works pension

McKneff

oh, i am very ashamed that i have not monitored things better.
i was just told that the company was finding it too expensive to keep going with the final salary scheme and that they were changing it to a money purchase scheme. And i just wnt along with it. you just trust people dont you. Well, maybe its just me, its a very family oriented company. The original company was set up in 19XX to help pows coming back from the war and has stayed with the same sentiment towards its people (employees) till today.
I think the final salary finished about 10 years ago ish. But there is a company handbook (to do with the F/a salary saying that they can discontinue it at any time) but and i quote from the original booklet for the final salary scheme:-

The employer Intends to continue the scheme but reserves the right to amend or discontinue it at any time. No amendment can be made that will prejudice the benefits accrued to the date of such amendment with your consent unless the amendment is reuqires as a result of legislation affecting retirement benefit schemes. In the event of disontinuance , you will be entitled to preserved benefits in prpoortion to your accrued interest in the scheme. The Employer is not obliged to pay benefits in the unlikedly event that the schemss resources are sufficient to do so.

See what i mean = i feel as if i have been banjaxed but like i say you trust people - has my trust been misplaced.l

MrChips

Sorry McKneff - I'm getting confused!

You say you joined the employer 23 years ago and that the final salary plan closed 10 years ago. What happened to the 13 years of benefits you built up?

In most cases you would have a preserved pension from this time, to go with the money purchase pension you have been contributing to since then.

McKneff

i was told the money that was in the f/a scheme was transferred into the money purchase scheme. I am feeling very silly now and very embarrassed at my lack of knowledge. I think i will ring my pension provider up tomorrow and see what the advisor says. Any other pointers before i do.

MrChips

I think this is a very good idea - it is crucial that you know what entitlements you have, particularly given your proximity to retirement.

You need to ask what happened to your final salary benefits when the scheme was closed. Given that you seem to have little idea as to what happened, it may be that you get a pleasant surprise that there is a bit of final salary pension waiting for you!

It is highly unlikely that the pension scheme trustees would allow beneficiaries to have their benefits transferred to a money purchase scheme without being comfortable that the members understood the risks involved. I'm pretty sure your consent would have been required to give up your final salary benefits.

McKneff

Thanks for all your help Mr C - will let you know how i get on.

McKneff

Hello again.

I was told this morning that when the final salary was wound up they
powers that be looked into how much was in the pension coffers and allocated an amount to all who were in it. like i said earlier i was the only employee, all the rest were manager.
I vaguely remember a meeting when we were told what was going to happen.
Apparently we were given a letter at that meeting regarding this. (this letter had been dated about 3 weeks previously but hadnt been given to us.) and i was also told this morning by the then MD that no consultations had taken place. We were literally told that it was going to happen today. The MD i have spoken to is actually suing them.
But no other benefits were left in the F/S scheme, it was just closed.

MrChips

Hmmm, well the law around pension scheme wind up was tightened up in the early 2000s - maybe your wind up predated this. Before around 2003, a solvent employer could wind up a pension scheme and pay non-pensioners an MFR transfer value. This put a relatively low value on secured benefits.

I think what happened in your case is that the scheme was wound up, and you were given this transfer value and it was put into your money purchase pot, to which you have since been adding further contributions.

If this is the case, this is indeed all you have. I can't comment on the legalities of the way your scheme and employer went about this as there isn't enough info. If you are on good terms with this former MD, you may want to talk to him about what he is suing them for (and whether this is anything you could consider). Sorry there is no better news

Re your £50,000 current pot, you are about right with your estimates of what this will get you in post 7.

MikeJones_2

Hi McKneff.

A couple of facts you might wish to know:

If your former scheme was a private sector defined benefit scheme (as you seem to suggest), then neither your employer, nor the scheme's trustees would have been legally entitled to transfer your pension from the final salary scheme into a money purchase arrangement (without your prior written consent). Consultation between the scheme and its members would have had to have been undertaken as an initial part of the process.

Under certain situations (such as the wind-up of a defined benefit scheme) the scheme trustees may be legally entitled to transfer members' benefits to a deferred annuity (such as a bulk buyout: a series of individual Section 32 Buyout policies taken out for each member). Again, consultation between the scheme and its members would have had to have been undertaken as an initial part of the process. If members couldn't be found, then the trustees could act accordingly by transferring benefits without member consent so long as the necessary notices were issued (see link below).

As MrChips says above, the processes and regulations have changed over the years so it depends upon when this all took place.

In a strange coincidence I wrote about an article that I came across this week which might indirectly have some bearing on your situation (and then again it might not!). See:

- Pensions: Judge rules when 'notice' differs from 'knowledge'

From what you have described so far, the scheme trustees might well have done everything correctly. They usually seek legal and financial advice in such matters – but that doesn’t mean that mistakes don’t sometimes happen.

That you have mentioned your former MD is suing them though, does raise some concern.

If you have any doubts about the events that took place, write to the Pensions Manager and explain that you cannot recollect the chain of events when the final salary scheme closed and would it be possible for it to be clarified now.

Say that you are simply doing this as part of your pending ‘flexible retirement’ process so that you can establish affordability.

When you receive a reply, you might want to share it with us so we can comment further.

A final course of action might be to seek the assistance of TPAS as it offers a free mediation service where a pension expert will help you to clarify what went on and why.

Hope this helps?

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.

McKneff

I think what happened in your case is that the scheme was wound up, and you were given this transfer value and it was put into your money purchase pot, to which you have since been adding further contributions.

Mr chips - Your right about the above. This all happened in 1998 11 years ago. and thanks again.


If you have any doubts about the events that took place, write to the Pensions Manager and explain that you cannot recollect the chain of event when the final salary scheme closed and would it be possible for it to be clarified now.

Say that you are simply doing this as part of your pending ‘flexible retirement’ process so that you can establish affordability.

When you receive a reply, you might want to share it with us so we can comment further.

Mike Jones - thanks for all that, really helps and i will go down that road
and update.

tawl_2

McKneff: I think you have a case for financial assistance scheme! here's what they say:

In general FAS assistance is paid as a top up to the pension that members receive from their scheme. In circumstances where a transfer was taken or benefits were commuted after wind-up started then a ‘notional’ rate of pension is used in order to calculate the FAS payment. The notional rate of pension that we use for a member is calculated by us from the amount of transfer or commutation by applying actuarial factors to provide a reasonable estimate of the amount of flat-rate pension that could have been secured by way of bulk annuity.

your scheme wounded up in 1998 and was underfunded at the time. you got a transfer value after wind-up so most likely this is a reduced transfer value. so i think that you can contact the FAS to see if you are eligible for payments!

details are here: http://www.pensionprotectionfund.org.uk/index/fas/contact_the_fas.htm