Reply to: Should I continue my private pensions now I have a Ltd?

[glashIFA@Paramount]

Yes you should be able to, with the exception of any protected rights money received if you were/are contracted out of SERPS - that will have to stay in your old plans for now - check with your providers and the new SIPP.
I may be wrong but I think that rule may be changing for SIPPS this year or next.

The target date is Oct 2008 which is when they hope to be able to accept Protected Rights into SIPPs but the gov't rarely deliver on time.

There are a number of pension providers who will allow a transfer of PR into their version of a SIPP but given that the funds are already with a life office this isn't likely to be a good option and is merely, in my opinion, a bit of a marketing ploy.

Also need to be aware of the funds your currently invested in if you're looking to transfer from ABC pension plan into a SIPP. A lot of the property funds are now exercising their right to defer payment for 6 months (small print).

[moorfield]

If I set up a SIPP can I transfer any of my 3 existing pensions (from a couple of permie jobs and 1 from an old Ltd company) into this?
TIA

Yes you should be able to, with the exception of any protected rights money received if you were/are contracted out of SERPS - that will have to stay in your old plans for now - check with your providers and the new SIPP.
I may be wrong but I think that rule may be changing for SIPPS this year or next.

[IR35 Avoider]

If I set up a SIPP can I transfer any of my 3 existing pensions (from a couple of permie jobs and 1 from an old Ltd company) into this?
TIA

Probably, but for the permie ones you need to read the small print to make sure you're not losing out by doing so.

[adder]

If I set up a SIPP can I transfer any of my 3 existing pensions (from a couple of permie jobs and 1 from an old Ltd company) into this?
TIA

[IR35 Avoider]

What happens if you think your outside of IR35 and you make all your contributions from your divs, and then the IR say your not outside IR35 and your owe X amount, would they consider what you paid into pension or would you have to find the money to pay them back ?

First, to make things simple, just get a personal or stakeholder pension, and pay company contributions.

With regard to IR35, it's only company contributions that matter, as only they reduce the deemed payment.

[IR35 Avoider]

This has prompted me to investigate my pensions. The one I have with the Co-op is an Individual Personal Pension Plan not a Stakeholder, and the T&Cs contain this line:

10.4 ... The Member has no rights to any of the assets of the Fund.

There is no mention (that I can see) of transfers out of the pension, so now I am wondering if I've tied my money up. As it happens, it's worth less than £1500 so it's not a big deal. I will check if I can transfer the funds, and if not, I will freeze it and open another Stakeholder.

I didn't realise that pensions could be made non-transferrable like that. Did I just interpret the T&Cs wrong?

Thanks for the research about fund insurance. I will know to watch out for that. When I have a fund worth 50k anyway!

I don't think the phrase you quoted means you can't transfer. I think it is telling you that what's inside a pension isn't legally owned by you, which is correct for all pensions. This is why "your" pension savings (usually) can't be taken to pay your debts if you're made bankrupt.

I think all personal and stakeholder pensions have to allow transfers.

[ashleymoran]

http://www.fscs.org.uk/

2nd Edit: I'm glad you raised this, because it has triggered me to check something that was worrying me. Recently I read something that raised the distinction between "insured" pension schemes and "trust-based" schemes for compensation purposes. The fact that I've just moved from Legal & General to Sippdeal means I've moved from one to the other.

This has prompted me to investigate my pensions. The one I have with the Co-op is an Individual Personal Pension Plan not a Stakeholder, and the T&Cs contain this line:

10.4 ... The Member has no rights to any of the assets of the Fund.

There is no mention (that I can see) of transfers out of the pension, so now I am wondering if I've tied my money up. As it happens, it's worth less than £1500 so it's not a big deal. I will check if I can transfer the funds, and if not, I will freeze it and open another Stakeholder.

I didn't realise that pensions could be made non-transferrable like that. Did I just interpret the T&Cs wrong?

Thanks for the research about fund insurance. I will know to watch out for that. When I have a fund worth 50k anyway!

[SueEllen]

I had assumed that pensions, like other investments, are covered by regulation and insurance schemes, which would help if someone ran off with the money. Actually, I don't know, so I'm going to check.

They are now regulated.

http://www.fsa.gov.uk/

[IR35 Avoider]

I was mainly thinking about it from a risk point of view, ie having multiple pensions is not putting all your eggs in one basket. Is that no different than having one pension split into multiple funds?

I had assumed that pensions, like other investments, are covered by regulation and insurance schemes, which would help if someone ran off with the money. Actually, I don't know, so I'm going to check.

Edit: I think pensions are covered by the Financial Services Compensation scheme, but only up to £50,000, so it may be worth having more than one. (Actually I'm surprised the cover is so low - I'm sure documentation I've had in the past told me I was fully covered.)

http://www.fscs.org.uk/

2nd Edit: I'm glad you raised this, because it has triggered me to check something that was worrying me. Recently I read something that raised the distinction between "insured" pension schemes and "trust-based" schemes for compensation purposes. The fact that I've just moved from Legal & General to Sippdeal means I've moved from one to the other.

I've gone back to L&G Stakeholder key facts, and what they say about compensation ties up with what the FSCS web site says about the compensation limits for insurance products. The first £2000 is completely covered, and the rest is 90% covered, with no upper limit.

So I think the £50,000 limit only applies to trust-based schemes.

It looks like I will have to move some of my Sippdeal funds back to an insured scheme, at some stage. (I only wanted to move to Sippdeal to take advantage of a short-term opportunity, I was happy enough with L&G as a long-term home.)

[Lewis]

I think that what you've missed is that from April there will only be 20% tax relief on pension, as the basic rate of income tax is going down to 20%. So "ultimate pension payment" for 2008/2009 is £987.50 and for 2009/2010 is £975.

Ah right. Thanks for that. I will arrange for company to pay pension post April. I do like this forum :-)

[minstrel]

Cheers Minstrel thanks for helping me understand

Setting up a pension has been bugging me for ages, I went to see my own bank (a mistake) and they never told me the basics and thats what I needed.

No problem. If it's any help I've got a SIPP with Hargreaves Lansdown and I've found them to be very good.

I'd steer clear of High Street banks - they rarely do the best deals.

[Bumfluff]

What you want in your situation is a personal pension making company contributions (or possibly personal contributions). You can make both personal and company contributions into a personal pension. You will be able to keep your personal pension and contribute to it throughout your working life.

Given the changes in tax rates in April it might be a good idea to set up a personal pension making company contributions after 6th April and make a lump sum personal contribution before April.

Cheers Minstrel thanks for helping me understand

Setting up a pension has been bugging me for ages, I went to see my own bank (a mistake) and they never told me the basics and thats what I needed.

[minstrel]

Hi thanks

Ok so there is personal and company contributions, is there personal and company pensions ? I'm not going to contract for ever and want something I can pay into through out my life. If there are personal pensions can both the company and myself pay into it ? At the moment I want to make company contributions, but in the future want to make personal contributions

What you want in your situation is a personal pension making company contributions (or possibly personal contributions). You can make both personal and company contributions into a personal pension. You will be able to keep your personal pension and contribute to it throughout your working life.

Given the changes in tax rates in April it might be a good idea to set up a personal pension making company contributions after 6th April and make a lump sum personal contribution before April.

[Bumfluff]

You're confusing company and personal contributions.

Your options are:

1. Company contributions - simply pay direct from your company to the pension provider and then record it in company accounts as an expense so that you offset against Corporation Tax

2. Personal contributions - simply pay direct from personal account to the pension provider and then declare on your Self Assessment to get personal tax relief.

Personal contributions are slightly more tax efficient now, but from April 2008 Company contributions will be slightly better. This is because this year Corporation Tax is 20% and Basic Rate tax is 22%, but next year Corporation tax rises to 21% and Basic Rate tax will drop to 20%.

Hi thanks

Ok so there is personal and company contributions, is there personal and company pensions ? I'm not going to contract for ever and want something I can pay into through out my life. If there are personal pensions can both the company and myself pay into it ? At the moment I want to make company contributions, but in the future want to make personal contributions

[minstrel]

I need to start a pension, reading these posts I understand most of it what Im not clear on is the mechinanics of it all, in terms of the money comes from A you delcare it on your Accounts / SA etc.... ?

I want a private pension as I will go permy at some point, so would the mechnics of it be as follows,

1. I get the 'company' to pay £x amount into my personel pension monthly or quarterly, my pension contributions wont be more than my sal ?
2. The accounts show it as an expense or a benefit ?
3. I declare the amount I paid into the pension on my SA so I get the tax relief ?

You're confusing company and personal contributions.

Your options are:

1. Company contributions - simply pay direct from your company to the pension provider and then record it in company accounts as an expense so that you offset against Corporation Tax

2. Personal contributions - simply pay direct from personal account to the pension provider and then declare on your Self Assessment to get personal tax relief.

Personal contributions are slightly more tax efficient now, but from April 2008 Company contributions will be slightly better. This is because this year Corporation Tax is 20% and Basic Rate tax is 22%, but next year Corporation tax rises to 21% and Basic Rate tax will drop to 20%.