Retirement Capital Plan Pension Advice

cdunne

Hi,

I'm not an expert on pensions but the Engineering company I work for is proposing to make some major changes to its pension plan.

I am currently on a Retirment Capital Scheme, I pay 4% of my pay and the company pays 16% to give a 20% fund.

However the proposed changes are a 1:1 match up to a maximum of 8%.

i.e if I pay twice as much towards the scheme as I currently do then I will still get one fith less.

I would like some help with the following:

Is this decrease in company payments typical in the current climate?
How does this new scheme compare to other companies? (is there an easy way to compare companies shcemes?)
Is the 1:1 scheme still a worthwhile option?
and If not what would be a better option?
From a rough calculation it looks like a 16% RCP shceme will not provide sufficient retirement capital, could anyone advise on this?
Is there any rules / bodies (such are the pension protection fund) that will protect against these sort of changes to a scheme?


The company do run a final salary scheme however this was closed by the time I joined. Changes are being made to the final salary sheme (which are bad but not as bad as the ones to the RCP). Because theres only a small percentage of us on the RCP we need some good arguments to make our case heard.

Many thanks for any advice,

Chris Dunne

dunstonh

Is this decrease in company payments typical in the current climate?

Yes.

How does this new scheme compare to other companies? (is there an easy way to compare companies shcemes?)

Still compares very favourably.

Is the 1:1 scheme still a worthwhile option?

Put it another way. If you pay in £100, they pay in £100. If you want to do your own thing, you have to pay in £200. If you go the 8:8 option, then it is very attractive.

and If not what would be a better option?

Nothing.

From a rough calculation it looks like a 16% RCP shceme will not provide sufficient retirement capital, could anyone advise on this?

If you go for the 16%, that should be fine for those looking to retire at age 65 and are under the age of 30-35, assuming no other pension benefits. Those over that age with no existing pension benefits would really need to look to pay a bit more in. Those with existing pension benefits would be able to take those into account and obviously what they should pay would depend on what they have already accrued.

Is there any rules / bodies (such are the pension protection fund) that will protect against these sort of changes to a scheme?

No. Your employer is willing to give you 8% towards your pension. It may not be a final salary scheme but 8% free is very good. You will find it very hard to complain about what they are offering. After all the legal minimum that they can offer is a works pension with NO employer contribution.

Kick up too much of a stink and they could turn round and say its not worth the effort and here's your group personal pension with zero contribution instead.

Debt_Free_Chick

cdunne wrote:

Is this decrease in company payments typical in the current climate?

Whilst there is no official source to refer to, I think the general consensus would be "yes".

What do your T&Cs of Employment say about a pension scheme and/or contributions?

How does this new scheme compare to other companies? (is there an easy way to compare companies shcemes?)

Again, no official source. But an employer match up to 8% is probably quite good. Many don't match at all and just give a fixed contribution - often as low as 3%. The best comparison would be with that of the companies peer group i.e. its competitors and those that the company would expect to compete with when hiring staff.

Is the 1:1 scheme still a worthwhile option?

Yes - as your contribution is doubled, for nothing

and If not what would be a better option?

a Rolls-Royce final salary scheme which resides in the same place as the Dodo - unless you're an MP or Civil Servant

From a rough calculation it looks like a 16% RCP shceme will not provide sufficient retirement capital, could anyone advise on this?

Can't be predicted with any accuracy - depends on too many "what ifs" spread over the future. You'll need to monitor the adequacy of the fund, as time progresses.

Is there any rules / bodies (such are the pension protection fund) that will protect against these sort of changes to a scheme?

Not changes like this, a they are driven largely by your T&Cs of employment and employment/contract law. The Pensions Protection Fund is a rescue package for insolvent pension schemes. The Pensions Regulator is a "watchdog" but you'll get more practical help from OPAS

Sorry ... not good news for you but let us know what your T&Cs say.

Regards