Do I take the offer or stick with Final Salary?

cownet

I think I'd probably want some better investment choices as an incentive to leave a final salary scheme, especially since the new Protection Fund means that companies can't welsh on their responsibilities easily now.

So waying up the options, although I am unlikely to still be with my current employer in 30 years, I am still better to stick with the Final Salary?

If I leave before my retiremnet age I would get 1/60th xfinal pensionable earnings x pensionable service. (standing at 5yrs curently)

That does not seem alot?

Ta

EdInvestor

One more question: what happens if you leave to another job.Can you take the money purchase pension with you - ie can it me moved to a SIPP or a personal pension easily, with no deductions?

cownet

If I leave the fund remains invested until retirement, or I can transfer it into a another pension.

I am waiting to get a call ref charges to tranfer it.

Thanks for the help
D

cownet

No charges are made.

At any time after leaving, I can ask for the money to be transfered, at which point the investment is de-invested and transfered with no charges.

Ta

EdInvestor

The final salary scheme will be upgraded by inflation or 5% up till retirement.

It's not an easy decision. If you feel you're likely to move around in your career, might need to access the fund earlier than official retirement, like the idea of controlling your pension money yourself and feel that you may want to take an interest in investment in the future, then I'd be inclined to take the money purchase deal. The downside of it is that although very cheap, and with a terrific employer contribution, you could do a lot better with different funds. And of course the investment risk is all with you.

If you think pensions and investment will never interest you, feel the company is being responsible about the f/s scheme, are confident about the Protection fund's ability to safeguard tour interests, feel there is no way you will need to access the pension before official retirement age, and don't mind chipping in the extra, then stay put.

I assume that in any case you will be have to leave behind your existing entitlement in the final salary scheme when you leave in future.So you will already have a chunk of deferred f/s pension?

Chrismaths

And remember, you are taking a bet on the company still being around in 30-50 years time, if you stay in the FS... A guarantee is only as good as the person/company guaranteeing it.

cownet

EdInvestor wrote:

The final salary scheme will be upgraded by inflation or 5% up till retirement.

It's not an easy decision.

Tell me about it

If you think pensions and investment will never interest you, feel the company is being responsible about the f/s scheme, are confident about the Protection fund's ability to safeguard tour interests, feel there is no way you will need to access the pension before official retirement age, and don't mind chipping in the extra, then stay put.

I think the company is being responsable, but who is to say that that will be the same in the future.

To to pay an extra 3% is going to cost me well over £100 pcm, which is a little more than an extra chip per month.

Adding to what Chrismaths said, I do think that in the future leaving the company I would be very interested in moving my money to somthing else, and yeah your right they may not be around, but more likly I will not be working for them.

I assume that in any case you will be have to leave behind your existing entitlement in the final salary scheme when you leave in future.So you will already have a chunk of deferred f/s pension?

Yep true.

I think if I was in my late 40's or say 60 then It would make sence to stay put in the Final Salary.

Thank you again for your replies, they are well recived.

I think I might take the offer and if I kick my self later then so be it!:o

Pal

Without a full analysis it is impossible to say, but I would stick with the final salary scheme. A straight 60ths scheme is currently worth about 20% or so of salary, but as an investment is largely index linked and has a government guarantee from the pension protection fund in case your company goes bust. You won't get a safer investment than that.

Another two things to consider:

- Your company will not be offering more money for the DC arrangement than they are having to pay to the final salary scheme. Chances are that they are offering less.

- I bet your company directors are staying in the final salary scheme.