Help, advice?

DoogleArse

Hi, I'm pretty new to this forum so unsure if I'm posting this correctly, however if it is wrong just point me in the right direction.

Ok so my problem is this, I currently have an excellent DB Pension with my employer who I've been with for the last 38yrs come September.

I took a hit on it in 2010 when I lost 30% of it due to a messy Divorce, and then two years later my employer reduced their contributions from a maximum of 3% to a maximum of 1% per annum.

Despite this my projected pension was still not too bad although did mean I would have to work longer.
Now after 38yrs service as of 31st December 2018 the DB Pension is finished and on the 1st January a new 'Pension, Wealth & Savings plan' will takeover, no detail around this yet but you can guarantee it will be a LOT less than the current DB, it is also based on Stock Market performance like most are nowadays.

My problem is that clearly in going to have quite a bit less as my planned retirement is at least 7 years away, I still have a mortgage and quite simply I cannot afford to leave, but with 38years in I'm guessing even under the new poorer pension plan I could only put in for two more years?

I'm also assuming that whatever my projection is by the 31st December this will pretty much be my future pension pot and despite it being not bad it will need to provide for a good few years, as a result I'm considering 'Pension Drawdown ' as a way of possibly recouping some of my lost pension?

I'm not looking for pots of money just an income each month of around £18-2000 a month but I'd like any feedback from people who have used this themselves, experiences, good, bad, anything at all really.
As more detail becomes about my current predicament I'll be seeking advice from an advisor in the future but thought I'd post here anyway and see what happens.
Thanks for reading:beer:

Dox

Not quite sure what you mean by saying the employer has reduced their contributions to a maximum of 1%. If it's a DB scheme, the employer is generally on the hook for the 'balance of cost' (i.e. however much it takes to ensure the promised benefits can be paid at a the right time). They can't normally make an arbitrary decision to limit their contributions.

You can go on contributing for more than 40 years - tax relief available on pension contributions up to age 75.

Why do you think drawdown would recoup your pension? it would reduce your defined contribution pension savings, not increase them. Doing that would also trigger the MPPA, limiting future pension contributions (yours + employer) to £4,000 per annum. See https://www.pensionsadvisoryservice.org.uk/news/the-money-purchase-annual-allowance-is-dropping-to-4000-how-does-it-affect

Without knowing what you are earning, how much your pension is currently worth, it's impossible to know whether £24K a year is realistic (and at what age do you hope to achieve that?).

hyubh

DoogleArse wrote: »

I took a hit on it in 2010 when I lost 30% of it due to a messy Divorce, and then two years later my employer reduced their contributions from a maximum of 3% to a maximum of 1% per annum.

Talk of an employer reducing (or for that matter upping) their contribution level doesn't make sense with DB. Are you sure you haven't already switched to DC...?

Now after 38yrs service as of 31st December 2018 the DB Pension is finished and on the 1st January a new 'Pension, Wealth & Savings plan' will takeover, no detail around this yet but you can guarantee it will be a LOT less than the current DB, it is also based on Stock Market performance like most are nowadays.

If you've already got 38 reckonable years in the DB scheme, then to be honest, switching to DC at the end isn't going to make a massive difference. For example, if it's final salary DB, presumably you've basically already reached your career-high salary, or thereabouts...?

with 38years in I'm guessing even under the new poorer pension plan I could only put in for two more years?

I'd assume the opposite. In fact, even a DB scheme doesn't have to have a maximum accrual (many do only because the tax regime in the 1990s enforced one).

I'm also assuming that whatever my projection is by the 31st December this will pretty much be my future pension pot and despite it being not bad it will need to provide for a good few years, as a result I'm considering 'Pension Drawdown ' as a way of possibly recouping some of my lost pension?

That term pertains to a DC pension that you draw from in stages, rather than anything to do with DB.

Brynsam

hyubh wrote: »

Talk of an employer reducing (or for that matter upping) their contribution level doesn't make sense with DB. Are you sure you haven't already switched to DC...?

...and if you have, that's not likely to meet the employer's obligations under auto-enrolment requirements.

greenglide

Has it already changed from final salary to career average and now the want to get rid of DB altogether?

This may explain the strange wording from the OP?

xylophone

You are currently age 58 and normal scheme pension age is 65? Or is it 60?

The employer contribution to your current DB pension scheme was lowered in 2012 but your own contribution remained the same?

You are sure that the DB pension was not closed at this time?

If this is a DB scheme, when it ends in December, you will become a deferred member?

You are not seeking to transfer this pension out to a DC Scheme?


Your employer will contribute to the new plan and you will be able to contribute to the new scheme for all the time that you continue to be employed by the company?

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

DoogleArse

Apologies for the confusion around the 3-1% this referred more to an agreement we had with the company and was to do with increases depending on yearly pay awards, the company would match any % increase up to a maximum of 3% they reduced this to a maximum of 1% effectively reducing our growth from 2012 in fact all the forecasts we get are based on our salary that year despite (in some cases) earning up to 10k a year more, there!!!8217;s some growth but not a lot.
I will be going to see a Financial Advisor shortly as, and I!!!8217;ll be first to admit it, I am pretty clueless around pensions, also as regards drawdown it!!!8217;s not something I definitely want to do as I tend to work on the basis that if a thing is too good to be true then it generally is.

Brynsam

DoogleArse wrote: »

as regards drawdown it';s not something I definitely want to do as I tend to work on the basis that if a thing is too good to be true then it generally is.

I think you might be a bit confused about drawdown and what it is meant to do/achieve. Have a little read: https://www.pensionsadvisoryservice.org.uk/about-pensions/retirement-choices/the-right-choice-for-me/annuities-and-income-drawdown

You might also find other information on TPAS's website which would be helpful in terms of general understanding.

DoogleArse

I see I!!!8217;m still causing confusion, the 3-1% was a separate agreement between the company and the Union, the contributions from the company have remained the same, I am still in a DB scheme that ends in December moving to what looks like a DC system but no doubt with a reduced contribution from the company (currently they put 12%) we have no detail at all yet as regards how it will look as the consultation period doesn!!!8217;t start until May 3rd

xylophone

You are currently a member of a DB Scheme which will close in December.

You will become a deferred member at this time?

You are now aged 58?

What is normal scheme pension (retirement) age for the DB Scheme?

What benefits will be available to you at that age?

If that age is earlier than the age at which you plan to retire and you choose not to draw your pension at NRA, will late retirement increases be paid?

A new DC pension scheme will be introduced in January.

How long do you plan to work for the company?

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

DoogleArse

Normal retirement is 65.
I was planning to work till at least 62 but no later than 65 depending on paying my mortgage off earlier.
I!!!8217;d also like to thank ALL the answers I!!!8217;ve been receiving from members.