Pension Change Advice Please.

twincamms

Good Day All


I'm looking for some advice on my pension as I can't find anything online, I asked a PFA and he was clueless as to what I should do, I'm hoping someone on here can direct me.


Ok, in 1996 I joined my company pension aged 25.


My annual projections said I'd get approximately £48k lump sum and £13k per annum pension at the age of 60.


In the mid noughties my company changed the scheme without employees having an option and my projection has reduced considerablely to this year my statment reading £28k lump sum and an annual pension of £4k at 60.


My employer has now announced that it is changing again to PSE, this is supposed to be better for them as they'll pay less NIC and better for us as we'll be about £10 a week better of in our salaries, however, they haven't told us if it will effect our pension lump sum and annuity payments in the long term. With this scheme we have an opt out clause and can stay as we are but the cut off date to opt out is the 23rd of April.


I have no idea what to do, I've asked, researched and can't come up with any answers.


Should I opt out or stay in their proposed scheme? Will I be better off staying in long term? Will more money in my salary now penalise me later? I don't know any of the answers, hopefully someone here will.


Thank you.

dunstonh

My employer has now announced that it is changing again to PSE, this is supposed to be better for them as they'll pay less NIC and better for us as we'll be about £10 a week better of in our salaries, however, they haven't told us if it will effect our pension lump sum and annuity payments in the long term. With this scheme we have an opt out clause and can stay as we are but the cut off date to opt out is the 23rd of April.

If i understand it correctly, PSE is salary sacrifice. So, it will have no impact on the final outcome.

In the mid noughties my company changed the scheme without employees having an option and my projection has reduced considerablely to this year my statment reading £28k lump sum and an annual pension of £4k at 60.

Is that down to changes in the projection assumptions or changes in the scheme? (in 1996, it was common to use higher projection rates, no inflation and single life basis annuities at higher annuity rates - progressively over the years the projection rates have come down, inflation factored in, joint life annuities using lower than market rates)

twincamms

It's down to changes in the scheme it used to be final salary it isn't now.

So you suggest I don't opt out?

jem16

twincamms wrote: »

So you suggest I don't opt out?

Never a good idea to opt out of an employer's scheme as you'll lose the employer's contribution. How much is your employer paying in?

In the case of Salary Sacrifice you would also lose the 12% NI saving too if you opt out.

Usually in the case of a Final Salary scheme changing to a Defined Contribution scheme, the previously accrued benefits are kept. What happened to the benefits from the Final Salary scheme?

twincamms

Yes they continued and transferred to the new scheme.

Employer currently matches our 6% contribution.

The reason I'm asking is because the information they're sharing is very sketchy just telling us it's both better for employees and employer but without giving us facts and figures.....

xylophone

Yes they continued and transferred to the new scheme.

Do you mean that your DB benefits were transferred to a DC scheme?

It would be more usual for the old scheme to close, for the members to become deferred pensioners of the old scheme and active members of the new one?

http://www.scottishwidows.co.uk/corporate/employees_and_members/salary_exchange.html

http://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/salary-sacrifice

jem16

twincamms wrote: »

Yes they continued and transferred to the new scheme.

That would be very unusual as xylophone says.

are you sure you don't have Deferred benefits with the Final salary scheme plus your DC pot?

twincamms

Thank you for all your advice guys, it has been most useful and appreciated.

mgdavid

twincamms wrote: »

Thank you for all your advice guys, it has been most useful and appreciated.

it would also be most useful (to both you and us) and appreciated if you responded to the questions in posts 6 and 7. Why so shy?