Q. I am 37 years old and I have just left my previous employer and received a statement from the pension scheme I was a member of. The scheme is a Group Personal Pension Plan and is worth quite a few thousand pounds. I have heard of the new pension flexibilities and wondered if I could take advantage of them now and cash in the pension to help with some home improvements we are about to have done, or if not what options do I have?

A. I am afraid the short answer is no. The earliest you can access pension benefits under these schemes (unless you are in serious ill health) is currently age 55. Even if you were aged 55 or over, you would also need to take this decision very carefully as, to use the old cliché, once it’s gone, it’s gone! In the meantime, you may wish to consider the following points:

  • If you have the opportunity to join your new employers scheme, then that is normally the right thing to do
  • It is sometimes (but not always) beneficial to consider transferring your old scheme to your new scheme, but this all depends upon how the charges and terms vary between schemes
  • If you new employer does not have a scheme, they may agree to pay into your old one, however this will become rarer as even the smallest or newest of employers in the UK will have to provide a workplace pension by April 2017
  • Should you, and can you continue to pay a personal contribution into your previous scheme, by setting up a personal direct debit

If your new employer has a pension scheme, they are likely to be able to introduce you to a financial adviser who provides advice on that scheme, who should be able to help with the above questions. If you don’t have access to an in house adviser with your new employer, and independent financial Adviser should be able to help you decide what’s best for you.

Q. I am getting divorced and am due to receive a share of my husband’s personal pension. What do I need to do? I am 46.

A. There are two possibilities with a sharing order. The first is that you become a “shadow member” or pension credit member of the same plan that your husband was a member of. The other is that you take an external transfer and set up a new plan of your own, usually a personal pension. There are not many schemes which offer you the choice. Shadow membership is usually only offered by schemes connected to the government, such as the NHS Pension scheme, or the Civil Service Scheme. The vast majority of private sector schemes, including most if not all personal pensions, will require you to elect a scheme into which to transfer your share, where it will grow until you draw benefits at retirement, which is at least age 55. If you do not choose a scheme and communicate that to the provider within a certain time, they will set up a default scheme, which may not offer the best value for you. I recommend you consult a chartered financial planner who can help you choose the best scheme for you.

 

If you have a question you would like Trevor to answer, please email it to: yourmoney@rwpfg.co.uk or post it to Your Money, Rutherford Wilkinson Ltd, Northumbria House, 21-23 Brenkley Way, Blezard Business Park, Newcastle upon Tyne, NE13 6DS.

0191 217 3340