Deborah asks:

I was made redundant from J.P. Morgan last year, where I had a company pension.  They’ve asked me what I'd like to do with my contributions - either they can hold on to it or I can transfer the funds to my personal pension held with Prudential. 

I also have funds in a company pension with Deutsche Bank that can be transferred.  I’m not really sure what to do.

Generally speaking it’s not normally desirable to transfer your benefits from a defined benefit (final salary) occupational scheme into a personal pension arrangement. If you do this, you would be moving your “preserved” pension from a scheme where the value is fixed (and protected in part at least, by the scheme against price inflation in the future) into a pension plan where the eventual outcome is less certain.

One reason for transferring, however, might be if you had good reason for thinking that your former employer might become insolvent and leave behind an underfunded pension scheme, that is to say one that doesn’t have sufficient resources to meet all its pension liabilities in full.

However, were that to happen, we do have the Pension Protection Fund which will normally step in if an employer is insolvent to ensure that members of the pension scheme receive at least 90% of their pension entitlement, subject to a maximum of approximately £28,700 per year.

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