Going to be offered a new pension, worth it?

TLJones

I'm going to be offered to join my company's final salary pension scheme soon, am I right in thinking that it's worth it?

http://www.mynrpension.co.uk/resources/media/documents/network_rail/pdf/RPS%2065%20NR%20Scheme%20booklet.pdf

It seems pretty good, working out my nominal contributions I can expect a pension income of £17,600 from the scheme, without taking into consideration any additional voluntary contributions that I will be making.

Should I go for it?

atush

YES, it is always best to grab a FS pension with both hands.

Join it TODAY.

redbuzzard

I would.

Not advice of course. But (a) it's free money, and (b) being defined benefit, the risk is with the employers.

TLJones

Many thanks guys

Perelandra

OP: Please don't let what I say below deter you- it's a good scheme, and if it were open to me I'd be taking it like a shot.

I notice that the retirement benefit is based on Final salary less 75% of the basic state pension for a single person. Given that the state pension scheme has been reformed, and that the basic state pension has effectively increase from to £144/week, does this mean that everyone on this NR scheme will now be getting a lower pension than they were before?

Gers

I'm just about to receive my final salary pension - well, early next year - and I thank all the available gods that I paid into it for so many years. It's allowing me to leave work earlier than the government wants me too and will give me a financial cushion between becoming a lady of leisure and the state pension.

Take it - fill it up and never grudge a penny being put into it.

Just my opinion of course. :j

TLJones

Perelandra, the scheme changed in July 2012 from RPS60 to RPS65, with the former being a better deal.

Here's a link to the RPS60 details: RPS60

The 65 isn't as good, but the other option is a defined contribution scheme with a max of 7% pensionable contributed by NR. Which isn't as good as the final salary, I don't think?

Perelandra

TLJones wrote: »

Perelandra, the scheme changed in July 2012 from RPS60 to RPS65, with the former being a better deal.

Here's a link to the RPS60 details: RPS60

The 65 isn't as good, but the other option is a defined contribution scheme with a max of 7% pensionable contributed by NR. Which isn't as good as the final salary, I don't think?

Impossible to tell, really, without knowing your personal circumstances and aversion to risk. For example, using the calculated example at the end of Section 12, if your final salary was the rather-unlikely £4,190.57 (I know this is stupidly low!), then your pension would be the princely sum of about 1p/year!

The adjustment-for-State-Pension part of the calculation suggests that the final salary scheme woul dbecome increasingly valuable to higher earners, compared with the DC scheme.

The benefit of the RPS65 is that you know what your pension will be- there's less risk to you than the DC scheme, where the pension could be lower (or higher) depending on market conditions.

TLJones

My aim for retirement age would be a grade 4 technician, which is £44k pensionable. Going by that:

(44,000 - 4190)/60 = 663.50
663.5 x 38 years = £25, 213 annual, without AVC.

If things were to stay as they are now:

(25,130 - 4190)/60 = 349
349 x 38 years = £13,262 annual, without AVC.

This doesn't take in any overtime and whatnot. Depending on where my career takes me on the railway, I'll be aiming for grade 4 as soon as possible.

DC seems less and less attractive.

Perelandra

I'm wondering, though, whether with the change in the state pension tiering, that the 4190 will increase to 5600 or so? (my original question).

FS schemes (as atush and redbuzzard have said) are things to grab- particularly if you're likely to see progression in your career!

TLJones

Oh. I'm unsure, but I imagine it would rise, they're dynamic things.

By all accounts I think I'll go for it when the offer comes. Thanks for your input!