change to final salary pension scheme

kidmugsy

Grimbal wrote: »

ETA: we don't have a union at work

I did belong a union at work and it proved entirely useless on the subject of pensions even though it provided some of the trustees. Unions are run to advance the political careers of their officers, not to advance the interests of their members.

Loughton_Monkey

Grimbal wrote: »

apologies, my post was unclear - what I was most surprised at was that they can take T&C in an existing contract and, if they don't "like" it, effectively rip it up & re-write another one - rather than than the closure of the scheme itself

If you just imagine a new law that prevents an employer amending the terms of your employment contract - ever - then you would have to work for the same salary every year.

I never 'baulked' at a time when my employer gave me 5 weeks holiday instead of 5. I didn't complain when they changed from Vauxhall Carlton to BMW 5 series for the company car. I even kept my mouth shut and accepted the introduction of BUPA cover....

OK, I fully understand that reductions in 'benefits' are unwelcome, but in today's market it is inevitable. At least you maintain the full value of pension rights to date. Many years ago, Final Salary Schemes were granted to employees only if they stayed there for the full working life. If you left, you got nothing......

p00hsticks

Grimbal wrote: »

I think that part of the T&C of our employment is that we don't join a union? vaguely remember seeing a clause about that, but not 100% sure - it's been a long time !

I think you'll be wrong here - they can't do that. More likely is that your employer doesn't formally 'recognise' any trade union - i.e. it won't negotiate directly with the union as a representative of the employees as a whole.

http://www.direct.gov.uk/en/employment/tradeunions/dg_10027560

DavidHayton

kidmugsy wrote: »

I did belong a union at work and it proved entirely useless on the subject of pensions even though it provided some of the trustees. Unions are run to advance the political careers of their officers, not to advance the interests of their members.

Unions are only as good as the workplace representative. If you join up and expect someone else to do the donkey work then it may well not happen. However, if one of you (or better several of you) within the workplace are willing to learn about employment law then the union will be able to train you and provide you with information on what you can do if/when you suspect that your employer is breaking the law.

kidmugsy

DavidHayton wrote: »

Unions are only as good as the workplace representative. If you join up and expect someone else to do the donkey work then it may well not happen.

But I did my bit as a workplace rep and I still have a low opinion of my union and, above all, of its officers. Would-be Labour politicians, the lot of them, and incompetent with it.

benz

Has your company looked at all the options regarding your F. S. Scheme?

Several years ago the company I worked for also stated that they would close our F.S. scheme as it was too expensive. I showed our union the potential savings for the company from a 'Salary Sacrifice Scheme', and they in turn put it to the management. The company had a rethink and decided that, with Salary Sacrifice and other fairly minor adjustments, the Final Salary pension scheme would be affordable after all.

Don't give up yet. Do some research. Look at all the options and give the company something to work on.

DVardysShadow

withabix wrote: »

No it shouldn't.

The end of final salary schemes is SENSIBLE because they are unsustainable.

That old porkie from the boss class.

The main reason they are unsustainable is because the employers took pensions holidays in the early 90's and then decided they were now too comfortable not paying.

Domain.Rider

This may not be so relevant in these straightened times, but if you plan to retire early, beware of different calculations used for active and deferred FS schemes. For my work FS scheme, I'd have to work until 57 to get the same pension amount retiring from the deferred pension as I got retiring at 55 while the scheme was still active...

Zelazny

DVardysShadow wrote: »

That old porkie from the boss class.

The main reason they are unsustainable is because the employers took pensions holidays in the early 90's and then decided they were now too comfortable not paying.

Final Salary schemes are expensive.

Most FS schemes use 60ths or 80ths. Even on 80ths (the lower of the two), you accrue salary x 1/80 in pension for each year you work. According to the annuity figures I have (not sure how up to date they are), based on a male, aged 60 - a pot of £10,000 would only buy £243.28 of index linked pension, with spouse provision. So each pound of pension costs over £41 to provide. That means that even on 80ths, the value of the pension is more than half of your salary (41/80).

(incidentally, a large part of the problem is that annuity rates have been falling. 10 years ago, it was nearer £25 per pound of pension)

Not everyone is married, and the scheme saves a little bit of money that way, but they lose an awful lot more through pay rises. Wages rise on average more than inflation, so the value of previously accrued benefits rise considerably faster than the value of previously paid contributions.

So let me ask you - would you rather have a Final Salary pension (80ths) or would you prefer the company you work for to (a) keep on running and (b) be able to afford things like pay rises?

(Incidentally, the company I work for closed it's Final Salary scheme a while ago. Now they run a Career Average Revalued Earnings scheme - which is like a final salary, but your benefits are accrued each year, rather than based on the final salary. This means that there's no pain from sudden pay rises, and they were able to be a little more generous with the rates - might be worth suggesting that your company look into it, if you'd rather stay away from DC).

(also, I should mention that for a scheme that's still running, it is cheaper to pay pensions than it is to buy annuities, but they're still a good guide to the value of the benefits, and the cost that the scheme faces should they wish to wind up and buy everyone's benefits with an annuity provider).