Does anyone know anything about pensions?

[Knipples]

Question as per title really, I need some advice because of leaving my job as to what to do with my pension ive been paying into for the last 22 months.

I need to sound like I know what im talking about when I speak to
a) the pensions people (who I have today received an email from)
b) my employer - the school I currently work in.

Would be grateful if anyone could help me out, I have no clue about this sort of thing, but need some help please.

[Mark]

I'm assuming from your comments that your employer set the scheme up. In that case, it will be one of the following:

1) A group personal pension - i.e. a personal pension scheme set up by the company, but with an individual policy in your name.
2) A company pension - either defined benefit (e.g. final salary) or, far more likely, contribution-based.

For option (1), you should be able to take the pension policy with you. You won't be able to contribute while out of work, but you can pick up contributions with your next job and keep the scheme as is.

For option (2), your options are either to transfer somewhere else or leave the money where it is and make the policy 'paid up' (i.e. you'll make no further contributions).

What you do from there is up to you, but you'll probably need to seek advice on the best options - it's often not a simple choice.

[Knipples]

My question is more

If I choose to take the money ive paid in so far now, do I also get the contributions my employer has made, and what level will it be taxed at?

[Mark]

Generally you can't 'cash in' a pension policy. That is, whatever you've paid in (and your employer has paid in) must go towards providing you with a pension. You can't touch that until age 55, and then you can only take 25% in cash.

Your options will most likely be to leave the money where it is or transfer it into another pension policy. Which option is best depends on circumstances. For example, if the fund is invested in the stock market then it'll have taken a big hit in the last 12 months and you might be best leaving it where it is. I had a pension review a few months ago and this was the exact reason it was recommended I didn't change anything.

22 months contributions won't be worth a huge amount, but it's certainly better than nothing (and better than about 50% of the population will get if things stay as they are).

It's a good question to ask them, however.

[Knipples]

They have said because its less than 2 years that I can have it back.

I write to inform you that should you leave on 31 July 2009 you will have 22 months service within the scheme. Under the rules of the scheme, as you have less than 2 years service, you will be able to take a refund of your contributions less tax, or transfer the total benefits (including those paid by your employer) to another scheme of your choice.

But because I am a silly moo, it doesnt make clear to me, whether I get the contributions both I and my employer have made back, and they also havent said what rate it will be taxed at.

[Mark]

I read that as you don't get employer contributions, but you definitely should ask.

As for your own contributions, it's probably done as a 'salary sacrifice' (i.e. some of your salary goes direct into the pension 'pot'), in which case you'll not have been taxed on that as pension contributions are not liable to income tax. If they give you the money back, you'll have to pay the income tax (at the current rate), and probably the NI too. It'll count for tax purposes as a salary payment.

The rules are a bit different if you pay into the pension yourself (like I do). In that case, you pay the tax and then claim it back. This doesn't sound like your situation.

[Tak]

I read that as you either get back what you paid in minus tax or you transfer to a new scheme in which case you get what you put in plus your employer contributions (but I have had an amazingly shi*t day and have just drunk a bottle of wine so I am probably talking rubbish like normal :p )

[Feek]

I read that as you either get back what you paid in minus tax or you transfer to a new scheme in which case you get what you put in plus your employer contributions

Yes, this is exactly how it works.