Asked to take a pay-cut and suggested to suspend pension contributions

Spendless

Hubby has been asked to take a 5% pay-cut. It has been suggested to him that this can be made up of him suspending payments into his company pension, which would account for 4%. His employer are also going to suspend paying into employees pensions for everyone.

I am a bit bothered that if we go down this route, it will come back and bite us in the bum when we are elderly. Hubby is in his early 40's and has worked for this employer for 5 years.

Any thoughts/ideas/advice?

SomeBozo

How much does he like his job and the salary he is earning now compared to what might happen when if the company went out of business? Or if they made him redundant and offered him a weeks pay for every year he worked?

Bozo

Spendless

and that answers my question about how suspending pension contributions might affect us when we are pensioners-how cos I am confused?

SomeBozo

You said :

Any thoughts/ideas/advice?

Which I assumed to mean the whole post, not just the second paragraph.

Bozo

SomeBozo

But to answer your question :

how suspending pension contributions might affect us when we are pensioners-how

It means you will get less.

But I suspect you already knew this.

Bozo

Spendless

Bozo- thank you for your advice. Does anyone else have any suggestions.

ceridwen

Is the employer planning on cutting back on what they pay into the pensions anyway - regardless of whether your husband elects to take a paycut in the form of suspension of his pension contributions?

kev.s

is it solely a works contribution pension or can he pay into avc ( added volountary contributions ) if they are reducing their part see if you can pay in more yourself, or transfer to private pension if appropriate, however i would be asking to see the works pension advisor or an IFA of your own

Spendless

Ceridwen- that is correct. The employer will stop contributions regardless of whether hubby agrees to a 5% pay-cut or not.

If hubby does agree to a 5% pay-cut he can make this 5% up out of suspending his own contributions which total 4% and the other 1% would come out of the rest of his salary.

It is a pension that both his employer and himself pay into.

It has been suggested to him to do it this way as it would mean his actual take home pay isn't very much reduced.

Spendless

kev.s wrote: »

is it solely a works contribution pension or can he pay into avc ( added volountary contributions ) if they are reducing their part see if you can pay in more yourself, or transfer to private pension if appropriate, however i would be asking to see the works pension advisor or an IFA of your own

that would leave us even worse off as we'd be taking a 5 % pay cut AND increasing the amount we pay into the pension. We couldn't afford to do both. I don't currently work, have been a sahm and at college, am due to finish at easter and have been job-hunting but I'm not even getting thru to interview. I am phoning up tomorrow about a voluntary job that will give me much needed work-experience which hopefully will then lead me to paid employment, but at the minute it is hubby's salary only we are surviving on.

ceridwen

Hmmm.....not good vibes here then I'm afraid re that job pension..

The combination of the fact that they arent going to pay in any more on the one hand - and came up with the suggestion to your O.H. not to do so on the other hand. It sounds like that paycut they plan on imposing on your O.H. has been deliberately set at this particular level - in order to stop him making his own contributions any more. I think this paycut is probably more about them trying to "shut up shop" on their pension scheme than it is about saving themselves money (at the employees expense) from the sound of it.

I guess that means they are going to let this company pension scheme "wither on the vine" - so I think the big question here is actually that your O.H. needs to consult with his union/his colleagues about how they can protect what Company Pension money they all already have. They need to see what they can do to protect it from getting frozen (ie not receiving appropriate inflation rises on what is "saved" in there so far) and from getting "raided" to help out the company's cashflow situation (which would probably be the last the staff would see of it).