Company want to end local government pension scheme

kangoora

One thing you can be 100% sure of. If they are offering £5k it will be saving them money and to their benefit and not yours. If you lose 3/60 of an index linked pension for the rest of your life, taken from what you are saying, then £5k sounds an incredibly poor offer.

I'm sure someone will be along soon who can crunch some numbers.

You can also be sure they aren't offering it out of the goodness of their hearts, there must be some sort of protection built in they are trying to bribe you out of with the payment.

IMO, of course.

xylophone

Have you checked on the 15 year protection?

Have you tried PAS? http://www.pensionsadvisoryservice.org.uk/pension-problems

hyubh

Dionysusjones wrote: »

Someone has told me that if we accept the £5000 we are actually volunteering to leave and it then affects the deficit and could save them millions.

In itself, that explanation does not make any sense. If the housing association actually does exit the LGPS, then it doesn't matter how the membership left - the liabilities accrued will still need paying off.

Perhaps the thought was that the association was looking to get members to voluntarily opt out, then the association stay in the fund as a 'zombie' employer, avoiding an exit valuation. If that has seriously been considered, then they will come up against explicit provisions in the 2014 scheme rules to prevent such a wheeze.

Nobody in work including all the union officials can tell me why they seek our approval so much to end this scheme when everyone keeps telling us they can do it legally anyway.

Notwithstanding the 'Baldrick' air around the enterprise ('I have a cunning plan!' says the finance manager to his boss...), trying to cut ongoing liabilities without actually leaving the fund seems a possibility to me...

Dionysusjones

Thanks for the replies


X
The 15yr protection story fizzled out in the end.


All the way through this process we have heard they pay the deficit when the last person leaves. What happens if just one person stays in it, does it carry on until they choose their moment to exit.


Apart from the office staff and operatives there is just only one other person in it from the higher management side, in fact more money was put into her pension by the company than a bricklayer received in pay for the year.

hyubh

Dionysusjones wrote: »

All the way through this process we have heard they pay the deficit when the last person leaves. What happens if just one person stays in it, does it carry on until they choose their moment to exit.

The last person leaving the scheme will trigger an exit valuation and the housing association having to pay off any historical deficit in the pension fund attributable to past employees (which is likely to be large). Until that point that deficit is instead slowly recovered over several years. Practices do vary, but this might take the form of regular capital sums being paid to the pension fund, or just a higher regular employer rate.

Apart from the office staff and operatives there is just only one other person in it from the higher management side, in fact more money was put into her pension by the company than a bricklayer received in pay for the year.

If she's LGPS too, then money isn't being put into 'her pension' specifically. As a council tax payer you'd want employers to properly fund those employees who are in the council's pension fund, right?

Dionysusjones

That's fine as long as everyone exits the fund together and I am probably barking up the wrong tree and getting paranoid but why do they keep on upping the money if they actually don't have to give us a penny..

Dionysusjones

I heard yesterday that we are voting at a mass meeting on Wednesday and if the vote is carried to accept the £5000 the money will be tax free in our Christmas pay and the pension will be gone in January and a new scheme will start.
I am like a dog with a bone and won't settle until I find out why they have done it this way instead of just ending it the way they could of.

System

Hi

Surely you cannot sell off your rights just like that. Perhaps the scheme will just close.

Somewhere in my head there is a phrase about employers not being able to 'co-erce or pressurise or bribe or something' regarding joining or leaving a scheme. The 5K seems to be in breach of this.

Malthusian

Johndough: Yes, I am almost sure by "gone" the OP means "closed" and they won't be able to contribute to the scheme anymore. But their existing pension rights will be deferred ("frozen" is misleading as they are increased with inflation) until they reach retirement age.

With regard to not being able to pressure people to leave a scheme, the Pensions Regulator bans you from offering cash incentives to transfer pension rights out of a Defined Benefit scheme and into a Defined Contribution one. But I think that rule only applies to transferring out of a defined benefit scheme lock stock and barrel - not closing the scheme but retaining what you already have built up. I could be wrong.

You may also be thinking about the rules preventing employers from encouraging employees to opt out of auto-enrolment, which is a different kettle of fish.

To answer the OP's question as to why they are offering such a generous cash sum, they probably think it's worth a one-off expenditure to avoid strikes, employee resentment and bad publicity. And if the members freely vote for the closure in exchange for a cash bung, they become as responsible for the decision as the management. No-one can complain 20 years later that they're facing poverty in retirement because their evil employer closed the DB pension (and they never bothered to pay enough into the new DC scheme) when they freely voted for the closure and took £5,000 in cash in exchange. Or they can, but they find sympathy much harder to come by.

kidmugsy

Malthusian wrote: »

No-one can complain 20 years later that they're facing poverty in retirement because their evil employer closed the DB pension ... when they freely voted for the closure and took £5,000 in cash in exchange. Or they can, but they find sympathy much harder to come by.

Oh they'll just come on to this forum and, on meeting a wave of realism, they'll blub and wail and tell the commenters that they are heartless, heartless swine.