# Transferring pensions



## Cici (10 Jun 2003)

I started my career with a semi state and left after 5 years. When I left my pension was locked in until retirement. I then moved to private sector and joined the company pension scheme. I left after 18 month and transferred my pension/value to my new employer's pension scheme. I left there after 3.5 years and as of yet have not done anything about transferring my pension on to my current scheme. Is this the best thing to do ?


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## ClubMan (10 Jun 2003)

*as of yet have not done anything about transferring my pension*

Do you mean you did nothing at all or that you elected to leave your fund invested in the ex-employer's scheme?

*Is this the best thing to do ?*

There is no necessity to transfer it out of the old scheme even if/when you join a new occupational scheme. If the charges on the existing scheme are reasonable then it may make sense to leave it invested in the ex-employers scheme. If charges are not competitive then you might want to consider transferring to a lower cost alternative - e.g. another occupational scheme if/when you join one or a buy out bond which is like a standalone pension bond. Bear in mind that transferring to buy out bond versus another occupational scheme may have implications for vesting periods (see the Pensions Board website for more info on the technicalities). The slight hassle of having more than one pension fund (e.g. personal pension/retirement annuity account and/or one or more occupational funds and/or a PRSA etc.) is the extra administrative burden in managing, reviewing, tracking them. However there may also be benefits such as spreading your risk across several fund managers.

Does this all make sense to you? Hope it help.


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## cici (12 Jun 2003)

Thanks for the reply CLubman. 
Have done nothing at all, so pension is still invested in ex employer's scheme. Don't fully understand what you mean about charges  ?


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## ClubMan (12 Jun 2003)

*Don't fully understand what you mean about charges ?*

Pensions generally levy some or all of a range of charges:
Bid/offer spread - a specific percentage (e.g. 5%) of each regular contribution taken by the underwriter in charges
Annual management fee (e.g. 1%-2%) for managing the fund
Policy fee - often a fixed amount that is charged each month sometimes whether or not contributions are being made
Allocation rate - the percentage of your contribution less charges that is used to buy units which will often be 100% but could be more or less in some cases
Other charges and commissions

Obviously the lower the charges the less "drag" on growth. You need to check what charges apply to your ex-employer's scheme and compare these against what you could obtain elsewhere (e.g. on another employer scheme or a buy out bond) in order to evaluate whether or not to transfer or leave your fund where it is.

Does this make sense to you?


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