What now for Final Salary, Defined Benefit and Public Sector pensions?

BobQ

kidmugsy wrote: »

It would not be difficult to introduce a sort of "virtual" DC scheme for govt employees, whereby taxpayers don't actually have to find most of the cash until someone retires, but meantime he could manage the investment of his virtual ETFs and so on. And perhaps real gilts, if govt is looking for new buyers of those.

Why bother? It would be simpler to close the existing schemes to existing and new members and accept the liability to that point. They could then replace the scheme going forward with a real DC scheme.

Andy_L

BobQ wrote: »

Why bother? It would be simpler to close the existing schemes to existing and new members and accept the liability to that point. They could then replace the scheme going forward with a real DC scheme.

Because, until the current cohort die off, they would double(ish) the current costs as they would have to pay the pensions and invest the current contributions rather than use contributions to cover pension payments

paparossco

Tom2023 wrote: »

Personally I'd like my entire Final Salary pot. I could then invest it and pass it on to my children.

As said before, there is no 'pot' as such but your scheme will probably allow for pension commutation which maximises the lump sum element.

atush

If you want to leave money to children, then open a PP alongside your DB scheme.

Alex444

I retired from Public Service and have index linked pension, and I then worked for a private company for 8 years, building up a pot of £12K in their pension scheme.

On being made redundant in August I enquired about the pot as I was 62years of age with a small chance of being re-employed.

I was advised by my IFA that I could take 25% as lump sum and take the rest as a pension payout of approx. £240 per year.

As I have regular income on my main pension this secondary one was not required, the only time the full amount would have been issued was to my wife on my demise.

As the goalposts seem to have shifted I am in contact with my IFA.

ayayay

Easy - transfer your final salary scheme to a personal pension immediately before retiring and do what you like with it. Probably silly if you did though.

Seabee42

Just be aware that your current automatic right to a transfer can be restricted a year before normal retirement.

trippy

ayayay wrote: »

Easy - transfer your final salary scheme to a personal pension immediately before retiring and do what you like with it. Probably silly if you did though.

There's already talk of removing the right to do this. The immediate plan is to restrict transfers from public sector schemes with a view to extending this to all DB schemes.


Although you could bring in a protected rights type scenario whereby transfer values from DB schemes will still be restricted to a max 25%. This would allow the member flexibility to invest the value of his pot in something else to try and beat revaluation. But then surely he'd just transfer it to a SIPP anyway?


I work in the occupational DB scheme sector and am prepared for a rush of people opting out of active schemes with future accrual with a view to accessing their £400k transfer value. A sort of pseudo pensions liberation, with a lower tax hit.

Alex444

From my IFA:-

Our understanding (only guidelines not definitive) is that a pot of £10k can be taken so under that rule you couldnt but if you have guaranteed income of £12k per annum you could.

With 16K per year coming in looks like I've cracked it.

OldBeanz

This is just a transitional amount for flexible drawdown. From April '15 it is intended that you would not require any pension to access the funds.