Job-hoppers can be left out on a limb

READERS' LIVES; Company pension schemes ... Halifax handout ... PIN numbers. Your financial queries answered

The Independent on Sunday's "Financial Makeover" series recently featured a young woman who had been forced to take a rebate of contributions from several company pension schemes as she had left the companies early. Surely she received bad advice to join the schemes in the first place? She has lost seven years in which to save for her pension, assuming she started work at 21.

LH, Nottinghamshire

Anyone who accepts the basic premise that an employer's pension scheme is likely to offer better-value benefits than a personal plan should sign up for an employer's scheme at the earliest opportunity. Of course, check the precise details of the employer's scheme. If possible, compare projections of benefits even if you are a short-term member (of at least two years) with what a personal plan might be worth over the same period.

Unfortunately, refunds of contributions to an employer's pension scheme can arise if someone has been in a scheme for less than two years. This is one reason given for people to pay into a personal pension plan if they are likely to job-hop.

But people do not know how long they will stay with an employer. What might initially be seen as a short-term job could lead to a long-term career. Not signing up for the employer's pension might be viewed, with hindsight, as a big mistake. With some employers' schemes you have to sign up within a short time or you lose the right to join at all. But even if that does not apply, most employers' schemes won't let you backdate membership of the pension scheme. Few allow you to buy extra years' membership.

Now, you could wait, say, two years and join the pension scheme only when you reckon you'll be staying in your job. But what if you still end up leaving within a further two years? You might then be forced to take a contributions refund and lose nearly four years' potential membership of the scheme.

One good thing about personal pensions, by contrast, is that they allow you to act with the benefit of hindsight. You can make use of unused personal pension investment limits going back six (and in some case up to eight) tax years. And getting an employer's refund means you immediately become eligible to pay into a personal pension in respect of the period for which you had previously belonged to the employer's scheme. So anyone who gets a contribution refund can invest the money in a lump sum in a personal pension plan.

I am the first-named on an account our Photography Club has with the Halifax. I also have a personal account with the Halifax. Last year I transferred the club's account to its Treasurer's account at the society's suggestion. I asked the Halifax to confirm entitlement to free shares despite the transfer. It replied positively, except now I only seem to be entitled to one basic handout of shares for the two accounts.

JB, Dorset

In fact you were only ever entitled to one basic handout of free shares for the two accounts, and the account switch has not changed this.

Share entitlements are based on totting up the balances of all the qualifying accounts with the same first-named account holder. This does have the effect of reducing the total number of free shares compared with the result produced by two accounts with different first-named account holders. But had you changed the first name on the club account when you switched it, that money would not have qualified for any free shares at all.

If you still have your copy of the recently issued transfer document, you'll find tables showing how many free shares you get according to the balance in your accounts. You can find out the number of shares that your personal account alone would have given you. Keep that number of shares and hand over the rest to the club.

After reading your advice about PIN numbers I would suggest a good plan is to use an old telephone number or similar. I use my mother's Co-op number which was etched on my brain. Anyone who remembers their mum's Co-op divvy number from the 1930s could use the same trick.

AL, Cambridgeshire

This sounds like a neat tip. Incidentally, Co-op divvy numbers were not confined to the Thirties. Even those who grew up as late as the Sixties may remember their divvy number (and the divvy itself is now being brought back, most recently in Scotland).

For the unenlightened under-40s, every time you went shopping at the Co-op for your mum, you had to give the cashier the divvy number. Then, periodically, your mother (and in those days it was the mother) received a dividend, which was based on the value of the shopping.

But the point of this tip is that childhood memories seem to stick much more firmly than more recent memories. While you may forget your boyfriend's or girlfriend's mobile phone number, the phone number or address of your childhood home may remain with you indefinitely. You may never forget that, for example, your granny lived at 54 Bramble Road, London SW11.

q Write to Steve Lodge, personal finance editor, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL, and include a telephone number.

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