Final salary pension advice urgently needed

backward_elvis

I am being made redundant after 11 years and have been offered a hefty redundancy payout which is practically tax-free. Another department in my company has just offered me a new job which pays exactly the same money as before and my continuous service will be honored.
Unfortunately the company are refusing to let me keep my final salary pension scheme. I am willing to forgo the redundancy money but can they really take away my pension?

Andy_L

They can't "take away" your pension, it will be deferred & will increase by RPI (possibly with a cap) every year until you retire.
Assuming that the final salary scheme is closed to new entrants than, if you are made redundant and re-employed then they can prevent you rejoining the FS scheme, assuming that's what the scheme rules say.
Can you just be transferred to the new department?

LittleJo

Hi,
In pension terms the operative phrase is 'what I have, I hold'.
Thus your pension rights earned cannot be taken away.
To some extent they are protected by gov. legislation.
I should look carefully at the company and pension scheme rules.
It appears that you are only changing roles, and not breaking service.
Try and get written clarification.
Your Final salary pension is of great value and must be protected.
Jo

MikeJones_2

Hi backward-elvis,

Remember that it your job that is being made redundant, not you, and your current job should cease to be available to anyone else.

If you cease to be an active member of the final salary scheme, your pension benefits will be preserved until your Normal Retirement Date. What you will have earned will be protected and will continue to 'revalue' (increase) up to your NRD. The increases will depend upon your scheme service dates and whether the scheme was contracted-out of the second state pension (SERPS between 1978 and 2002 and S2P thereafter). You may have different slices of pension - with some receiving different rates of 'revaluation'.

You could always consider accepting the offer and then use the Internal Dispute Resolution Procedures (IDRP) to argue your case. There is a two-stage process and you could use The Pensions Advisory Service (TPAS) to help you with you case. TPAS' provides a free dispute resolution service.

Is the final salary scheme 'closed to new members' - i.e. ignoring the situation that you have described - if any new employee joined the company would they be eligible to join the final salary scheme or are they offered an alternative pension?

Finally, you might want to read this free factsheet which could help save you some pension contributions, depending upon how your scheme works. See: Redundancy: Maximising your pensionable service - Active Members

I'd be interested to learn of the outcome, if you don't mind sharing it with us.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a 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.

backward_elvis

Hi,
Thanks for your replies I really appreciate the help.
As I said before for all intents and purposes I am no longer being made redundant as another role has been found for me. If I accept the job I am not eligible for any severance, paid notice period, retraining costs etc. so it is pretty much that I am simply transferring to another section of the company. I really don't get why they are being so problematic as if turn the job down they are stuck paying me a shed load money, plus they still have to fill that position which they know I am perfect for.
The Final salary scheme has been closed to new members for a few years but as I am not leaving the company why the issue? Is there any precedent for them to buy me out of the scheme for a cash lump sum?

artha

backward_elvis wrote: »

Hi,
Thanks for your replies I really appreciate the help.
As I said before for all intents and purposes I am no longer being made redundant as another role has been found for me. If I accept the job I am not eligible for any severance, paid notice period, retraining costs etc. so it is pretty much that I am simply transferring to another section of the company. I really don't get why they are being so problematic as if turn the job down they are stuck paying me a shed load money, plus they still have to fill that position which they know I am perfect for.
The Final salary scheme has been closed to new members for a few years but as I am not leaving the company why the issue? Is there any precedent for them to buy me out of the scheme for a cash lump sum?

I don't have the experience or knowledge of those who have already replied but, unless I am missing something, I dont see why you have to leave the final salary pension scheme.

If you are not being made redundant and simply transferring to another job within the company you must be able to retain your continuous employment status and therfore membership of the pension fund. Have you considered taking legal advice? or Union advice?

tuggy12

You should speak to the trustees of the scheme to find out what is going on.

Debt_Free_Chick

backward_elvis wrote: »

Hi,
Thanks for your replies I really appreciate the help.
As I said before for all intents and purposes I am no longer being made redundant as another role has been found for me.

The Final salary scheme has been closed to new members for a few years but as I am not leaving the company why the issue? Is there any precedent for them to buy me out of the scheme for a cash lump sum?

I agree with you - if your service is not being terminated, why must you leave the pension scheme? In fact, I suggest you ask the company to confirm which rule it is they are applying and ask them to send you a copy of that rule.

Let's see what they say when they quote the relevant rule. It could be someone in HR has the wrong end of the stick!