Pensions - contract in or out
Discussion
when you work out the extra payments into SERPs and what it gives you, its usually more than what the same money into your own pension would have ...thats assuming that the govt scheme is unchanged over the next 18years
...its just a gamble really, no-one knows the future, so best bet is to hedge your bets and invest in a few things for retirement...so probably safe option to take the saved money and invest in a SIPP or property, at least you have some control
...its just a gamble really, no-one knows the future, so best bet is to hedge your bets and invest in a few things for retirement...so probably safe option to take the saved money and invest in a SIPP or property, at least you have some control
Opting out of final salary... Interesting.
You forgo
death in service lump sum 4-6 times your salary would be highly helpful to your wife and or kids
death in service accelerated pension ie if you die at say 30 yo and are married they will assume you will have worked until 65 retirement age so full pension paid out on a monthly basis to you wife until she dies.
Plus of course the accrued pension. Note they cannot change what you have accrued to date it's only the future you earn that could change.
I really hope your not unlucky health wise and that your other pension plus of course your life INS which you now have to pay for seperatly all add up. As I've done the sums and in no way does it not make sense. Even career average is perfectly fine acceptable.
I'm really struggling to see your logic and I hope for your sake you didn't overlook the benefits I've highlighted instead just looked at the pension when you retire.
You forgo
death in service lump sum 4-6 times your salary would be highly helpful to your wife and or kids
death in service accelerated pension ie if you die at say 30 yo and are married they will assume you will have worked until 65 retirement age so full pension paid out on a monthly basis to you wife until she dies.
Plus of course the accrued pension. Note they cannot change what you have accrued to date it's only the future you earn that could change.
I really hope your not unlucky health wise and that your other pension plus of course your life INS which you now have to pay for seperatly all add up. As I've done the sums and in no way does it not make sense. Even career average is perfectly fine acceptable.
I'm really struggling to see your logic and I hope for your sake you didn't overlook the benefits I've highlighted instead just looked at the pension when you retire.
Welshbeef said:
Opting out of final salary... Interesting.
You forgo
death in service lump sum 4-6 times your salary would be highly helpful to your wife and or kids
death in service accelerated pension ie if you die at say 30 yo and are married they will assume you will have worked until 65 retirement age so full pension paid out on a monthly basis to you wife until she dies.
Plus of course the accrued pension. Note they cannot change what you have accrued to date it's only the future you earn that could change.
I really hope your not unlucky health wise and that your other pension plus of course your life INS which you now have to pay for seperatly all add up. As I've done the sums and in no way does it not make sense. Even career average is perfectly fine acceptable.
I'm really struggling to see your logic and I hope for your sake you didn't overlook the benefits I've highlighted instead just looked at the pension when you retire.
i didn't trust them not to change the rules!You forgo
death in service lump sum 4-6 times your salary would be highly helpful to your wife and or kids
death in service accelerated pension ie if you die at say 30 yo and are married they will assume you will have worked until 65 retirement age so full pension paid out on a monthly basis to you wife until she dies.
Plus of course the accrued pension. Note they cannot change what you have accrued to date it's only the future you earn that could change.
I really hope your not unlucky health wise and that your other pension plus of course your life INS which you now have to pay for seperatly all add up. As I've done the sums and in no way does it not make sense. Even career average is perfectly fine acceptable.
I'm really struggling to see your logic and I hope for your sake you didn't overlook the benefits I've highlighted instead just looked at the pension when you retire.
LC23 said:
SplatSpeed said:
i didn't trust them not to change the rules!
But wouldn't they at least ringfence the final salary period? I have never heard of someone not wanting to be in a final salary scheme!I know these final salary pensions would not be worth the paper they were written on, they are allready turning them into average salary!
i don't trust the government!
SplatSpeed said:
LC23 said:
SplatSpeed said:
i didn't trust them not to change the rules!
But wouldn't they at least ringfence the final salary period? I have never heard of someone not wanting to be in a final salary scheme!I know these final salary pensions would not be worth the paper they were written on, they are allready turning them into average salary!
i don't trust the government!
Average salary IF agreed will only apply to the future years the final salary you have accrued to the date of that change remains. If a financial advisor told you otherwise you should be looking into compensation for appaulimg incorrect advice.
Opting out of a final salary ...most companies pay in 30-45% per year of your salary into the scheme that's what it costs to provide that lifestyle. If you opt out you either need to pay in a similar level impossible really OR it needs spectacular performance every year until you retire. If you think that's possible I can understand why you opted out - say no more.
Welshbeef said:
SplatSpeed said:
LC23 said:
SplatSpeed said:
i didn't trust them not to change the rules!
But wouldn't they at least ringfence the final salary period? I have never heard of someone not wanting to be in a final salary scheme!I know these final salary pensions would not be worth the paper they were written on, they are allready turning them into average salary!
i don't trust the government!
Average salary IF agreed will only apply to the future years the final salary you have accrued to the date of that change remains. If a financial advisor told you otherwise you should be looking into compensation for appaulimg incorrect advice.
Opting out of a final salary ...most companies pay in 30-45% per year of your salary into the scheme that's what it costs to provide that lifestyle. If you opt out you either need to pay in a similar level impossible really OR it needs spectacular performance every year until you retire. If you think that's possible I can understand why you opted out - say no more.
anonymous said:
[redacted]
This time next year you won't be able to contract out unless you're in a defined benefit scheme (e.g. final salary/career average) - so not much point in worrying about whether to contract in or out at this point.http://www.dwp.gov.uk/docs/emp-contracting-out-fac...
Spitfire2 said:
This time next year you won't be able to contract out unless you're in a defined benefit scheme (e.g. final salary/career average) - so not much point in worrying about whether to contract in or out at this point.
http://www.dwp.gov.uk/docs/emp-contracting-out-fac...
Good point had forgotten about that as such OP question is in effect a non question as it's a year tops so peanuts you may as well opt in lesshassle http://www.dwp.gov.uk/docs/emp-contracting-out-fac...
Welshbeef said:
oh dear. Sorry you have either Been misinformed or didn't understand/let the red tops give you advice.
100% correct. The red tops (and the BBC) love a sensational 'government is ripping you off story' but they only tell a tiny fraction of the story. NO-ONE has lost earned pensions. All the new deals start from now. And they still beat a SIPP into a cocked hat. I'm not saying SIPP is bad. As a top up or as your only provision it can be excellent. But compared to a defined benefit scheme...no way.
All I'll say is I have seen and dealt with a significant number of upheld formal complaints against organisations advising to either transfer assets out of a company sponsored final salary plan or opting not to join such a plan in favour of a personal plan of some sort.
Anything you've seen and heard about changes meaning that benefits earned already will be lost is utter rubbish: UK legislation fully protects accrued pension rights. If you or anyone else wants to change things it will only be for the future: accrued rights will be protected. So, you get "old" accrued benefits and "new" future benefits which together make up your total. Of course, if anyone is daft enough to be pursuaded to take a transfer in lieu of accrued rights and transfer them into something else, that's their decision and not a very good one usually in my experience.
Contracting out or not, whenever it is possible, is usually wholly dependent on age: the older you are the less attractive it is to contract out.
Note that what I've said above should not be considered advice, just my own experienced based opinion. If you really wish to make an informed decision on what I consider to be a critical financial matter, get good independent advice and expect to pay for it too.
R.
Anything you've seen and heard about changes meaning that benefits earned already will be lost is utter rubbish: UK legislation fully protects accrued pension rights. If you or anyone else wants to change things it will only be for the future: accrued rights will be protected. So, you get "old" accrued benefits and "new" future benefits which together make up your total. Of course, if anyone is daft enough to be pursuaded to take a transfer in lieu of accrued rights and transfer them into something else, that's their decision and not a very good one usually in my experience.
Contracting out or not, whenever it is possible, is usually wholly dependent on age: the older you are the less attractive it is to contract out.
Note that what I've said above should not be considered advice, just my own experienced based opinion. If you really wish to make an informed decision on what I consider to be a critical financial matter, get good independent advice and expect to pay for it too.
R.
OneDS,
Sorry but you are wrong. I agree that the Civil Service Pension Scheme (CSPS) is not technically an occupational pension scheme because that term usually applies to private sector pension schemes. The CSPS is a public sector pension scheme. More to the point, however, is that the CSPS does contain all the right provisions to ensure that members' accrued benefits cannot be changed retrospectively. It may be that a member has the option of doing so or can take a transfer value to some other pension arrangement such as a personal pension plan, but that decision is an individual one not one that can be imposed on members.
Benefits for future service can always be amended, whereas they cannot be changed retrospectively.
R.
Sorry but you are wrong. I agree that the Civil Service Pension Scheme (CSPS) is not technically an occupational pension scheme because that term usually applies to private sector pension schemes. The CSPS is a public sector pension scheme. More to the point, however, is that the CSPS does contain all the right provisions to ensure that members' accrued benefits cannot be changed retrospectively. It may be that a member has the option of doing so or can take a transfer value to some other pension arrangement such as a personal pension plan, but that decision is an individual one not one that can be imposed on members.
Benefits for future service can always be amended, whereas they cannot be changed retrospectively.
R.
SplatSpeed said:
we had the option with the wifes IR pension to go final salary
or pay into a private pension
i advised against final salary as they may try to change the deal later! so we went and got the money put in a private pension
hopefully they can't touch that!
That's likely to be the worst decision you've ever made or will ever make in the futureor pay into a private pension
i advised against final salary as they may try to change the deal later! so we went and got the money put in a private pension
hopefully they can't touch that!
Sidicks
sidicks said:
SplatSpeed said:
we had the option with the wifes IR pension to go final salary
or pay into a private pension
i advised against final salary as they may try to change the deal later! so we went and got the money put in a private pension
hopefully they can't touch that!
That's likely to be the worst decision you've ever made or will ever make in the futureor pay into a private pension
i advised against final salary as they may try to change the deal later! so we went and got the money put in a private pension
hopefully they can't touch that!
Sidicks
try to explain Why!
The worst decision I have ever made, bold statement!
My final salary pension is being ended this month, when I retire I'll get the same 60th of my final salary multiplied by the 16 years I've paid into it as I would if it continued. We have been offered a money purchase scheme for the rest of my time there and it's now a decision whether I go with it or not bother at all. Why anyone would not want to go into a final salary scheme is beyond me, you can't lose whereas with the money purchase it's all a very big gamble with absolutely no risk to my employer.
It's already been summarised for you in the posts above.
The final salary scheme is likely to be worth around 35%- 40% of salary p.a. Unless your wife is getting an employer contribution at that sort of level into a defined contribution scheme then you are already (much)worse off. Plus of course you still retain all the risk regarding investments (plus of course potential reward) and longevity.
And it would appear that the sole basis for this decision was that there is a risk that the final salary scheme could change.
But as has been pointed out, the likelihood of accrued benefits being reduced is so close to zero that it is not worth bothering with.
Sidicks
The final salary scheme is likely to be worth around 35%- 40% of salary p.a. Unless your wife is getting an employer contribution at that sort of level into a defined contribution scheme then you are already (much)worse off. Plus of course you still retain all the risk regarding investments (plus of course potential reward) and longevity.
And it would appear that the sole basis for this decision was that there is a risk that the final salary scheme could change.
But as has been pointed out, the likelihood of accrued benefits being reduced is so close to zero that it is not worth bothering with.
Sidicks
sidicks said:
It's already been summarised for you in the posts above.
The final salary scheme is likely to be worth around 35% of slaray p.a. Unless you getting an employer contrbution at that level into a defined contribution scheme then you are already (much)worse off. Plus of course you still retain all the risk regarding investments and longevity.
And it would appear that the sole basis for this decision was that there is a risk that the final salary scheme could change.
But as has been pointed out, the likelihood of accrued benefits being reduced is so close to zero that it is not worth bothering with.
Sidicks
she was only in the scheme 2 years The final salary scheme is likely to be worth around 35% of slaray p.a. Unless you getting an employer contrbution at that level into a defined contribution scheme then you are already (much)worse off. Plus of course you still retain all the risk regarding investments and longevity.
And it would appear that the sole basis for this decision was that there is a risk that the final salary scheme could change.
But as has been pointed out, the likelihood of accrued benefits being reduced is so close to zero that it is not worth bothering with.
Sidicks
the salary the day she left is her final salary had she accepted it in 35 years!
assuming they don't change the rules.
they were constructivly dismissing her post and she was just waiting for something better to come along! (moving post 30 miles away!)
so she has 2 years contributions that will accrue for 35 yr's or take 2 years worth of benefit of her leaving salary 35 Yr's ago
so please explain to me the "Worst decision of my life!"
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