Final Salary Pension

happeechapee

Hi

I am soon to be made redundant from a company I have worked 11 years for. In that time I have been contributing to a Final Salary Pension Scheme I now have the opportunity to take the pension as I am over 50 or leave it frozen.

I have been told that if I leave it frozen and the company decide to change the Pension Scheme to a Money Purchase one this would affect my pension but if I take the pension now it can't be altered.

I am wondering whether to take the pension and invest it until I am 65 or leave it frozen and risk it changing to a money purchase.

Any advice appreciated

CLAPTON

you dont really give enough details about the effect of taking it early but better to be certain and take the pension now and invest the proceeds until you need them

dunstonh

I have been told that if I leave it frozen and the company decide to change the Pension Scheme to a Money Purchase one this would affect my pension but if I take the pension now it can't be altered.

The switch from final salary to money purchase does not happen over night.

Most companies actually move in stages. First stage is that they close the final salary scheme to new entrants. Then over time if that doesnt work, they will then look to change to money purchase. Most schemes do not go that far though.

So, unless there are real concerns about the scheme, not taking it is probably the best option. Without actual figures though, we cant tell and even then, only hindsight will see which option was best.

happeechapee

dunstonh wrote: »

Most companies actually move in stages. First stage is that they close the final salary scheme to new entrants. Then over time if that doesnt work, they will then look to change to money purchase. Most schemes do not go that far though.

Yes, they HAVE already closed it to new entrants arounds 10 years ago.

Am I right in saying they can't change my pension if I have already started drawing it, but they can if I freeze it.

Thanks

Andy_L

The 11 years you have accrued is protected from change by law, whether you have taken it or not. Only future service can be changed - not an issue for you as you've left.
IIRC people who have taken their pension get better treatment than deferred members like you if the scheme goes bust, although that might have changed with the introduction of the pensions protection fund.

EdInvestor

Have a word with these people:

https://www.pensionsadvisoryservice.org.uk

chesky369

And anyway, they'd have to let the members know beforehand, so that they can consider all their options with regard to funds within any proposed money purchase scheme.

happeechapee

Thanks for all the advice its much appreciated, the pensions advisory service site looks good, thanks for that EdInvestor.