Frozen Company Pension - The Options!
Author: Elizabeth Grant
You can hardly have failed to notice that the prediction for UK pensions
is not good. Like many European countries, the UK has an aging population
and a decreasing birth rate. Whilst the workers are currently funding the
old aged pensioners, it remains unclear how the next generation of old aged
pensioners will be funded. Simply put, we are getting older and the pension
scheme currently in place is not able to accommodate this.
As society's attitude towards work has also undergone a major transformation
whereby a job for life no longer seems to be the norm, the number of employees
with a frozen company pension scheme is also on the increase. In fact, many
people are changing their job so often that they have accumulated a number
of frozen company pensions. So, what are the options available for those
with a frozen company pension?
Pension plans can become frozen if you have been part of a company pension
plan and you then decide to leave the company. Normally this happens when
you have been working for the company for two years. This pension plan is
known as a frozen company pension as you are unable to then pay any contributions
into it. If you have a frozen company pension you will not be able to simply
draw money out of it as the money will have be paid before tax. This means
that the Inland Revenue have strict regulations as to how to deal with a
frozen company pension. Although this may seem as though it is fairly final
you will still have a few options available to you. These frozen company
pensions options can be summarised as follows:
•Transferral - Transfer the frozen company pension to another company pension
scheme. Allowing you to then make new contributions
•Acceptance - Leave the frozen company pension with your previous employer
and accept that you will not be able to pay into it again
•Conversion - Convert the frozen company pension over to a Personal Pension
Plan, allowing you to start making contributions again
•Buy Out - Transfer the frozen company pension to a Section 32 Buy Out Policy
It is always advisable to discuss these four options in more detail with
a financial adviser to ensure that you are fully-informed about your future
possibilities for your frozen company pension. By having a full understanding
of the implications of freezing plans and investment approaches when evaluating
the requirements of a frozen company pension plan, you can rest assured
that you will be making the best decision for your retirement.
About the Author:
Elizabeth Grant writes exclusively for The Mortgage Broker specialist websites.
To read more of Elizabeth's articles on Adverse Credit Mortgages please
visit the Pension Transfers website.