Closure of final salary pension

lorton

Hi..

My employer is considering the closure of our DB pension scheme completely which has various implications. However, the one that concerns me is as follows:

Currently the DB scheme i contribute to has a death in service element which is very generous and based upon my current salary x 5. This is very important to me as I am unable to get life insurance elsewhere (due to long standing health issues which is debilitating/over 12months and I assume covered under equality act/disablement). IF the DB scheme closes I will I assume lose this benefit under a DC scheme and will not be covered for life insurance, and without the potential to acquire elsewhere.

Can my employer close without consideration of this and my circumstances, if I state I am unable to get cover elsewhere?

Thanks for any help and advice.

Linton

DC schemes can also have death in service benefits. Both schemes I have been in provided this.

FatherAbraham

lorton wrote: »

Can my employer close without consideration of this and my circumstances, if I state I am unable to get cover elsewhere?

Yes. The employer can change terms and conditions of the employment contract (otherwise you'd never get a pay rise).

It might be worth your while lobbying for a group life policy to be included as part of the overall benefits package (this will be at the expense of someone else, of course: either pension contribs will be reduced for everyone, or the employer will have to take less profit, or there'll be less free ketchup in the canteen).

Warmest regards,
FA

bigadaj

My understanding was that death in service benefits were the norm, ours vary between three and six times salary dependent on seniority.

atush

We have a DC pension, with Death benefits (x3 not 5- 3 is the more normal figure I think).

When the change occurs, I would get in writing that the new DIS benefit (whatever factor of your salary this is-and do ask for the current x5 if you can get it) to be transported to the new DC scheme.

As this would mean no break in benefit so you can't be turned down on health grounds.

If they are not giving any DIS (and I can't see this as the case) ask for special compensation for yourself and others like you with health concerns. Or a special group life policy as stated above.

232607

Just to add my own recent experience:-
My company closed a DB scheme with 4 x DIS and replaced it with a DC scheme that has 7 x DIS.

I would not assume that you will lose the DIS benefit by moving to a DC scheme. You need to ask the question - What is the DIS on the new DC scheme?

As far as I understand, it's common for companies to set up a higher DIS ratio when moving from DB to DC.
This is generally becasue the insurance they pay for DIS is relatively small (not many people die in sevice) & doing this helps them create the perception that the new DC is somewhat equal to the old DB...Which of course it never is.