Transfer of pension

[Crazy Daisy]

Had been in the final salary scheme for 20 plus years. I know it's closed now but have the chance to transfer it into another works scheme. Anybody know how the transfer value is calculated ??????

[RobertT]

Is the new works scheme Defined Benefit or Defined Contribution?

If it’s the later then transferring is almost certainly a bad move because your RM pension has been rising in line with inflation since you left the company and will continue to do so when you actually start drawing it. A Defined Contribution scheme won’t do that.

If it’s Defined Benefit, your new employer scheme will need to give at least equal benefits to the RM one otherwise there’s no real logic in moving it. Also check the normal retirement ages because if you move from RM’s NRA of 60 to your new schemes NRA of 65 for example, you could effectively be forcing yourself to work 5 years longer.

[Crazy Daisy]

Thanks for the reply.the new scheme is a defined benefits scheme. Retirement age of 55

[RobertT]

If the normal retirement age is 55 and there’s no acturial reduction for taking it at that age then transferring could well be a good move.

As for the transfer value you mentioned in your first post: As both schemes are Defined Benefit, the value will be in the amount of benefits your RM pension buys you in your new pension. If it’s roughly equal then that’s great but if it’s significantly less it could potentially outweigh the bonus of the NRA of 55.

Btw NRA’s of 55 are quite rare so I’m guessing you’re a firefighter or similar?

[Crazy Daisy]

Cheers? Been a retained firefighter for years and just been given access to the old pension scheme.