Coming out of final salary early

Linton

Flu_strength_Darren wrote: »

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

There are two sets of figures:


1) If you continue paying into your pension until NRA.
If you receive no salary increase then at first sight this should not increase as your pension is based on your salary. Assuming this is a final salary scheme.

2) How much pension you have earned so far
This should increase each year you are paying in and at NRA become equal to the numbers given in (1)

Audaxer

Linton wrote: »

1) If you continue paying into your pension until NRA.
If you receive no salary increase then at first sight this should not increase as your pension is based on your salary. Assuming this is a final salary scheme.

I'm a bit confused reading this thread, but I agree with the above. If there is no salary increase, the year by year increases in projected value of the DB pension would just be as a result of index linked increases, rather than anything to do with the level of contributions. As I understand it, if he left the DB scheme and it went into deferment for 7 years he would presumably get a lot less than the current projected values, as these are based on the contributions continuing.

dunstonh

Sorry but havent read most of the thread and just caught a few posts after the start.

Is it possible that there is a misunderstanding of how the DB pension works?

The annual benefit statements showing pension projection to retirement wouldnt be expected to change much as they assume you will be a contributing member until scheme age.

If you leave early you cease to be a contributing a member and the benefit will be reduced.

Silvertabby

!!!8220; If you receive no salary increase then at first sight this should not increase as your pension is based on your salary. Assuming this is a final salary scheme.
Originally posted by Linton

Even if the pensionable pay doesn't go up, the pension will increase due to the extra service.

Audaxer

Silvertabby wrote: »

Even if the pensionable pay doesn't go up, the pension will increase due to the extra service.

But I think that will built into the projected pension, in that it assumes he will be contributing for the next 7 years.

Terron

Linton wrote: »

There are two sets of figures:


1) If you continue paying into your pension until NRA.
If you receive no salary increase then at first sight this should not increase as your pension is based on your salary. Assuming this is a final salary scheme.

2) How much pension you have earned so far
This should increase each year you are paying in and at NRA become equal to the numbers given in (1)

Surely the pension would be based both on the final salary and the number of years he contributes. My first was 1/60th of my final salary for each yeat.


If he leaves the schem then it might be adjysted for inflation wach yeat, so it is possible he might get more pension that way.

Linton

Terron wrote: »

.....


If he leaves the schem then it might be adjysted for inflation wach yeat, so it is possible he might get more pension that way.

Yes, with high enough inflation not matched by an increase in salary the OP could be better off deferring now.

kidmugsy

kidmugsy wrote: »

Meaning what? Does it mean that if you keep contributing to age XX then you'll get £10k (index-linked)?

The first comment asked this question and I don't think we've had an answer to it from the OP. There have been some persuasive guesses from the commenters but the OP owes us an answer.

Flu_strength_Darren

Sorry Kidmugsy im getting lost here, whats the questiin?

Dox

Silvertabby wrote: »

Even if the pensionable pay doesn't go up, the pension will increase due to the extra service.

That's certainly true of the pension built up to date (and OP has confirmed that figure has increased since the previous year), but the projection to NRA already assumes active service to NRA - so in the absence of a salary increase it's hard to understand why that has changed. Post 17 above relates.