Co Pension Scheme Closed-what do I do ?

Apple_2

The company I work for is closing it's pension scheme to new entrants at 31/12/05. I'll still be in old scheme with company continuing to pay contributions. There's a 'hole' in our scheme. After our company makes a yet to be decided payment in( or decides not to ), then the grapevine says we'll have 3 choices. Move retirement age to 65 ( from 60 ) - Employees contribute to pension ( currently only employer ) - the bit you accrue each year will be reduced from 2006 ( the fraction ).
It all seems bad. Someone told me the old fund would have to over time switch from equities to bonds therefore lower return? Can anyone direct me to websites or web articles spelling out consequences or choices ? Anyone who had the same thing happen got any comments ? I feel like the 'company' and the 2 trustees, one co & one employee, who are both aged high 50's and want to work till they're 65, will manouver the decision to suit their circumstances. If I need to do something or argue something, I need to know it and do it now. We're due to have a staff consultation on this in Jan 2006 ( 28 people in company )
Thanks

Apple_2

I know pensions are boring but ........ pleeze anyone ??

caveat_emptor

Apple wrote:

I know pensions are boring but ........ pleeze anyone ??

There are a number of options open to the company,as you've said, I think it's pointless trying to guess what might happen. You can't do anything until a decision is made so wait until then.

Apple_2

Thanks for replying caveat

The point is, if I and the other staff are being 'consulted' about what happens to our pension pot and what ramifications it will have for us from 2006 onwards, it's a decision-making process and I'd like to have information beforehand so I'll know if I'm being shafted, and I can have my say.
Afterwards I'll be too late.

caveat_emptor

Presumably you have a non-contributory, defined benefits scheme, ie. at retirement you get pension according to time served and final salary and you want to maintain the benefit element. Or maybe not, because there will no doubt be a trade-off between the benefits you would like and contributions you and/or the company is prepared to make. If you want the existing benefits I would suggest;
1. Company increases its contributions on the basis that they have a contractual obligation to existing fund members. ( No chance)
2. Company maintains its contributions but with contributions by employees. (It may be that the employee contributions will be so high this won't be acceptable. Recently a company suggested doubling the employee contribution). So you need to know what your contributions would be to maintain the existing benefits.
3. A deal on the retirement age and it may be an extra 5 years won't balance the fund.
So you need to know how many extra years.
4. 2 with 3.
If your going to get reduced defined benefits, because 1 to 4 is not workable, then it's up to you to decide and trade these against your contributions/retirement age.
The current trend is for companies to ditch responsibility for defined benefits schemes in favour of defined contributions ie. you/company pay into a Stakeholder Pension and/or group Personal Pension Plan, most popular of these is with-profits funds as the're relatively easy to administer but there are others. At retirement you have a sum that you decide how to convert to a pension. Being a member of a group scheme would be better than going it alone as the charges SHOULD be lower.
Some companies reacted to the last stock market crash by moving their pension funds out of stocks and into bonds where the risk is lower but so is the long term potential return. Again the which way you go is dependent on your attitude to risk.