Final salary pension scheme

PACH

I am a sixty year old engineer working for a company that just recently has been bought out. At present I am in a Group Pension Scheme with one of the major UK companies. I have been with my present company for nearly 22 years. As I understand the new company has a Final Salary Scheme that I will have to join.
I know that that the Final salary Scheme is a very good one, but how will it affect me as my 22 years will not be taken into account.

dunstonh

With all the different options available for the trustees and management, it would be hard to give an absolute answer without the facts.

If they are not transferring the old occ scheme into the new one, chances are that the old benefits will be ring fenced and paid on maturity as planned. You just won't accrue any extra years. The new scheme will start from scratch for you. So 5 years (assuming 65) in that one and 22 years in the other will be paid to you and you will get 2 incomes (3 if you then include state pension).

A bit of a pain on the tax codes but nothing major.

Debt_Free_Chick

dunstonh wrote:

With all the different options available for the trustees and management, it would be hard to give an absolute answer without the facts.

If they are not transferring the old occ scheme into the new one, chances are that the old benefits will be ring fenced and paid on maturity as planned. You just won't accrue any extra years. The new scheme will start from scratch for you. So 5 years (assuming 65) in that one and 22 years in the other will be paid to you and you will get 2 incomes (3 if you then include state pension).

A bit of a pain on the tax codes but nothing major.

Not sure what you mean by "ringfenced" here. If there is no agreement (between the two companies) to do anything, then the OP would simply be a deferred pensioner in his existing pension scheme. He would get the same benefit & options as applies to someone who voluntarily left employment.

The deferred pension may be a good deal as it must increase in line with inflation (RPI) up to retirement ... and there is no requirement for salaries to do the same. So, if the OP received no salary increases in the future, he would actually be better off with his deferred pension in the existing scheme.

Regards

Debt_Free_Chick

PACH wrote:

I am a sixty year old engineer working for a company that just recently has been bought out.

Has the new company simply bought the assets of the old company, rather than the entire share capital? Or, is the old company part of a larger group e.g. the company that trades as B&Q is actually part of Kingfisher plc.

It makes a difference as, if the new company has acquired the entire share capital of a company, and it is NOT part of a larger group, then the pension scheme essentially passes over to the new company. Sounds like it doesn't in your case, but would be worth looking at the precise nature of the deal to eliminate any other potential outcome.

At present I am in a Group Pension Scheme with one of the major UK companies. I have been with my present company for nearly 22 years. As I understand the new company has a Final Salary Scheme that I will have to join.

No - you are not required to join. But it may not make sense for you to refuse. You cannot, however, remain in the existing scheme if that is not transferring to newco i.e. if it continues to be operated by the oldco, then you will no longer be eligible to remain a member (as you will no longer be employed by oldco). You may be able to remain a member for a short time, whilst newco puts it pensions proposals into effect.

I know that that the Final salary Scheme is a very good one, but how will it affect me as my 22 years will not be taken into account.

You will simply start a new pension, in the same way as if you had changed your job.

HTH

PACH

Thanks to all of you that answered to my question. In the next couple of months I will find out what the new company will do re. previuos pension scheme.