Money purchase v final salary

Florrie97

I am on a 50% contract and in a final salary scheme and because of the nature of my job I can collect my pension after 50 and still intend to work (I'm 52). I have an increment due in Jan and expect to opt out of the pension scheme and collect on Feb 1st.
Now the way my pension works out, by doing a pension modeller It doesn't increase much, it really is worth collecting soon.
I only pay a nominal sum each month into the scheme. paying more does not increase my benefits at all.
my question is would it be worth converting to a money purchase pension to collect and generally speaking would I benefit more by doing this being 50%.
I have asked pension advisors but they can't advice as my employers scheme s too specific and they seem to be unaable to help.
Any thoughts would be welcome.

Another thing. Something I've often wondered. How is it that if someone is sacked they lose their pension.
Is this even all their contributions!!

jem16

Florrie97 wrote: »

Now the way my pension works out, by doing a pension modeller It doesn't increase much, it really is worth collecting soon.

It may not increase much but will you lose a lot by taking it early? Most final salary schemes lose around 5% for each year taken early - it's called actuarially reduced.

my question is would it be worth converting to a money purchase pension to collect and generally speaking would I benefit more by doing this being 50%.

I'm not sure what you mean by 50%? I am assuming you mean a 40/80ths scheme or 30/60ths scheme therefore meaning you get 50% of your final salary if you have the maximum number of years.

What do you hope to achieve by converting it?

MikeJones_2

Florrie97 wrote: »

I am on a 50% contract and in a final salary scheme...

Can you explain what you mean by this, as it isn't clear - and for us to contribute anything meaningful to your post we need to be certain of what you are referring to? I've highlighted some key points below to show you the type of thing you'd need to address/consider.

Florrie97 wrote: »

...and because of the nature of my job I can collect my pension after 50 and still intend to work (I'm 52).

Have you confirmed this with your employer and Pensions Dept?

What is your Normal Retirement Date?

Florrie97 wrote: »

I have an increment due in Jan and expect to opt out of the pension scheme and collect on Feb 1st.

Will you still continue to work with the same employer, in the same job and for the same pay? Does your employer offer 'Flexible Retirement' for example?

Florrie97 wrote: »

Now the way my pension works out, by doing a pension modeller It doesn't increase much, it really is worth collecting soon.

We can't comment because we don't know the details. For example, we can only assume that you have understood and used the Pensions Modellor correctly. These are often very basic indeed and of limited use or for general guidance only, and reliance upon them in isolation is not to be recommended.

Florrie97 wrote: »

I only pay a nominal sum each month into the scheme. paying more does not increase my benefits at all.

But your employer does - your employer funds its contributions to meeting the pension that it has promised you and this could be very valuable - but again we can't comment as we don't know enough from your original post.

Florrie97 wrote: »

my question is would it be worth converting to a money purchase pension to collect...and generally speaking would I benefit more by doing this being 50%...

Impossible to say to either from the info you have provided.

Florrie97 wrote: »

I have asked pension advisors but they can't advice as my employers scheme s too specific...

That only means that the advisers you have been to do not have the specific expertise or knowledge that is required on this matter.

Florrie97 wrote: »

...and they seem to be unaable to help.

What's in it for the adviser? Were you willing to pay a fee for the advice?

Any thoughts would be welcome.

Florrie97 wrote: »

Another thing. Something I've often wondered. How is it that if someone is sacked they lose their pension..

I don't know where you've heard this from, but for the vast majority of defined benefit pension schemes in the UK it is simply untrue.

Sorry for the lengthy reply, but I had hoped to demonstrate how difficult it is for anyone to help with the limited information you have given. You are about to make a (presumably) big financial decision and it merits detailed investigation and a precise recommendation.

Mike Jones

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

Count_Dante

Florrie97 wrote: »

Another thing. Something I've often wondered. How is it that if someone is sacked they lose their pension.
Is this even all their contributions!!

I think that is from watching US cop shows where a cop does something naughty and loses his pension rights.

Ian_W

Count_Dante wrote: »

I think that is from watching US cop shows where a cop does something naughty and loses his pension rights.

The UK civil service [and AFAIK most other public sector schemes] allow for pensions to be forfeited on Ministerial orders in extreme circumstances involving work related criminality. The CS scheme mentions Official Secrets Act violations which result in 10yrs or more imprisonment or other offences which are likely to "seriously undermine public confidence" in the civil service.
The police scheme has similar provisions and there is an example HERE.
Don't suppose many coppers would have much sympathy with a bent barstward like that or many members of the public would want to see a pension paid to a civil servant who betrayed his/her country as a spy or had earned mega bucks in bribes.
Even in rare cases where a pension is forfeit it doesn't include a portion deemed as their own contribution.

So it can happen, but only in really serious cases usually involving crime - not just when someone is sacked. Not helped the OP much but thought I'd just clear that up.