Final Salary Scheme to Money Purchase Scheme

Whatdoiknow

Hi there,

Up to 1988 our Company offered a Final Salary Pension Scheme. In May 1988 it decided to offer a Money Purchase Scheme for those staff under 40 saying that with Government rebates we would likely be better off:rotfl:

Most of us at that time believed the Company and transferred into the MP Scheme, we were though given a No Worse Off Guarantee that when it came to the crunch at retirement we would get at least the same as if we had stayed in the FS Scheme as well as compensation for losing our SERPS.:T

Although not yet receiving my State Pension I have been given what my expected SP will be including the loss for being contracted out.

I have only ever worked at two companies the first was was also a contracted out scheme so I have lost a number of years SERPS for two pension schemes.

Dividing my total number of years being contracted out into the amount I am losing from SERPS (about £50.00 per week) the compensation from my second Company doesn't seem to be equivalent to what I am losing.

Also on checking my contracted out years from the DWP I appeared to have an extra year contracted out and on contacting HMRC they stated that the year before we all contracted out in 1988 was also contracted out. I couldn't believe this as my P60s clearly showed I had paid full A rate contributions.

It wasn't until I recently found an old memo from my Company in 1989 that the Government also offered rebates for the year 1987/88 ( we contracted out in 1988/89 ) and all employees needed to sign a form to claim these rebates. Obviously at that time most if not all employees signed this. In doing so this robbed us of our SERPS for 1987/88 but the No Worse Off Guarantee given by the Company only applied from 1988/89 this I believe was just an oversight as the Company has changed pension administrators twice since then and the second Company has itself changed hands at least twice.

I have taken this up with the pension administrators who also took this matter up with the Trustees but they have now passed it back to the Company itself and I am expecting that they will hope I go away.

Apologies for the long post but I have two questions.

Am I within my rights to demand compensation for the additional loss of SERPS.

Also was the guarantee we received in 1988 a wonderful jesture from the Company or were they legally obliged to offer this for the transfer from a FS scheme to a MP scheme.

Cheers.

Apologies I'd rather not leave my name at the moment.:silenced:

xylophone

a wonderful jesture from the Company

Do you mean was the joke on you?:)


You have a deferred DB pension from company one (Contracted Out Salary Related) and both a deferred DB Contracted Out Salary Related) and a DC pension from company 2?

The DC pension from company 2 was a Contracted Out Money Purchase Scheme with defined benefit underpin?

http://www.mycompanypension.co.uk/What-is-a-Money-Purchase-Scheme-with-a-Defined-Benefit-Underpin-Active-Members-DB

Contracting out for DC schemes ended in 2012 - you are still a member of this scheme?

What exactly does your state pension statement say?

When do you become eligible for state pension?

I don't understand the business about 1987-88 - either way you were contracted out.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

See above - but for BSP use £119.30 and for NSP £155.65


https://www.gov.uk/government/publications/state-pension-fact-sheets/contracting-out-and-why-we-may-have-included-a-contracted-out-pension-equivalent-cope-amount-when-you-used-the-online-service

Whatdoiknow

xylophone wrote: »

Do you mean was the joke on you?:)


You have a deferred DB pension from company one (Contracted Out Salary Related) and both a deferred DB Contracted Out Salary Related) and a DC pension from company 2?

The DC pension from company 2 was a Contracted Out Money Purchase Scheme with defined benefit underpin?

http://www.mycompanypension.co.uk/What-is-a-Money-Purchase-Scheme-with-a-Defined-Benefit-Underpin-Active-Members-DB

Contracting out for DC schemes ended in 2012 - you are still a member of this scheme?

What exactly does your state pension statement say?

When do you become eligible for state pension?

I don't understand the business about 1987-88 - either way you were contracted out.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/447195/new-state-pension--effect-of-being-contracted-out.pdf

See above - but for BSP use £119.30 and for NSP £155.65


https://www.gov.uk/government/publications/state-pension-fact-sheets/contracting-out-and-why-we-may-have-included-a-contracted-out-pension-equivalent-cope-amount-when-you-used-the-online-service

Hi Xylophone,

Thanks for taking the time to reply and also the websites to visit which I will take a look at.

Just to confirm the Final Salary Scheme was contracted in, the Money Purchase Scheme commenced in May 1988 and was contracted out.

The MP scheme was offered to all employees under the age of 40 so a member of that scheme reaching the age of 40 was transferred back into the FS scheme ( + SERPS ) which then closed in 2006 and was replaced by Contracted in Money Purchase Plan.

My contracted out service is :-

6/4/78 to 31/10/85 (Employment 1)

6/4/87 to 5/4/89 (Employment 2) #

6/4/88 to 5/7/94 (Employment 2) %

# This wasn't the one I was aware of until recently notified by HMRC.

% This is the period we were given a no worse off guarantee for.

# This period we currently do not have a no worse off guarantee but I would have thought we should have as we were advised to opt in to the rebate and therefore opt out of SERPS.

My contracted in service is :-

1/7/70 to 5/4/78 ( Employment 1 )

1/11/86 to 5/4/88 and 6/4/94 to 31/12/16 ( Employment 2 )


My expected pension in May 2019 is £176.00 per week but that includes a COPE deduction of £53.77 per week.

Thanks.

p00hsticks

Whatdoiknow wrote: »

My expected pension in May 2019 is £176.00 per week but that includes a COPE deduction of £53.77 per week.

I don't think that can be the case. When the new State Pension (nSP) was introduced in April 2016, your entitlement as at that date was calculated under both the old and new pension rules and the higher value used.
The fact that your pension amount exceeds the nSP maximum of 159.55 indicates that in your case the value under the old rules was higher. The COPE value is only used in the calculation under the new rules.

xylophone

If your "foundation (starting) amount" at 6/4/16 was £176.00 then your "old state pension" calculation was higher than the new and you receive the higher of the two.

Old Rules BSP + (Grad + SERPS + S2P) - deduction for contracting out

New rules £155.65 - COPE.