Moving companies and i'm confused about my pension contributions?

I've recently been offered a new job and am leaving the company i've worked for for 1.5yrs. According to my contract if i've worked less than 2 years i can either have my contributions back (excluding the contributions my company puts in) and these will be taxed at 20% or i can have it transferred to my new pension contribution scheme with both my & the companies contribution - i pay 4% they gave 7% making it 11% altogether. they say i cannot keep it within the company. The problem is i've received my new contract from the new company and it says that they stopped accepting pension fund transfers in Apr 2006. So i don't really know what to do now because i don't want the money back and taxed further by 20% as on my payslip contributions are only taken after my basic is taxed so i will have paid tax on that money and now i have to pay more tax???, i'd rather have it in a pension fund somewhere. Any idea, somebody must have gone through this before?

IF you take the money, they will WITHHOLD 20%. That IS NOT the actual tax you will pay. The IRS will charge a 10% early withdraw penalty, plus you will include the full amount as income and pay tax at your marginal tax rate.
Your best option is probably rolling the money into an IRA. This is treated the same as rolling funds into your new employers plan for tax purposes. It also gives you more investment options than either employers plan.

Move it to an IRA. That way you get to keep the company portion and you are not penalized. If you are unsure how to do this, talk to your bank, accountant or broker and they will all have suggestions you can select from.