Future of closed defined benefits scheme

stuball

Hi wise folk, hoping for some help.

I have a now closed defined benifits scheme, which I understand remains linked to final sallary. However, the company is making noises to to something about this, particularly due to it's link to final sallary, which means they continue to owe more as it's employees sallarys goes up over the years.

A: Can the company, without employeee agreement fully shut down the scheme, i.e. pay everyone off and wind it up completely?

B: Can they, without employee agreement break the link to final sallary that still exsits.

Hope you can help.:)

Iancfp

There is no reason why they cannot stop the scheme from a future date and say you will no longer accrue any future benefits

What they cannot do is take away what you have already accrued. You become like a leaver with a deferred pension that gets some degree of inflation protection (but not fully).

You can be offered a transfer value instead but you do not have to take it

They can only wind up without your consent by transferring your benefit to a fully guaranteed insurance bond that provides exactly the same benefits as the scheme did

Shimrod

stuball wrote: »

A: Can the company, without employeee agreement fully shut down the scheme, i.e. pay everyone off and wind it up completely?

B: Can they, without employee agreement break the link to final sallary that still exsits.

Hope you can help.:)

It's unlikely that they cannot do without a change to you terms and conditions, otherwise I am sure they would have done it the same time the pension scheme was clused to future accrual based on years of service.

You need to be aware that if you refuse to accept new terms and conditions, they could also:

C) Not give you any more pay rises, so your final salary never changes.

Zelazny

As Shimrod says, the link to final salary could be a bit of a trojan horse. Without such a link, they are obliged to increase the pension by at least CPI each year, but with the link to final salary they may be able to avoid that (citing that previous increases were higher than CPI, for example).

They can't just stop all increases, though.

And yes, they likely could wind up the scheme without employee agreement. They'd have to purchase benefits of equivalent value (and normally with identical terms, if possible) for you from an insurer though, so those benefits that you have currently accrued would still be safe (and as mentioned above, would still increase).