Final salary pension - a question.
Discussion
cubes said:
Out of interest, if there any way employers can close a DB pension completely and transfer everything to an alternative such as a DC pension pot?
Not that I have a DB pension, just curious.
Not that I'm aware of. The past is protected (unless of course the Employer goes bankrupt).Not that I have a DB pension, just curious.
Spitfire2 said:
sidicks said:
No, I think the benefit would be based on salary when the scheme ceased, uprated for inflation lin line with the statuary minimum or higher amount as er the scheme rules.
Correct. Final salary in this situation is the salary when he scheme closes. I have this situation on 2 previous pensions. I note OP does say it was closed to new members 12 years ago so that might indeed be the case.
cubes said:
Out of interest, if there any way employers can close a DB pension completely and transfer everything to an alternative such as a DC pension pot?
That would need agreement from every member of the scheme and as such is very unlikely indeed. However, if the employer sweetened the deal enough it is theoretically possible. Just don't expect to see it happen anytime soon!Jockman said:
Very interesting. Cheers Al.
This is a good blog on the subject.https://henrytapper.com/2016/08/14/pension-transfe...
Ginge R said:
Jockman said:
Very interesting. Cheers Al.
This is a good blog on the subject.https://henrytapper.com/2016/08/14/pension-transfe...
CETV comes from the Trustees, not the Employer. Makes sense but I had never really appreciated that.
texaxile said:
Gents, Thanks for the answers so far, I will go through my paperwork and consult with our pensions dept to see exactly what our "pension promise" is and to establish some facts regarding that.
I will also look into another option of equity tracker funds. However, this is totally new ground to me so any advice would be welcome. FWIW I have an endowment coming out in 2017 worth about £2.78 instead of the £60k (cheers Barclays) it promised, but it'll be a lump of cash I'll need to put to work at the time.
Bottom line is that I was concerned that my contributions could be moved by the Company into a different scheme as they have "control". Incidentally our contributions were recently increased by a fairly sizeable percentage due to recent changes apparently as it became necessary to do so to keep the scheme running (Govt legislation).
If the company does make an offer, just speculating, would it be a blanket offer across the board or done on an individual basis calculated upon years left or service accrued?, as this might benefit some more than others. Or, is it simply unrealistic to try and guess?.
Ouch £2.78 v £60k that's one hard kick in the nuts. I will also look into another option of equity tracker funds. However, this is totally new ground to me so any advice would be welcome. FWIW I have an endowment coming out in 2017 worth about £2.78 instead of the £60k (cheers Barclays) it promised, but it'll be a lump of cash I'll need to put to work at the time.
Bottom line is that I was concerned that my contributions could be moved by the Company into a different scheme as they have "control". Incidentally our contributions were recently increased by a fairly sizeable percentage due to recent changes apparently as it became necessary to do so to keep the scheme running (Govt legislation).
If the company does make an offer, just speculating, would it be a blanket offer across the board or done on an individual basis calculated upon years left or service accrued?, as this might benefit some more than others. Or, is it simply unrealistic to try and guess?.
One question why are you asking about investing that £2.78 lump sum ... What difference could that possibly make even if it returned 50x original investment it's still only £100 hardly worth worrying about.
Interesting reading with regards to DC schemes. I was one of the last to get on to our DB scheme just over five years ago, they closed that and moved all new hires to the DC scheme. We were given the chance to move to the DC scheme, continue with the DB scheme at 1/60th accrual for an increased contribution or take a 1/80th accrual for the same contribution. The trick was that if you dropped to 1/80th you could never move back to 1/60th so I stayed on 1/60th.
The comments about there being so few people in a scheme that its not worth running hit home, I wonder how long it'll be before we are told the same. I guess they will ask us for more contributions before that happens, hopefully it will be some time as there is something like 18k people in the UK, I would suspect the majority are on the DC scheme.
The comments about there being so few people in a scheme that its not worth running hit home, I wonder how long it'll be before we are told the same. I guess they will ask us for more contributions before that happens, hopefully it will be some time as there is something like 18k people in the UK, I would suspect the majority are on the DC scheme.
Crafty_ said:
Interesting reading with regards to DC schemes. I was one of the last to get on to our DB scheme just over five years ago, they closed that and moved all new hires to the DC scheme. We were given the chance to move to the DC scheme, continue with the DB scheme at 1/60th accrual for an increased contribution or take a 1/80th accrual for the same contribution. The trick was that if you dropped to 1/80th you could never move back to 1/60th so I stayed on 1/60th.
The comments about there being so few people in a scheme that its not worth running hit home, I wonder how long it'll be before we are told the same. I guess they will ask us for more contributions before that happens, hopefully it will be some time as there is something like 18k people in the UK, I would suspect the majority are on the DC scheme.
That's exactly what I've suggested for public sector schemes - for the people that can't afford increased contributions, the accrual rate should be reduced instead, to reduce taxpayer subsidy.The comments about there being so few people in a scheme that its not worth running hit home, I wonder how long it'll be before we are told the same. I guess they will ask us for more contributions before that happens, hopefully it will be some time as there is something like 18k people in the UK, I would suspect the majority are on the DC scheme.
sidicks said:
Crafty_ said:
Interesting reading with regards to DC schemes. I was one of the last to get on to our DB scheme just over five years ago, they closed that and moved all new hires to the DC scheme. We were given the chance to move to the DC scheme, continue with the DB scheme at 1/60th accrual for an increased contribution or take a 1/80th accrual for the same contribution. The trick was that if you dropped to 1/80th you could never move back to 1/60th so I stayed on 1/60th.
The comments about there being so few people in a scheme that its not worth running hit home, I wonder how long it'll be before we are told the same. I guess they will ask us for more contributions before that happens, hopefully it will be some time as there is something like 18k people in the UK, I would suspect the majority are on the DC scheme.
That's exactly what I've suggested for public sector schemes - for the people that can't afford increased contributions, the accrual rate should be reduced instead, to reduce taxpayer subsidy.The comments about there being so few people in a scheme that its not worth running hit home, I wonder how long it'll be before we are told the same. I guess they will ask us for more contributions before that happens, hopefully it will be some time as there is something like 18k people in the UK, I would suspect the majority are on the DC scheme.
It would be good if the govt set up a scheme whereby companies and individuals pay into for DB schemes so that when they elect to up the investment requirement it's nice and clear no questions.
Welshbeef said:
I remember when that first happened to me and then the Mrs - we both agreed we would simply up our contribution and retain the 1/60th. So many didn't in our differing work places - I even spoke at length with one guy who had no idea about pensions (earned c£60k) went through the basics then he oddly IMHO opted for the 1/100th option. Jam today so to speak.
For those that can afford it, higher contributions an higher benefits is likely to be the best thing to do, however many people, particularly those on lower wages, will not be able to afford increased contributions, so reduced benefits makes more sense for them.Welshbeef said:
It would be good if the govt set up a scheme whereby companies and individuals pay into for DB schemes so that when they elect to up the investment requirement it's nice and clear no questions.
Sorry, I'm not sure I understand, are you suggesting the the government should run a DB scheme for private sector employees?sidicks said:
Welshbeef said:
I remember when that first happened to me and then the Mrs - we both agreed we would simply up our contribution and retain the 1/60th. So many didn't in our differing work places - I even spoke at length with one guy who had no idea about pensions (earned c£60k) went through the basics then he oddly IMHO opted for the 1/100th option. Jam today so to speak.
For those that can afford it, higher contributions an higher benefits is likely to be the best thing to do, however many people, particularly those on lower wages, will not be able to afford increased contributions, so reduced benefits makes more sense for them.Welshbeef said:
It would be good if the govt set up a scheme whereby companies and individuals pay into for DB schemes so that when they elect to up the investment requirement it's nice and clear no questions.
Sorry, I'm not sure I understand, are you suggesting the the government should run a DB scheme for private sector employees?Welshbeef said:
Yes - they run it / regulate it and also offer the chance to individuals to pay into a DB scheme even if they don't have that offer BUT with the understanding their payment is worth X/80ths or whatever nice and clear.
So not content with the massive existing liabilities of Public sector final salary schemes, you think the government (taxpayer) should take on significantly more risk?Not sure i agree!!
Edited by sidicks on Thursday 18th August 22:27
sidicks said:
So not content with the massive existing liabilities of Public sector...
Additional liabilities aren't a problem if the funding is in place. Why would you assume otherwise?sidicks said:
...financial salary schemes
They are called "final salary schemes" not "financial salary schemes". And in any case they may be CAE or other alternatives to final salary.sidicks said:
...you think the government (taxpayer) should take on significantly more risk?
Why would the government (taxpayer) be taking on more risk? Even a half-competent actuary could calculate an appropriate contribution / funding model and manage this over the life of a scheme.basherX said:
iantr said:
Why would the government (taxpayer) be taking on more risk? Even a half-competent actuary could calculate an appropriate contribution / funding model and manage this over the life of a scheme.
This should be good. iantr said:
Additional liabilities aren't a problem if the funding is in place. Why would you assume otherwise?
You miss the point - people would be paying contributions based on expected / projected outcomes, but the government would have to fund any shortfall.iantr said:
sidicks said:
...financial salary schemes
They are called "final salary schemes" not "financial salary schemes". And in any case they may be CAE or other alternatives to final salary.iantr said:
sidicks said:
...you think the government (taxpayer) should take on significantly more risk?
Why would the government (taxpayer) be taking on more risk? Even a half-competent actuary could calculate an appropriate contribution / funding model and manage this over the life of a scheme.
Edited by sidicks on Thursday 18th August 22:31
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