Final Salary pension, capped

hyubh

bigadaj wrote: »

A quick google leads to a scheme booklet for rbs, with a defined benefit scheme that closed in 2006 - have you seen this.

It doesn't seem to have any of the issues you describe, a fairly standard sixtieths scheme from my brief perusal.

From the 'definition of terms' at the end (my underlining):

Pensionable salary This is the Pensionable Salary that you are informed of annually. Increases in Pensionable Salary take place each 1 April and are subject to an annual limit which is the lowest of:
• The actual percentage increase in your salary or
• The annual rate of increase in UK Consumer Price Index (CPI) over the 12 months ending on the previous 30 September or
• 2%

Reckless_Saving

Not heard of this before but wouldn't surprise me, ours had some tinkering including changing from final salary to career average. Few years later the DB scheme was closed and years accrude locked in and we carried on contributions to a DC scheme.

Eisenhorn

Yes that's the scheme booklet, as noted the definition of the pensionable salary is on page 27 right hand side.

AnotherJoe - HR are very careful about how they will answer about employee pensions, most questions refer to the booklet that's been linked here, or just simply seek IFA.
In answer to your last bit about my finances, I have money for emergency bills and redundancy. This while I want to get it sorted isn't an emergency.

hyubh - the employer contribution I could be wrong on. a couple of weeks ago the announcement of the 1% increases due to NI costs mentioned the employer contributions wouldn't change just the employes and mentioned totals of 26/27%, So I'm basing it off of that minus my contributions.

Thanks for all the responses, I didn't expect this to get much traction on a sunday

Keep_pedalling

Oh! its a bank, why am I not surprised. You need to get on the board, I'm sure directors are not subject to the same rules because they need to be incentivised even if they screw up.

AnotherJoe

That really is a lousy deal if its as you describe. You've got to wonder if its not even a mistake its so bad?

As you point out you could join at a low part time level, have a meteoric rise to the boardroom, and your pensionable salary would effectively be based on the saturday job you had 30 years previously!

Is there a union, or employee council or similar you can make representation on?

But if it turns out to be as it seems, you need to bail out of this scheme, and put the money elsewhere. How many of your colleagues are aware of this?

kidmugsy

Whisper low: Fred Goodwin.

xylophone

I have just found this

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6089497/RBS-delivers-body-blow-to-staff-as-it-slashes-pension-benefits.html

Then there's this

http://www.ftadviser.com/2016/03/21/pensions/personal-pensions/rbs-hits-pension-scheme-members-with-m-bill-0FoEgZgjDAjBKF3KRULZRM/article.html

The alternative to the DB Scheme is this

https://rbs.tbs.aon.com/RBS/media/default/PDFs/Guides/GB_Guide.pdf

PeacefulWaters

How old are you?

What's your salary?

What's your capped pensionable salary?

What percentage of your salary goes into the defined benefits scheme? Clarify if this amount is pensionable salary or actual salary. (Ignore what your employer pays in)

What's the maximum amount your employer will pay into a defined contribution scheme and what contribution do you have to make to optimise this?

Answer these questions and the right course of action should become more obvious.

sandsy

So if you're going to be paying 17% of actual salary which is twice your pensionable salary, that's equivalent to 34% of pensionable salary.

That's an awful deal.

Malthusian

AnotherJoe wrote: »

That really is a lousy deal if its as you describe. You've got to wonder if its not even a mistake its so bad?

As you point out you could join at a low part time level, have a meteoric rise to the boardroom, and your pensionable salary would effectively be based on the saturday job you had 30 years previously!

Not only that but if a fellow director had joined RBS in 2006 having been headhunted, his pension would presumably be based on his full salary while you, the loyal long-serving employee, would have yours based on the Saturday job.

If all this is true, it seems possible that the disparity between the amount of contributions you are paying (based on actual salary) and what you get for it (based on pensionable salary) could grow so large that you could argue it breaches the obligation on the pension scheme to treat its members fairly. And it might be worth considering talking to your union to try and find out how you raise this.

But on the other hand, my instinct would be to tread cautiously. After all, if the trustees are forced to re-examine the rules, it is far more likely that they will just close the scheme altogether rather than make it more generous.