Pensions Advice
Discussion
Hi there,
Looking for some pensions advice. My current job has a final salary pension scheme to which I contribute 7% of gross salary. These types of scheme are few and far between these days and new employees have not been able to join this scheme for the last 5 years. (I’ve been with the same company for 10 years). In the future if I choose to move jobs or decide to take a career break what are the likely options for either a private pension or a company backed money purchase pension. I’ll probably work for the next 23-28 years.
Thanks and all the best.
Looking for some pensions advice. My current job has a final salary pension scheme to which I contribute 7% of gross salary. These types of scheme are few and far between these days and new employees have not been able to join this scheme for the last 5 years. (I’ve been with the same company for 10 years). In the future if I choose to move jobs or decide to take a career break what are the likely options for either a private pension or a company backed money purchase pension. I’ll probably work for the next 23-28 years.
Thanks and all the best.
I see you havent had much action on this thread, you may have lost interest!
Anyway if you do decide to move jobs your benefits with your current employer will become frozen. It may be possible to transfer these to a new employer but full advice is needed and to be honest i would be unlikely to move it unless it was to another final salary scheme who could offer me a greater benefit than if it stays where it is. Certainly final salary schemes offer a clearer idea of what you will get at retirement (dont think this means your fund is 100% safe however)
In terms of money purchase arrangements with new companies they may still contribute a similar amount as well as you, but this will build a fund pot from which you can take a tax free amount and the rest can be used to provide an income. The simplest way to think of it is that in a final salary scheme, the company takes the investment risk, in a money purchase it is you who are taking the investment risk so selecting the correct funds for your risk profile would be essential, and keeping a regular eye on them. At the moment a fund of £100,000 would provide an income of around £6,500 if you get the best annuity rate (using the entire £100k to buy an annuity), this will almost certianly change by the time you retire, there are also other options to annuities as well, but again this could have changed when you retire.
It may be possible to choose your pension provider and your employer pay into the personal scheme for you as long as you are contributing aswell, but it depends on the size of the firm and what they are willing to do. Certainly the larger firms will have a large adviser looking after them and will offer the one solution and no more.
Poosibly clear as mud, but until it comes time to moving jobs might be irrelavant, the goalposts might have been moved by then!
Anyway if you do decide to move jobs your benefits with your current employer will become frozen. It may be possible to transfer these to a new employer but full advice is needed and to be honest i would be unlikely to move it unless it was to another final salary scheme who could offer me a greater benefit than if it stays where it is. Certainly final salary schemes offer a clearer idea of what you will get at retirement (dont think this means your fund is 100% safe however)
In terms of money purchase arrangements with new companies they may still contribute a similar amount as well as you, but this will build a fund pot from which you can take a tax free amount and the rest can be used to provide an income. The simplest way to think of it is that in a final salary scheme, the company takes the investment risk, in a money purchase it is you who are taking the investment risk so selecting the correct funds for your risk profile would be essential, and keeping a regular eye on them. At the moment a fund of £100,000 would provide an income of around £6,500 if you get the best annuity rate (using the entire £100k to buy an annuity), this will almost certianly change by the time you retire, there are also other options to annuities as well, but again this could have changed when you retire.
It may be possible to choose your pension provider and your employer pay into the personal scheme for you as long as you are contributing aswell, but it depends on the size of the firm and what they are willing to do. Certainly the larger firms will have a large adviser looking after them and will offer the one solution and no more.
Poosibly clear as mud, but until it comes time to moving jobs might be irrelavant, the goalposts might have been moved by then!
Edited by DannyR on Monday 24th September 12:11
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