Final Salary Scheme Closing

piccybabes

You can try and fight the closure of the scheme, but at the end of the day it is a consultation period not a negotiation and once the consultation period is over the company can close the pension scheme anyway. There have been a couple of cases where the company has kept the pension scheme open, or delayed the closure by a couple of years (IBM I think was an example of this), but that has tended to be large companies with a large number of active members.

I accept that the company will close the scheme. The rules allow for it.

I'm not saying don't fight it but your energies may be better spent trying to improve the benefits of the new scheme going forward.

That's what I have decided to do - to concentrate my energies in this way.

You mention that the company contribution is 6% - the overall average company contribution is 6.5% (varies from 2-3% in some retail organisations to 15% in banks!). Do a bit of research to see whether 6% is above or below average for your sector - you could suggest to the company that 6% is less than competitors in the same sector and look for a increase - the staff in final salary schemes these days tend to be the longer serving and the company may wish to reward their loyalty (this tactic may not work if the company is also looking to reduce headcount).

I know of one company that matches up to 8.5 % and another that inputs 10% plus a further 3% for three years after the closure of the scheme. It seems that ours is below the national average.

If the pension scheme is contracted out, then you are going to incur an extra 1.6% NI once the scheme closes - will the company offer a pay increase to offset that?

Nothing offered!

Is the pension scheme closure purely about saving money, or is it to limit the unknown liabilities going forward?

Company line is to limit liabilities

How much does the company pay as a % of salary into the final salary scheme at the moment? If the closure is purely to reduce unknown liabilities you could ask for the same percentage (a bit less might actually be a better starting point) as the contribution to the new DC scheme.

We had a meeting today amongst the affected staff - we're going to go for 10+3% for three years.

Consider what benefits you get with the final salary scheme at the moment - these normally include enhanced death benefits, spouse's/dependents pension and ill health pension. Will the company pay for increased life cover (if you get 3x at the moment, ask for 5x cover) - this is quite a cheap option for the company.

Company has offered x 4, up from x3.

If you die before pensionable age while is service, partner and/or dependents would (probably) get a pension, and if you die after while receiving the pension, there would be a 50% spouse's pension. These options cost money when you buy an annuity (in the form of a lower pension) - what will the company offer to offset this loss - again you could ask for an enhanced contribution. For ill health pension, will the company provide permanent health insurance (PHI) for instead for those currently active in the pension scheme?

We have an e:mail address where we can send questions, we received fortnighly round up of the questions and answers. We have not been invited to any " consultation meetings". The staff representatives have attended one meeting with the company.

Who is attending the consultation meetings? It would be normal for the company to meet with representatives of the workforce - they are representing you so make sure they get your point of view across - it doesn't matter whether they agree with what you say or not.

I agree - I have prepared a questionnaire to canvas views in the active members and representative has suggested that I tone down some of the questions.

piccybabes

Well as a result of some pretty tireless campaigning - the company has offered an increase in %age contribution for current members of 1% ( from 6 to 7) for a period of 3 years.

More campaigning to do methinks to get them to increase again.

75 respondants to my survey so far - out of 175 active members.

emeraldbugle

Shimrod wrote: »

If the pension scheme is contracted out, then you are going to incur an extra 1.6% NI once the scheme closes - will the company offer a pay increase to offset that?

The employer is also making an NI saving of 3.7% if it is contracted out. Don't forget they will be losing this, so have probably factored it into their proposed contributions.

Would they not consider introducing a salary cap or moving to career average?

Our employer has introduced a salary cap of 1%, their contributions dropped by a third because of it.

HankRandy

"As a taxpayer," Loughton Monkey, is a phrase you seem to use a lot. The public sector pay taxes too you know. Or do you view public sector work as a form of benefits cheating Tory boy?

Loughton_Monkey

HankRandy wrote: »

"As a taxpayer," Loughton Monkey, is a phrase you seem to use a lot. The public sector pay taxes too you know. Or do you view public sector work as a form of benefits cheating Tory boy?

Fully aware of that.

And no. I don't see all public sector work as benefits cheating. Public sector work ranges from the extremely cost effective, essential, good value for money.... right through to the obscene doubling of Council CEO salaries, their grotesque manufactured 18 month salary 'redundancy' deals - only to wind up swapping jobs with the council next door. This, by any standards, is cheating - as was the MP's expense scandal.

kidmugsy

"What I find incredible is the rest of the staff's apathy towards doing anything. What happens now means a major difference to the quality of their lives for the 20 or so years of their retirement": which is why employers are abandoning final salary schemes - if the employees don't much care, it would be foolish to view the schemes as an effective tool for attracting and retaining staff. The employers will turn to pay, or extra holidays, or private medical insurance, or vouchers or what have you. It's a sort of employee democracy, and rational people like yourself are outvoted.