How can Pension companies be allowed to keep you in the dark?

Bazofts_Revenge

I don't like the fact many things change on pension schemes. When I joined up I thought I was signing a contract. I was promised/told I cold retire at 50 (with a huge reduction which I was prepared to take) The company was taken over and we merged pension schemes. The minimum retirement age went upto 55 cheers. The business we were in has been in terminal decline since the 80's and we knew we would be unlikely to be still in the business by the time we retire. We knew there were serious reductions (approx 30%) in our pensions if we retired early we accepted that. Only once we were under redundancy notice many years after signing up to the scheme did we find out that deferred pensioners get hit by much larger reductions 40 to 50% if they retire early.

I don't see why employees who get made redundant or leave for any other reason get penalised more than an employee who retires from active status. if they retire at the same age the reduction should be the same percentage wise.

Bazofts_Revenge

Another change that happened. Is we started paying something like 6% of salary a year and that crept up to 9% of salary for the same benefit.

pimento

You used to be able to say "You can take it to the bank" as an assurance that something was ship-shape and 100% trustworthy. You can't say that these days.

dunstonh

I was promised/told I cold retire at 50 (with a huge reduction which I was prepared to take)

But during that time, life expectancy increased requiring the pension to pay out for a longer period. That needs to be paid for. An increase in age from 50 to 55 was frustrating for a tiny number but realistic. A really tiny number of people actually retire at 50, let alone at 55.

Another change that happened. Is we started paying something like 6% of salary a year and that crept up to 9% of salary for the same benefit.

Still a bargain. However, it is part of paying for living longer. Which would you prefer, a longer life or paying less?

pimento

I think the point is the moving goalposts. If it was possible that the terms could change, it should have said so when they signed up.

Nothing is certain any more. That's why there's not much trust for financial institutions.

I expect that even though the terms might have changed to our detriment, the bonuses still got paid out at the same rate.

dunstonh

I think the point is the moving goalposts. If it was possible that the terms could change, it should have said so when they signed up.

pensions do get played around with a lot by the Govt. However, in reality, most of the changes over the last 20 years have been beneficial. Increased lump sum payments, lower charges, drawdown improvements. The only real negatives are the reduction in annual allowance, lifetime allowance and age to 55. However, they affect such small numbers that there is no reason for an average person to be concerned about them.

Nothing is certain any more. That's why there's not much trust for financial institutions.

it isnt the financial companies that are changing the terms. It is the Govt.

I expect that even though the terms might have changed to our detriment, the bonuses still got paid out at the same rate.

Earnings, bonuses and incentives are way down on the 80s and mid to late 90s. Most insurers have actually had to cease new business or pull out of life and pensions as they could no longer afford to remain in that class of business.

atush

Also, I really don't trust that the rules won't be changed. My employer is making noises like they want to change the scheme into a money purchase scheme.

All the more reason to stay in until they do. As your transfer value will be far higher for a DB scheme if you chose to go the enhanced annuity route due to your ill health.

Another change that happened. Is we started paying something like 6% of salary a year and that crept up to 9% of salary for the same benefit.

Why all this whining about living longer? That is the reason for increased payments (as the company would have to close the pension if not). You would think, that people are happy to be living longer. And I don't know anyone who retires at 50 these days. Most 50 year olds are still young.

OffGridLiving

pimento wrote: »

Given my time again, I wouldn't have joined a pension scheme.

Can I ask what you would have done? I've often seen people slate pensions but then they go quiet when you ask them for viable alternatives.

quotememiserable

pimento wrote: »

I think the point is the moving goalposts. If it was possible that the terms could change, it should have said so when they signed up.

However, the terms never change retrospectively. If you pay 10 years at 6% then you've earned 10 years pension and it stays earned. When contributions rise to 9% you don't lose earned years and you're not asked for back payments.
I suppose any contract could come with a rider that the terms are not fixed in perpituity, but I suppose the thought was that people understand that. When you start a job on a salary of £25k, you don't expect that salary to remain unchanged for the time you work there. You know that it could go down, even though you hope it won't. You just know that once you've been paid you get to keep the money.

pimento

OffGridLiving wrote: »

Can I ask what you would have done? I've often seen people slate pensions but then they go quiet when you ask them for viable alternatives.

Lived in a bigger house, taken more holidays, put all my cash in a strong box and then lived off the grid when I retired.

Perhaps paid for my son to have a private education so that he could keep me in my dotage.