Pension opt out - which contributions get refunded?

Jonny5068

Grateful for wiser minds than mine:

I'm a member of the railway pension scheme. My contract was 9 months with my railway employer. During that time they were making 26% contributions while mine were c. 4%.

As I have less than two years' service on aggregate, I understand I can get a refund on these contributions (which I'm seeking to do as I face a period of unemployment).

Is the consensus that the refund of my contributions or mine AND my employer's? If only mine, what happens to the contributions the employer made (and I'm aware the refund is post income tax)?

Very grateful in advance

PS. Many threads about less than 2 years' service refunds. But couldn't see an answer to this question.

quotememiserable

You just get your own contributions back. Its a final salary scheme, so the employers contributions aren't in respect of any individual employee, but rather to make good their obligation to employees as a group. So their money would stay in the fund.

atush

you wont even get all yours back- you'll have to pay tax and and NI on it.

It would be foolish to take it, as it would count against you if you needed benefits.

Far better to get that huge employers contrib and transfer it to another pension along with the tax and NI. after all, you'll need one someday.

mania112

We know its not final salary because it mentions the employer contributions.

Besides that, you'll have more than 6 times the value if you leave it where it is. If you take out your contributions you'll spend it on something pointless and wish you'd never done it (hopefully).

Add to it, don't remove it.

P.S The 2 year service rule can mean you receive the entire fund, in some cases. But that's not the situation for Railways.

hyubh

mania112 wrote: »

We know its not final salary because it mentions the employer contributions.

That doesn't follow at all - most public sector schemes at present are final salary with specific employer contribution rates. In the funded schemes' case at least (e.g. LGPS) this has always been the case, and has the aim of avoiding the need for irregular lump sum payments on the employer's part.