Yet another should I join this scheme thread..

artic99

Hi all,

Confused and in need of help. Situation is as follows. I am 29 and high rate tax payer currently holding a £32k pot with standard life, I contribute fully to equity ISA every year so that's not an option here.

I am moving from a company which matches my contribution to pension with standard life to 5% which has suited me fine especially being in charge of my own fund choices but the new company scheme is a bit more complicated and not something I've seen before.

The new scheme is part company pension part private(?) pension scheme with standard life. I contribute 6% of my salary, they in turn will provide a annual pension calculated as (1% x leaving salary x years in service) and also contribute 2% separately to a scheme with standard life. I can't see myself being with this company for more than 5 years. Also attached to this scheme is a death benefits package to further complicate things.

Some problems I have with this is that once I leave my company pension final salary amount will rise annually at RPI to a maximum of 5% p/a so its going to get eroded over the years even without serious inflation as I will have 20-30 years till retirement after I leave. I am also not too keen on their standard life limited fund choice (6) for the 2% I really would prefer to be in charge of my money in its entirety.

Not sure whether to go with their offer or carry on paying in to my current standard life pension myself. Looks like it may end up costing me almost the amount of pay rise I am getting at the new job to match what I was paying before with the company contributions, they said it was a matching contributions scheme before I joined and obviously its nothing of the sort

I may need to go and see an IFA about this because it is confusing me a little but would like some help here if possible, any opinions? I can answer specific questions in case I have left out some important information.

Ed

Andy_L

If you don't join you are turning down an extra 2% of salary paid into your pension plus a 1/100ths final salary scheme. Yes it's not as good as your previous 5% matching contribution but it's still free money.

So you could keep going with you previous 5% & only have that or pay 6% (1% extra) and get an extra 2% (8% in total) plus whatever the final salary scheme is worth - presumably you considered this before changing jobs

artic99

Didn't consider it before changing jobs no because they told me it was a matched contribution scheme so feeling a bit short changed, they also said my contribution was matched to 5% but it changed to 6% this year.

I'm kind of viewing the 1/100th thing as not being worth much because I'm not planning on staying for too long and it will get eroded over the years so really im giving 6% and receiving 2% of what I personally think is worth something. The scheme doesn't seem good for being in a short time with a long time till retirement and there's nothing to stop them fiddling with it, they have upped the required contribution 1% after only two years of the scheme being started.

Maybe I could make better investments with the 6% I could contribute personally than their 1/100th + 2%. People seem to love these final pensions schemes yet its the last thing I was wanting

artic99

Andy_L wrote: »

So you could keep going with you previous 5% & only have that or pay 6% (1% extra) and get an extra 2% (8% in total) plus whatever the final salary scheme is worth - presumably you considered this before changing jobs

Having re-read what you said and what I said I think I've explained it badly, I am paying 6% to get the final salary, the 2% is put in to the standard life account and is completely separate.

So I pay 6% and I get 2% paid to standard life fund plus whatever the final salary scheme is worth not 8% to SL plus the final salary.

Guess the question really is: is 4% of salary worth five years of 1/100th final salary with 30 years to go to retirement afterwards?