Knock on effect of BHS pension

greenglide

that appears to be what has happened to the NHS pension I am now a member of ( we have went from defined benefits to defined contributions)

The NHS pension is still a DB scheme.

It has changed from final salary to career average but still much better that most.

elantan

from my understanding it is defined contribution ( admittedly was informed of this by a staff member), in fact i sincerely hope so as i only earned £4k last year and will earn similar this year and next, after that I intend on earning more, if it is career average and I have 3 years of £4k out of 15 years contributions I aint gonna do too good I dont think

elantan

dunstonh wrote: »

Pensions have levies whether it is to the PPF or the FSCS. The cost of the levies is factored into the pricing of the product (when money purchase) or the terms (how much you pay or the employer pays). Savings accounts result in levies. Insurance has levies. investments have levies. If BHS ends up in the PPF then the cost will have to be borne by the rest but BHS itself wont change a company position.

If they move to money purchase, then there will be levies there. If they move to career average, there will be levies there. Effectively, what I am saying is that the cost of the levies is small fry compared to the cost of the overall liability. It it is the liability that scares employers.

Thanks Dunstonh that makes it easier to understand now

jem16

elantan wrote: »

from my understanding it is defined contribution ( admittedly was informed of this by a staff member),

That staff member is wrong - it is a CARE scheme now so still Defined Benefit.

http://www.nhsbsa.nhs.uk/Pensions/4017.aspx

in fact i sincerely hope so as i only earned £4k last year and will earn similar this year and next, after that I intend on earning more, if it is career average and I have 3 years of £4k out of 15 years contributions I aint gonna do too good I dont think

Won't be any worse for you than what you were building up on final salary part-time service.

Thrugelmir

BHS scheme has a retirement age of 60. One good reason why the scheme has run into financial difficulties.

hyubh

Thrugelmir wrote: »

BHS scheme has a retirement age of 60. One good reason why the scheme has run into financial difficulties.

Doubtful - if the NRA was higher than that would have been reflected in the actuarial assumptions used in the scheme's 'heyday', same if were lower, i.e. contributions would have been lower or higher accordingly.

Ganga

The BBC were stating that there is a shortfall of over £570million in the BHS pension scheme,worrying times for the staff!

EdGasket

With interest rates so low and bond yields so low, it is a wonder that any pension is being paid from private company schemes! Something will have to give.

AnotherJoe

elantan wrote: »

sorry I dont think I am fully understanding this, I think (could be wrong) that yes it would be up to his employer to decide if they want to change the scheme etc but if they choose not to there may be higher costs incurred should his employer choose to stay with the scheme due to the BHS situation.

These incurred costs may make it more economically viable for his employer to change the terms of his pension

so whilst it isnt BHS fault that this situation has arisen, had the situation with BHS been different then there may not have been any need to contemplate changing the terms of the pension,

is that about right ?

I'd say no, that the BHS case is an irrelevance, its not needed to make employers take action, many employers are doing this anyway because the costs of the schemes (irrespective of contributiosn to PPF) are becoming increasingly unsustainable. My employer changed my final salary scheme to DC more than 10 years ago.