What happens to pensions which I am not paying into?
Basically I have 3 pensions, the current one I am paying into with my current employer. The previous two were from previous employers. Now I have left the companies where the pensions were originally taken out, what happens to these? Both have very little contributions in, one less than a year, the other possible 2-3 years. Can I transfer the dormant 2 pensions into my current pension or cash them in?
Thanks
You can leave them where they are or move the funds all into one (this may cost you in some way so you need to take advice). But you can't cash them in yet (apart from the rules on triviality which you probably don't qualify for as you appear to still be working). Apart from tidiness there may be no reason to move them but there might be an advantage if you move to a lower charging scheme.
Rob Graham
Thanks Rob. You hit the nail on the hard there. I ONLY want to transfer because I don't like have multiple pensions with different companies. I would rather have ONE.
Fine. In which case you need to recognise that the transfer value may not be equal to the actual fund value. This could be because there may be an inbuilt penalty which reduces as you reach retirement age, and/or there may be an MVR (market value reduction) applied if it's a with-profits policy. OTOH, the scheme into which you move the funds may have lower monthly charges, which might offset the initial charges of getting the money away from the original scheme. But, there may be a less than 100% allocation of the funds to the new scheme, which is another cost. All these things should be found out and used to calculate (there is software for this) whether a switch is in your best interests.
Rob
Check that you have enough to retain them at all. One company I was with would not let you keep with the scheme unless you had been in for two years. You had to transfer it within something like 3 months, or lose it. If you were in the scheme for less than a year, you could have the contributions back (minus any tax relief which then becomes due).
I wouldn't want all my eggs on one basket, but it may be that those baskets are simply too small to be worth doing anything with.
In message , Andrew Gabriel writes
When I retired, I had three pension schemes. Two were paid-up private pensions and the other was a current works money purchase pension scheme (so was effectively also a private pension). When 'pay-back time' came, my financial advisor reckoned that, in the present economic climate, it might maybe be safer to split the total pot between two pension providers. There was still enough in each 'half pot' to ensure that I hardly lost anything by doing this.
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