now may make sense.


 
The OP can still get this "benefit" even if it comes from a BOB to the new employer's scheme.


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## ClubMan (11 Feb 2008)

Are you sure? I thought that you lost the vesting time once you transferred into a _BOB_ and/or you could not transfer a _BOB _into an occupational scheme? Am I wrong on either or both points?


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## Fisher Black (11 Feb 2008)

Wrong on both - the administrator of the BOB is responsible for collecting all of the relevant associated employment details and it is possible to transfer the BOB on to a new company arrangement.


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## ClubMan (11 Feb 2008)

Thanks - learn something new every day!


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## elcato (11 Feb 2008)

Be aware of th BOB charges though as they usually charge you a % of the original value of the pension. I thought long and hard on this one and didn't like (or possibly not fully understood) the charges involved in setting up the BOB. I decided to let it roll till I got another employer scheme and then transferred it.


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## Fisher Black (11 Feb 2008)

ClubMan said:


> Thanks - learn something new every day!


No problem.


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## LDFerguson (11 Feb 2008)

elcato said:


> Be aware of th BOB charges though as they usually charge you a % of the original value of the pension. I thought long and hard on this one and didn't like (or possibly not fully understood) the charges involved in setting up the BOB. I decided to let it roll till I got another employer scheme and then transferred it.


 
Of academic interest only to you as you obviously went another road, but the original scheme broker (or any other broker with a keen eye for charges ) should be able to arrange a BoB for you with no entry charge and just the ongoing annual management charge, which will be payable in the original scheme anyway.  Was this not your experience?


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## ClubMan (11 Feb 2008)

elcato said:


> Be aware of th BOB charges though as they usually charge you a % of the original value of the pension.


Don't some offer > 100% of the original amount?


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## hlm (13 Feb 2008)

Just a word of caution. Is the scheme a defined benefit or defined contribution scheme. If defined benefit, you should seriously consider the implications of transferring out and thereby losing all guarantees that such a scheme provides. In the majority of cases a member would be advised not to transfer in this scenario. If defined contribution, be careful that the charges you would pay in a buy out bond would not be multiples of the charges in the company scheme. The charges can be negotiated in a buy out bond, but it's worth being aware of what you're comparing against in the company scheme


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