Coming out of final salary early

Flu_strength_Darren

If i came out of current final salary pension at work, the new pension at work which replaced the one im in the employer pays 10% if employees pay 6%. Im assuming i would be ok to join this if i deffered/ transfered final salary pension.
Hence my 3400 a year increases to just under 8k with employer contributions.
Im not saying the 56k would be better than 2800 a year final salary, im just trying to work out if i would be better of doing something different to what im currently doing, £400 a year increase seems woefull.
I might be wrong but by being deffered would give me minimum 2.5% rise anyway?

Flu_strength_Darren

My statements in 2016 and 2017 the difference at NRA was £165 per year, thats a years extra service and approx £3400 paid in.

Dox

Flu_strength_Darren wrote: »

I might be wrong but by being deffered would give me minimum 2.5% rise anyway?

I'm afraid you are wrong. If it is CPI to a maximum of 4%, then you'd get whatever CPI is - which could be well below 2.5%.

Dox

Flu_strength_Darren wrote: »

My statements in 2016 and 2017 the difference at NRA was £165 per year, thats a years extra service and approx £3400 paid in.

I'm losing the plot a bit. You have said your contributions are 'only getting you £400 a year increase', yet your statement shows £165? What's the salary on which contributions are based and what fraction of pensionable pay do you 'earn' for each full year of service?

NoMore

You can't really relate the amount of your contributions to the payment of a Final Salary Scheme, that's not how they work.

Its length of service and your final salary at retirement that determine what you will get from your pension. Not the amount you pay in.

Flu_strength_Darren

Option 1 2016 annual pension of xxxxxxxx @ NRA
Option 1 2017 annual pension of xxxxxxxx @ NRA
Difference of £165

2016 pension you have built up based on membership of scheme xxxx
2017 pension you have built up based on membership of scheme xxxx
Difference of £426

So at NRA its increased £165 in a year
Current value built up its increased £426

I wont put exact figures as my company is renowned for being trigger happy at anything they deen as negativity on social media/ internet.

Dox

Flu_strength_Darren wrote: »

Option 1 2016 annual pension of xxxxxxxx @ NRA
Option 1 2017 annual pension of xxxxxxxx @ NRA
Difference of £165

2016 pension you have built up based on membership of scheme xxxx
2017 pension you have built up based on membership of scheme xxxx
Difference of £426

So at NRA its increased £165 in a year
Current value built up its increased £426

I wont put exact figures as my company is renowned for being trigger happy at anything they deen as negativity on social media/ internet.

If you've not had a pay increase, I don't understand why the figures at NRA have changed - they are projected on the basis you will stay in active service until the scheme's NRA so should be the same for 2016 and 2017. Any idea why they aren't?

Dox

NoMore wrote: »

You can't really relate the amount of your contributions to the payment of a Final Salary Scheme, that's not how they work.

Its length of service and your final salary at retirement that determine what you will get from your pension. Not the amount you pay in.

I think OP has grasped that, but is feeling hard done by because he is paying in a substantial sum by way of contributions, but in the absence of any pay rise the projected pension isn't going up as much as it would if his salary increased.

Linton

Flu_strength_Darren wrote: »

If i came out of current final salary pension at work, the new pension at work which replaced the one im in the employer pays 10% if employees pay 6%. Im assuming i would be ok to join this if i deffered/ transfered final salary pension.
Hence my 3400 a year increases to just under 8k with employer contributions.
Im not saying the 56k would be better than 2800 a year final salary, im just trying to work out if i would be better of doing something different to what im currently doing, £400 a year increase seems woefull.
.....

Ah OK. If the £400 is correct then, at first sight, it would seem that the new scheme is somewhat less generous than the DB scheme (unsurprisingly) plus you would lose the guarantee of the income by deferring the DB pension. On the other hand you would get a lump sum and much greater flexibility in what you can do with it. So it depends on which factors are most important to you.

Note that commercial index linked annuity rates to provide something equuivalent to your DB pension are around 3% so a £400 increase in annual pension payment is not woeful compared to the amount of money you are paying in.


All this assumes my understanding of your situation is correct.

Flu_strength_Darren

No no idea.
So your saying no pay increase no pension increase even though ive paid in for sevetal years more?