Defined Benefit Pension Question

L

LittleAcorns

Guest
Hi,
My position was made redundant in June 2012, I joined the company's Pension Scheme in 12/05/2010. I was wondering if anyone knew if I could cash in the pension? I am far off retirement age. (I am 36yrs old and have a pension from a previous employer and paid into that for 10yrs - I am satisfied I am well catered for in the future).
If the answer to my question is 'No' I have been offered 2 Options but do not know which one is the best option?
1. Deferment
2. Transfer (a) into a buy-out bond OR (b) transfer to new employer OR (c) to a PRSA. I am not in a position to transfer to a new employer as I am still seeking employment - Any advice would be greatly appreciated!
 
As you have over 2 years service in the pension scheme, you cannot cash it in.

The answer to your second question is dependant on whether the scheme is fully funded and what commitment there currently is from the employer to maintain the scheme. Seek advice from an pension's advisor on whether it is best to defer or take a BOB/PRSA now
 
Many thanks Baracuda for your advice - appreciated
 
I agree with Baracuda's advice, but it is worth warning you that there is no easy answer to the question, and a pensions adviser may not be in a position to give much useful advice unless he/she knows a lot about the scheme.

If the scheme is fully funded, then the decision is pretty straightforward. If it is underfunded, your value has been written down to reflect this. In this case, it would be a good idea to stay put if the employer (and/or the current employees) were likely to agree to a recovery plan which would mean that over time, the write-down is likely to disappear. On the other hand, if a recovery plan is unlikely, it is possibly a good idea to get out now if the situation is going to get worse. Just to complicate things further, the Governement is considering a change to the law (but have not made a decision) that could see members of underfunded schemes who have not yet retired do a bit better, i.e. not suffer quite as big a write-down.

It would be worth trying to get what information you can from the scheme trustees about the current situation and some kind of feel for where it is going.

d
 
In my view transfer values are rarely good value due to assumptions used to discount but get prof . Advise as I am no expert
 
Also consider that in leaving it there you don't incur any charges, you would if you moved it.
 
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