# Advice on frozen pension.



## bradleymarky (Nov 29, 2013)

I worked for Stagecoach bus company from 1996-2008 until we were sold to anothe company, as a result my pension was frozen and i started another with the new company.

I was told in 2008 it was worth £9000 lump sum and £44 pounds a week when i retire With it being a final salary would it be worth transferring to my new pension or letting it mature. To tell the truth i dont understand what a final salary pension is 

I dont retire until 2033.


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## S63 (Jan 5, 2007)

I'm no expert on these matters but I'd hazard a guess that the figures you quote are at time of leaving in 2008 which should be very different to the figures on your retirement date of 2033. Depending on who handles your pension it maybe possible to keep tabs online with yearly updates and forecasts for the future.

Might be worth taking professional advice as to whether you almagamate or keep your old pension separate from your new one, as with all financial matters concerning the future a certain amount of guesswork is required. Remember the rules change next April quite dramatically although you're a long way off from retirement so plenty more reform to come.


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## Kerr (Mar 27, 2012)

A lot of companies won't let you put in money from other pensions.


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## S63 (Jan 5, 2007)

It's possible that your pension is being administered by Standard Life, if so they have an excellent online facility (my pension is with them), you can log on any time and request up to date statements and get forecasts for future years. If this is the case you will need to write to them and request a username and password.


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## goRt (Aug 26, 2013)

The general rule is don't take money out of a final salary scheme.


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## Guest (Aug 16, 2014)

As above. All you need to understand is that final salary schemes tend to work out better for the employee rather than the employer - they are very expensive. These days companies try like mad to get out of providing a final salary scheme as they cost them too much to run.

Next month I turn into an old f**t and will be getting a small frozen final salary pension from a job I left in the 1980s. I checked around (as you should) but it is going to give me about 30% more than if I took it out and transferred to another scheme.

Only situation I can see where you might get a better deal is if your current employer also offers a final salary scheme and lets you transfer in.


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## Andyg_TSi (Sep 6, 2013)

'Final Salary' is just that.

It means that your pension is based on your final years salary and will work out to be a % of your final salary.

EG. If your in a 1/80ths scheme, this means that you accrue 1/80th of your salary for every year of service.

If your employed for 40 yrs, this means that your pension will work out at 40/80ths (or 1/2) of your final salary.

Someone in a similar scheme, retiring today on a salary of 30k per year, accruing 40 yrs service will have a pension of 15k per year.


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## m500dpp (Feb 17, 2006)

> The general rule is don't take money out of a final salary scheme.


Yes I thought that but:

Final salary pension would give me £11500pa reduced by £1250 at state pension age, with a lump sum of £75,000

I took a transfer out which gave me a pot of £420,000, from which I can take a tax free lump sum of £105,000, and a pension of £25,200 pa........as a result of which I retire on the 29th this month.

Also as of next year I can draw whatever I like from the fund (subject to tax of course) but in any event I am better off with this arrangement, I have invested the pot with AJ Bell (youinvest)

Of course if you take too much money too soon the pot will deplete but for me I'd rather have the money in the early years of my retirement than later. Also I have retired before state pension age, and from 65 I will need less from the pot as my state pension comes in and the same again when the wifes state pension comes in. Also once I hit say 75 or so I wont need as much to live on.

I have a simple spreadsheet that escalates the fund versus drawings and accounts for investment returns and inflation, really a matter of being sensible.

Yes Final salary might have given me more when I am 90+ but who wants to be the richest corpse!

So Don't ignore the possibility of transferring out of a final salary scheme, transfer values are very generous at the moment partly because of very low interest rates.


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## m500dpp (Feb 17, 2006)

> Next month I turn into an old f**t and will be getting a small frozen final salary pension from a job I left in the 1980s. I checked around (as you should) but it is going to give me about 30% more than if I took it out and transferred to another scheme.


Hugh, did you get a transfer value, and if so did you look at income drawdown within a SIPP, or just at annuities?


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## goRt (Aug 26, 2013)

m500dpp said:


> Yes I thought that but:
> 
> Final salary pension would give me £11500pa reduced by £1250 at state pension age, with a lump sum of £75,000
> 
> ...


The general rule is still don't cash in your db.

The thing the op really has to do is seek professional advice on his specific situation (as you did)
ps your annuity rate seems very high based on those in the market for "average" people).


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## m500dpp (Feb 17, 2006)

> ps your annuity rate seems very high based on those in the market for "average" people).


Thats because it is income drawdown using the Govt approved figures (which disappear next year)

An Annuity would give me approx £20k on a non inflation linked basis, I prefer to manage my own money.

Yes I did take independant advice because I had to but it was a no brainer and in my case a waste of £1500!

Annuities are very poor value these days and will pretty much disappear next year once the new regulations come in,


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## goRt (Aug 26, 2013)

m500dpp said:


> Thats because it is income drawdown using the Govt approved figures (which disappear next year)
> 
> An Annuity would give me approx £20k on a non inflation linked basis, I prefer to manage my own money.
> 
> ...


So you're not actually taking a pension but are in fixed drawdown until next year.
The math will show that you'd have been better taking the db.
I'm living off savings until I get to 55 will then do similar to you with my sipps but will take my db at 60 as we're long lived.


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## m500dpp (Feb 17, 2006)

> The math will show that you'd have been better taking the db.


Sorry there is no way DB was better for me work out how many 1.3% inflation rises are required to get me from £11500 to £25,000.....I can tell you I would be 90 or so before DB had any advantage, and it has meant I can retire 4 years early, put a price on a year of active life vs a year in a care home!

Even the Financial advisor came down clearly on the side of leaving the DB, DB is not in all cases best.................my advice to anyone is take your blinkers off and look at the options and make your own decision to suit your circumstances


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## goRt (Aug 26, 2013)

m500dpp said:


> Sorry there is no way DB was better for me work out how many 1.3% inflation rises are required to get me from £11500 to £25,000.....I can tell you I would be 90 or so before DB had any advantage, and it has meant I can retire 4 years early, put a price on a year of active life vs a year in a care home!
> 
> Even the Financial advisor came down clearly on the side of leaving the DB, DB is not in all cases best.................my advice to anyone is take your blinkers off and look at the options and make your own decision to suit your circumstances


With a pot of 315k (420-105) you cannot sustainably take 25k per year. A more reasonable figure is 10-15k.
You're talking about emptying the pot as fast as you can i.e. just transferring to cash and hoping that provides you with sufficient to live on. 
That's a choice you can make but not advice that should be recommended without explaining the risk.


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## m500dpp (Feb 17, 2006)

> You're talking about emptying the pot as fast as you can i.e. just transferring to cash and hoping that provides you with sufficient to live on.


Er no please give me some credit for intelligence!

OK well in a way we are both right! I will be drawing £25k for 4 years then £17500 when my state pension kicks in (total = £25000) and again once the wife's pension is available we will only need £10,000 from the pot - hence we maintain an income of £25,000.

This is sustainable (as you have indicated) and I have a spreadsheet to monitor the performance of the fund which allows for inflation and will guide me into increasing or reducing my drawdown according to the fund performance.

As I said, it's a very individual thing, as long as the risks are understood, and common sense is applied it can be very beneficial to transfer out of a DB, but it doesnt suit everyone.

Happy to send you the spreadsheet if you are interested...........

Dave


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## goRt (Aug 26, 2013)

m500dpp said:


> Er no please give me some credit for intelligence!
> 
> OK well in a way we are both right! I will be drawing £25k for 4 years then £17500 when my state pension kicks in (total = £25000) and again once the wife's pension is available we will only need £10,000 from the pot - hence we maintain an income of £25,000.
> 
> ...


Thanks for filling in the missing parts, no need to share your spreadsheet, I've got one of my own that tracks my emptying my SIPP as tax efficiently as possible before starting my DBs at 60.


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## bradleymarky (Nov 29, 2013)

I`ve been in contact with the pension provider and they say it will be based on 3 out of 10 years salary, with 2008 being the highest. Problem is i dont work there anymore and i`m earning over £100 a week more now.

I did ring my current pension provider (scottish life) and all they wanted to know was if i had seen a financial advisor...


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## Guest (Aug 28, 2014)

Your current pension provider should be able to tell you (without you needing advice),

Is it a final salary scheme?

Do they accept transfers in?

If the answers are yes, that's when you'll need an IFA to work out whether or not it's worth transferring your frozen pension value into your current pension scheme.


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