Hi. I have been a lurker for some time and have benefitted significantly, thank you. I haven't posted before because I couldn't top the good advice offered and haven't had a decent question until now.
A friend (honest, it's not me!) is 56 and will probably want to retire and take his pension within 6 years. He contributed to a final salary scheme with a local authority for about 10 years and this was frozen when he left them about 25 years ago. At the moment he has about 4 years contributions in his current employer's final salary scheme and he is making AVC's to that scheme. As far as he knows he is likely to stay with his current employer until he wishes to retire.
In between these two, he worked for a small company which offered a small group scheme (I think that is the correct term), operated by a scheme manager, with Equitable Life. His share of that fund is closed (paid up?) and is currently worth about 25k (of which 15k is non-protected rights and
10k protected rights). It looks as though the manager of this small group scheme wants to get out of Equitable Life and is offering my friend a number of alternatives.1 Take a 15 % exit hit and transfer the amount to NU (the default option)
2 Take a 15 % exit hit and transfer to another insurance company of his choice. 3 Transfer to a new EL "wind up" fund with no guarantees (must be a joke!); could be WP or UL. 4 Transfer to a new EL Personal Pension fund with no guarantees (must be another joke!); could be WP or ULI assume that options 3 and 4 would not attract the 15 % exit hit and that these options would release the current scheme manager from his obligations. The current scheme manager claims that he has negotiated favourable "setting up charges" with NU which, he says, are likely to be less than with any other insurance company "of his choice". The default (1) will be executed if he doesn't reply before 7 Jan 2005.
I will declare a personal interest now. My wife has a similar amount in an Equitable Life PP fund (held directly, not through a scheme manager), and she is about the same age. I have been thinking about taking the non-protected rights portion as pension into an e-SIPP with Income Drawdown (thus avoiding the 15 % exit hit) and managing it ourselves. Could I do the same with the protected rights bit when she reaches 60?
Comments, please?
I apologise for such a complicated post. It is a complicated issue (but not of our making!!)
Graham Carter