Final Salary Pension

[CAH706]

Hi all

I have a final salary pension and have been looking at my options for opting out. I will be taking financial advice but so far from the reading that I have done everything seems to suggest that I should stay put.

There is a slight quirk in my final salary pension in that my pensionable salary is capped well below my current salary and will remain at that level until I retire . it is this that is making me consider alternative options.

I am somewhere from my planned retirement age of 55 (I'm 46) and I know that this will influence the thinking.

I'm not looking for advice particularly on my personal situation but I am interested to know whether anybody else has opted out of the final salary pension scheme and what your reasons were.

I guess I'm just wanting to understand whether or not I'm mad for even considering it!

[PurpleMoonlight]

Interesting quandary

At the moment as an active member your past service accrual is frozen. If you were to opt out is would increase by CPI subject to a 5% pa cap (called LPI).

Your ongoing annual contribution is therefore effectively only funding the one years accrual less the LPI.

Will your employer pay anything to an alternative pension arrangement if you opt out?

[Jockman]

Some will look at spouse benefits. Sometimes Final Salary schemes are less generous than DC.

[CAH706]

Thanks both

I can (and would I think) go into the new pension scheme. 5% contribution from me, 13% from employer.

Death in service is 8x income in the new scheme v 4x in the final salary.

I'm not sure (hence seeing the advisor) how ongoing pension payouts would compare.

The transfer value of the pension is good and that gives me a good pot to move if I do it now. Not sure what the values will be down the line.

[PurpleMoonlight]

You don't have to transfer it just because you opt out.

[Jockman]

Indeed. Your Adviser will talk to you about the options. They will also discuss the costs of any potential transfer and the ability to ring fence it instead.

[rfisher]

You money bods do like to tease.

Tell me more about ring fencing a pension once that scheme has been closed please.

How, why etc.