What did BMW do to their final salary DB pension

aphill24

Hi all, I work for Ford motor company and things are looking really dire for our future especially in Bridgend. I fully expect our fate will be sooner rather than later and I have a feeling they might copy BMW in closing their DB pension.
If memory serves me right I think they closed their DB pension and workers then had a DC pension started with a 25k lump sum paid into it after a few one day strikes when initially it was 7k that was offered when this first came about.
Has anyone got more concrete evidence to what exactly BMW workers had and was it a good deal for older workers as I imagine it would be the younger one's who would miss out on the benefits that come with a DB pension.
I am 53 yrs of age and can access my pension without penalties at age 58, just can't see our plant being open more than about 18 months.

AnotherJoe

It's not just a motor industry issue, most companies closed their DB pensions to new entrants long ago , and most have then taken the next step of closing the existing DB scheme and havinga new DC scheme.
As to what the exact details of that will be for any one company, no way to know and no reason to think that all companies in the same industry will do the same thing.
You'll have to wait and see.
Your best strategy is to look at what you could do to bridge the gao between age 55 and 58. Redundancy payout would likely help there plus any savings you can make into a private pension now which will give you a tax boost and can likely be withdrawn with minimal tax if you don't have any earnings between 55 and 58.

aphill24

Thanks Joe, I have been saving into avc's also for the past 3 years for tax reasons and it might be a case of getting to 55 and being able to draw a pension if they make an offer of voluntary retirement.
They have sent out a 2nd pension statement this year, first time that's happened it seems they are trying to intice people when they see the figures to retire early.
They have also set up access to see how much our pension is worth individually which makes me wonder why? and a few fellow workers have transferred out of the db scheme as a result of seeing such large sums involved.

Brynsam

aphill24 wrote: »

They have also set up access to see how much our pension is worth individually which makes me wonder why? and a few fellow workers have transferred out of the db scheme as a result of seeing such large sums involved.

That's why!

dunstonh

I have been saving into avc's also for the past 3 years

Do you mean an AVC? (rather than plural). Most occupational schemes run only 1 AVC or even none at all nowadays.

AVCs, in general, become obsolete in the mid 2000s when retail plans started to get cheaper and employers were no longer required to offer an AVC. There are some exceptions where the AVC can be used for payment of the lump sum from the main scheme or the extremely rare ones where the employer matches the payment into the AVC.

You may wish to check your AVC is still offering decent terms comparable to modern options.

aphill24

Thanks Dunstonh, yes it's an AVC. It's with Legal and general I have been putting in £40/50 per week into this as i work overtime which takes me into the 40% tax threshold.
Im not sure on the performance of the fund sorry as Iv'e only had one statement I need to check. Primarily I would like to use it for my daughters wedding when she's older and wouldn't mind taking it all in one lump for the said day as at least I would have saved 20% on the tax presumimg I pay 20% on it when I decide to take it out.

dunstonh

Im not sure on the performance of the fund sorry as Iv'e only had one statement I need to check. Primarily I would like to use it for my daughters wedding when she's older and wouldn't mind taking it all in one lump for the said day as at least I would have saved 20% on the tax presumimg I pay 20% on it when I decide to take it out.

The AVC may not support the option to draw as a UFPLS (lump sum). So, it may need transferring at the time.

75% of what you draw as a lump is added to your income in the year that you draw it. If you remain a basic rate taxpayer after that then it will be 20%. If it takes you into the higher rate band then you will pay higher rate on that segment.

If you plan to draw this earlier than retirement, then it will potentially handicap your retirement planning as your annual pension contribution allowance is lowered to £4000.

aphill24

Thanks, I don't intend to draw it prior to retiring and realise the tax implications.
i don't have any intentions on taking my DB pension and investing it in a sipp but would like to make a seperate post on people who have done this and how have things progressed.