Final Salary pension, capped

atush

It sounds to me you should join the new DC pension, esp if there is a decent employers contribution.

PeacefulWaters

For comparison, LBG DB pensions have a 0% cap. Pensions are now set and will be eroded by inflation.

The little people in the banking sector are paying big time for the failure of their bosses.

xylophone

http://www.scotsman.com/business/pay-shock-at-rbs-in-pensions-shake-up-1-1368789

OP, if you became a deferred pensioner of the DB scheme and opted for the alternative arrangement, do you know how much of your remuneration represents salary and how much is "other"?

I have to say (and I speak as one fully sensible of the advantages of a Final Salary/"proper" DB pension scheme), if I were an employee of RBS in your situation, I think I would be at least considering going deferred, opting out, and starting a personal pension.

However, as you are unsure as to your best course of action, would it not be worth the money to obtain independent financial advice?

Do you see yourself changing jobs at any point?

Malthusian

PeacefulWaters wrote: »

For comparison, LBG DB pensions have a 0% cap. Pensions are now set and will be eroded by inflation.

Not correct. LBG pensions are still linked to inflation, before and after retirement, as is required by law.

The little people in the banking sector are paying big time for the failure of their bosses.

It has nothing to do with "little people" - a "little person" whatever that is is unlikely to care so much as their salary isn't going to dramatically increase during their membership, the "big people" stand to lose far more. Companies across all industries are closing their DB schemes whether the company is successful or not, because the expense and liability of running them is too great.

Seabee42

I presume it meant pensionable salary for actives is set. So you loose a bit of value to inflation each year. If deferred then as you say it has to go up.

PeacefulWaters

Malthusian wrote: »

Not correct. LBG pensions are still linked to inflation, before and after retirement, as is required by law.

We are talking about an individual employed by a company who remains an active member of a DB scheme. I am completely correct with the comparison I made.

It has nothing to do with "little people" - a "little person" whatever that is is unlikely to care so much as their salary isn't going to dramatically increase during their membership, the "big people" stand to lose far more. Companies across all industries are closing their DB schemes whether the company is successful or not, because the expense and liability of running them is too great.

The big people messed up and then left, pocketing their pensions.

The little people were either made redundant or had c£150k wiped off their retirement income (based on an average scheme member's age and salary).

PeacefulWaters

xylophone wrote: »

I have to say (and I speak as one fully sensible of the advantages of a Final Salary/"proper" DB pension scheme), if I were an employee of RBS in your situation, I think I would be at least considering going deferred, opting out, and starting a personal pension

Surely utilising the same employer's DC scheme first would be a better option.

PensionTech

We are talking about an individual employed by a company who remains an active member of a DB scheme. I am completely correct with the comparison I made.

I must say I thought you'd got the wrong end of the stick and looked it up. You're right. However, it does seem to be non-contributory - so it can't be argued that members are paying for more than they're getting, which appears to be the case here (i.e. the OP is apparently paying contributions based on full salary but only accruing benefits based on capped salary).

PeacefulWaters

PensionTech wrote: »

I must say I thought you'd got the wrong end of the stick and looked it up. You're right. However, it does seem to be non-contributory - so it can't be argued that members are paying for more than they're getting, which appears to be the case here (i.e. the OP is apparently paying contributions based on full salary but only accruing benefits based on capped salary).

Most LBG DB schemes are contributory.

greenglide

According to the LBG info in the link above the contributions are based on the pensionable pay (which is capped) rather than the actual pay which is better than closing the scheme completely?

Employee and employer contributions will be based on the capped Pensionable Pay rather than actual pay.