Final Salary Pensions

[b2dan]

I've just had my "invite" to join one of these. It would mean an increase from 2% - 11.68% a month and everyone I work with is telling me I'm a fool of I don't join.

I was just wondering what would happen to my money if this was wound up before I retire (I'm only 23 now so it's a long time off!)

Cheers

b2

[bogie]

do it - it will be the best chance you get to save for retirement

I had one that was backed by Equitable life ...they went under, but we all still got protected rights so its still sat there waiting for me now.

[peterbredde]

b2dan said:

I've just had my "invite" to join one of these. It would mean an increase from 2% - 11.68% a month and everyone I work with is telling me I'm a fool of I don't join.

I was just wondering what would happen to my money if this was wound up before I retire (I'm only 23 now so it's a long time off!)

Cheers

b2

I suppose the risk of this being wound up depends which industry you work in. Even if this were a 'gold-plated' public sector scheme there is a distinct chance that future governments are going to have to tackle the cost of these soon.

BUT - these schemes are like gold dust outside of the public sector. If I were offered one I would just go for it.

[Mattt]

With the way things are going - it could end up being wound up within a short space of time and closed to future accrual.

[Welshbeef]

Do it.

I've been lucky enough to have had two different final salary schemes two different co's and also defined contribution and purely a private pension all by 32.
Still have 6 years locked away with one which was only a 3% contribution rate and 1/60th accrual current one is 7% and 1/60th guess that shows you the way things are going but it is nice getting them banked early.

Also current one pays out 3times salary if I die in service so wife will have that for no added cost to me plus if I die my spouse cab draw my pension after I die or if I had kids I could pass it on directly to my kids so they would have q pension for 18 years.

Plus if you don't take it your missing out on part of your package.

I have worked out that if I don't have a payrise then you recover what you pay in in one year over nearly 2 years - add in annual pay rise or a promotion then your laughing.

[-Pete-]

Do it.

A final salary scheme is a guaranteed amount of income based on your years of service and final salary. A money purchase scheme is a gamble based on the performance of shares, after deductions to pay for the fund managers.

I used to have a final salary pension but we were forced to change it and my pension has roughly halved

[northandy]

Do it, even if your only in it a few years.


I managed 11 years in a non contributory fs scheme which has given me a good start for my retirement, topped up with an old personal pension and my new employers scheme.

[Welshbeef]

-Pete- said:

Do it.

A final salary scheme is a guaranteed amount of income based on your years of service and final salary. A money purchase scheme is a gamble based on the performance of shares, after deductions to pay for the fund managers.

I used to have a final salary pension but we were forced to change it and my pension has roughly halved

were you not given compensation as part of the offer to change? If not you could have refused the change and then been out of their pension but kept your final salary nice and safe

[-Pete-]

Welshbeef said:

-Pete- said:

Do it.

A final salary scheme is a guaranteed amount of income based on your years of service and final salary. A money purchase scheme is a gamble based on the performance of shares, after deductions to pay for the fund managers.

I used to have a final salary pension but we were forced to change it and my pension has roughly halved

were you not given compensation as part of the offer to change? If not you could have refused the change and then been out of their pension but kept your final salary nice and safe

We were told we'd have to accept or we'd lose any future pension contributions. We were also told it would be much much better for us. The person in question was one of a select few who retained his final salary pension and retired a few years later. Life isn't fair, eh?

[Welshbeef]

Well too late now that decision has been made - I guess others Reading this could take some of others life experiance to help them make their own decisions.

Life isn't fair you just have to make the most of it

[b2dan]

Thanks for the replies.

Just been working out how much it'd cost a month. At my current rate of pay, my contributions would jump from £40 per 28 days to £245!

[Welshbeef]

b2dan said:

Thanks for the replies.

Just been working out how much it'd cost a month. At my current rate of pay, my contributions would jump from £40 per 28 days to £245!

it comes down to how much you value an easy/ more comfortable retirement vs struggling to get by raiding the reduced to clear and having tp shop in lidl rather than waitrose plus not change your car etc

[b2dan]

Thanks for all the advice. Letter getting posted off this aft.

It won't be as bad as shopping in the whoopsie section of asda yet and I'm keeping my car! Just had the engine rebuilt (after the oil filter disintegrated!)

I'll just have to watch my outgoing a bit better, and any overtime will have to be saved.

Cheers

b2

[b2dan]

Just another question re: Final Salary Schemes.

Got confirmation today that I'll be joining the scheme in September. I'm currently paying into a defined contribution scheme (2% from me, 5% from my employer) and it totals just over £6k at the moment.

Is it possible to transfer this into my Final Salary scheme (or will I have to ask the pensions department) and is there any mileage to it?

Cheers

b2

[-Pete-]

No, there is no way to 'transfer in' money, because your final salary scheme does not have a specific pot of money in your name, only a promise to pay you a proportion of your final salary, based on the rules (years of service etc). This money comes from a large portfolio which the pension fund administrators manage on behalf of all members.

But you shouldn't see that as a bad thing, just an extra bit of pension invested somewhere else. Diversity adds security, don't keep all your eggs in one basket. And if you move to another job with a money purchase scheme, you can usually transfer in later on if you want to.

Edited by -Pete- on Monday 19th July 19:12

[m4tt]

-Pete- said:

No, there is no way to 'transfer in' money, because your final salary scheme does not have a specific pot of money in your name, only a promise to pay you a proportion of your final salary, based on the rules (years of service etc). This money comes from a large portfolio which the pension fund administrators manage on behalf of all members.

But you shouldn't see that as a bad thing, just an extra bit of pension invested somewhere else. Diversity adds security, don't keep all your eggs in one basket. And if you move to another job with a money purchase scheme, you can usually transfer in later on if you want to.

Edited by -Pete- on Monday 19th July 19:12

Incorrect. Some schemes will let you buy extra years by transferring funds in. Best to ask the administrator.

[Ponk]

b2dan said:

Just another question re: Final Salary Schemes.

Got confirmation today that I'll be joining the scheme in September. I'm currently paying into a defined contribution scheme (2% from me, 5% from my employer) and it totals just over £6k at the moment.

Is it possible to transfer this into my Final Salary scheme (or will I have to ask the pensions department) and is there any mileage to it?

Cheers

b2

Network Rail Dan? Drop me an email if you like, I know a fair bit about the Railways Pension Scheme and the NR Section in particular.

Pete

Edited by Ponk on Monday 19th July 20:05

[Welshbeef]

Good question re tfring in to your current pension. I've a number of defined contribution and two final salary current is final salary so I'll check out what I can do re tfr in.

Normally I go down the route don't put all your eggs in one basket also makes it less hassle managing them when changing address or keeping documentation for god knows how many different things

[-Pete-]

musclecarmad said:

m4tt said:

-Pete- said:

some incorrect info

Incorrect. Some schemes will let you buy extra years by transferring funds in. Best to ask the administrator.

yes you can normally transfer in by buying added years - whether this is worth it or not is questionable - i'd probably say not at a sheer guess due to the recent pensions news.

Oh - ok, I stand corrected. You learn a new thing every day.

[munky]

-Pete- said:

Welshbeef said:

-Pete- said:

Do it.

A final salary scheme is a guaranteed amount of income based on your years of service and final salary. A money purchase scheme is a gamble based on the performance of shares, after deductions to pay for the fund managers.

I used to have a final salary pension but we were forced to change it and my pension has roughly halved

were you not given compensation as part of the offer to change? If not you could have refused the change and then been out of their pension but kept your final salary nice and safe

We were told we'd have to accept or we'd lose any future pension contributions. We were also told it would be much much better for us. The person in question was one of a select few who retained his final salary pension and retired a few years later. Life isn't fair, eh?

Sounds like you were given bad advice... depending on who it was that gave you that advice, could you claim compensation? I'm sure there are rules about this.

I received compensation without even asking for it, when a not-so-independent financial advisor advised me to pay into a free standing AVC scheme. Fair enough I thought, it was just money I would have spent otherwise, it was a kick up the backside to actually put something aside.
However the advisor knew I was in a generous final salary scheme at work, and should have advised me to pay into that instead (but that wouldn't have earned her commission, would it!). So some years later I received a cheque in the post for the difference it would have made, as calculated by the FSA, I believe. It was quite a lot, in comparison to what I'd paid in.