Final salary pension, changing to part time

accobra

I have had a final salary pension now for nine years and presently work full time. What would be the impact on this pension if I were to change to Part time working please?

jem16

You would build up less pensionable years of service.

For example if you work full time for 10 years you have built up 10 years of pensionable service. If you work 10 years on half a week you will build up 5 years of pensionable service so your final entitlement to your pension will be less.

cyclonebri1

jem16 wrote: »

You would build up less pensionable years of service.

For example if you work full time for 10 years you have built up 10 years of pensionable service. If you work 10 years on half a week you will build up 5 years of pensionable service so your final entitlement to your pension will be less.

Is it as simple as that Jem???
I ask I was in a similar position a few years ago.

Most schemes of this type are made up of a percentage of the number of years service x final rate of pay. in my case it was the average of the best 2 from the last 10 years. Most are more recent, ie, based on the last 3 years, surely this could decimate the op's entitlement??

CLAPTON

in general the 'final salary' is the full time equivalent and as jem says you simply accumulate fewer full time years

jh2009

Many schemes will simply adjust the accrued service (if changing to full or part time) so that you get the same benefit at a higher or lower salary.

EG 50% Part time, 10 years service with salary of 10000, then full time the service becomes 5 years service applied to full time salary of 20000 to give the same benefit. (opposite applies part time to full time).

This produces the same benefit:

Part time: 10 years x £10000 /60 = 1667 a year.

Full time: 5 years x £20000 / 60 = 1667 a year.

If you don't adjust it, you're either handing away free pension or cutting their entitlement.

Some schemes may base their final benefit on a final year(s) gross earnings. Some of these schemes can look back at past years (eg up to ten years) to see if they can calculate a higher figure if someone has gone part time.

The actual adjustment should be explained by your scheme if you ask them.

jem16

cyclonebri1 wrote: »

Is it as simple as that Jem???

No it's probably not that simple. However without more info I could hardly quote every possible variable for every scheme.

My own scheme for example offers a "winding down" at age 55 so I can go part-time and still accrue full time years.

Most schemes of this type are made up of a percentage of the number of years service x final rate of pay. in my case it was the average of the best 2 from the last 10 years. Most are more recent, ie, based on the last 3 years, surely this could decimate the op's entitlement??

Your final rate of pay is normally calculated on your full-time pay equivalent so that doesn't matter whether you are full-time or part-time. The main difference is the number of years of service accrued.

cyclonebri1

jem16 wrote: »

No it's probably not that simple. However without more info I could hardly quote every possible variable for every scheme.

My own scheme for example offers a "winding down" at age 55 so I can go part-time and still accrue full time years.



Your final rate of pay is normally calculated on your full-time pay equivalent so that doesn't matter whether you are full-time or part-time. The main difference is the number of years of service accrued.

Ah, that makes sense. I wasn't aware of the mechanics as I was about to consider reduced time, but was forced into retirement unexpectedly :beer:

accobra

Thanks for your replies. You have made it alot clearer to understand!

Debt_Free_Chick

Just to clarify, if you work 10 years full time, followed by 5 years at half the normal time and then retire ... Your pension would be ...

10 years pensionable service
plus
2.5 years pensionable service (half the full time rate)

This would be based on the full-time equivalent of your final salary. (you were working part time at this point, but your pension is based on the full-time equivalent of your final salary. Your pensionable service has already been adjusted for your part-time employment, as you're getting 2.5 years of the full-time salary, which is equivalent to 5 years service at the part time rate).

HTH