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I live in the UK. I have a private pension with Scottish Widows and a University pension which is superannuated. I no longer pay into the SW pension as a legacy of money difficulties in 2010 which are now resolved. I could start paying into the SW pension again.

My question is: would I be better off in the long run transferring the SW pension to the superannuated University one? Or should I leave them alone.

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  • is the University pension a DC or DB Scheme - for a DB scheme the cost of buying extra years would have to be analysed to see if it makes sense
    – Pepone
    Nov 7, 2014 at 1:26
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    What do DC and DB stand for?
    – user20748
    Nov 7, 2014 at 7:59
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    Defined Benefit vs Defined Contribution pensions. DB: Not as common now, but previously (particularly in public sector jobs) your pension would be worked out based on your years of service — you could get something like half of your final annual salary paid to you after retirement. The amount is paid for the rest of your life. DC pension: you put away a set amount each pay cheque which is invested in the stock market. When you retire, you have what is in that account ­— you can take it as a lump sum, buy an annuity or a little of both.
    – anotherdave
    Jan 19, 2021 at 9:27

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There are several angles to this which you would need to investigate - there's no one right answer to this.

  1. Not all schemes will accept transfers in, so that might rule it out completely.
  2. There may be a fee payable on one or both schemes for the transfer (most likely the scheme you are transferring away from) - you would need to look at the documentation to see whether this is the case and how much it is.
  3. You would need to look at the management fees on the two schemes and see whether it is actually advantageous to transfer or leave it where it is.
  4. Do both schemes offer the range of funds that you want to invest in? If the SW scheme is invested in, say, ethical funds but the University one doesn't offer such an option, you might not want to transfer.
  5. What is the performance of the funds? Obviously past performance isn't necessarily an indicator of future performance, but if the SW fund is no longer being actively managed it may not have the same expectations of return.
  6. What is the protection on the investments - eg if SW goes bust are you entitled to anything? You may want to keep the split arrangement if the protections are different.
  7. What other benefits are attached to the SW pension that you might lose (eg a death in service benefit, a spousal annuity guarantee, etc. etc.)?

These are just the questions I would ask off the top of my head - there may be others.

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    "You would need to look at the management fees on the two schemes" — keep in mind too that some schemes may have variable fees based on how much money you have in the account e.g. 0.5% fees for balance up to £N, 0.3% fees for balance higher than £N. Make sure you watch out for those terms too & not just the fee you happen to be paying now
    – anotherdave
    Jan 19, 2021 at 9:18

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