Another Pension Transfer Value Question

Woofles

I have a deferred company pension which as of Nov 2008 had a transfer value of £12,000 (wheee world cruise here I come). Would I be correct in thinking my pension from this would be calculated as a percentage return on this amount, and as things are at the moment a very small return. I should add I am due to retire in 12 months and 3wks time, (whose counting then, not me guv).

The last funding statement I have shows the scheme to be 84% of its funding level and showing a shortfall, which I suspect many schemes are at the moment. My last yearly statement showed there were 245 contributing members and twice as many pensioners, and I'm beginning to wonder if this fund can remain viable.

I'm fishing for options, as reality has just hit me on the side of the head with a spade (ouch).

MikeJones_2

Hi Woofles,

If it's a defined benefit scheme (such as a final salary type scheme), which judging by your post it probably is, your pension at your Normal Retirement Date will be based upon the formula contained in the Scheme Rules.

Most final salary schemes provide benefits based upon 4 key elements:

• the length of the pensionable service you are credited with as being an active member of the scheme
• your pensionable salary
• the formula or rate of ‘accrual’ which uses service and salary to work out your pension
• the circumstances under which benefits are taken from the scheme (retirement, early payment, early leaver, ill-health, death etc).

If you're concerned about the security of your pension benefits take a look at the Pension Protection Fund's website along with The Pension Regulator's website too.

If it's a defined contribution scheme (also known as a money purchase scheme) your benefits will based upon the amount of money that is in YOUR own pension ‘pot’ when benefits are due to be paid.

The amount in YOUR ‘pot’ at retirement will depend upon how much was put in by your employer and by YOU, the investment returns achieved on those contributions, and any costs which are charged against your growing ‘pot’.

The benefits you or your dependents will get from a money purchase scheme will come entirely from your ‘pot’.

Hope that helps.

Mike

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.

Debt_Free_Chick

Woofles wrote: »

The last funding statement I have shows the scheme to be 84% of its funding level and showing a shortfall, which I suspect many schemes are at the moment. My last yearly statement showed there were 245 contributing members and twice as many pensioners, and I'm beginning to wonder if this fund can remain viable.

The number of contributing members doesn't really matter as the company pays "the balance of the cost". If there were no contributing members, the company would still have to contribute.

Companies only "get out" of funding the scheme, these days, if they go bust! And if they do, then the Pensions Protection Fund would (almost certainly) take over operation of the scheme.