dB final salary scheme help

Philb84

Hello,
Hopefully someone can offer me some help or advice. In 2013 my final salary pension was frozen at my 2013 salary by the company. Therefore my pension at 65 (30 years time) will be massively reduced.
The company then set up a DC pension scheme to top up my pension with the difference in my pay from 2013.
I am considering transferring out of the dB scheme into the DC scheme which I will then be able to buy a pension when I retire at 60 (ish) which will be considerably more than what they are predicting at 65.

Has anyone done this? I believe because the transfer value is above 30k I need to talk to an independent financial advisor who has dB pension qualifications.

I know there are risks in doing this as my dB pension is guarenteed, But I feel it is worth it.

Thanks

P

Thrugelmir

Philb84 wrote: »

Therefore my pension at 65 (30 years time) will be massively reduced.

Your frozen pension will have been uprated every year by a measurement of inflation either CPI or RPI. Worth checking before making any hasty decisions.

squirrelpie

A mix of a DB scheme with its guaranteed income and a DC scheme with more flexibility is something a lot of people would like to have. So why do you feel you want to change it?

tacpot12

It would be very unusual for a db Pension to be frozen at a set level. They normally rise each year with inflation, but because the employer doesn't know what inflation is going to be in the future they only tell you what they will pay you if you were to retire at the scheme's normal retirement age, AND that you were reaching that age tomorrow. So it can look like your pension will be low. Actually, if it is low in today's money, it will still be low in the future; moving it to a DC scheme can't really get around that.

Somewhere in the information you have been sent it will confirm whether your deferred pension will increase with inflation or not.

If it will increase with inflation, then keeping this db pension is likely to be best. Only if you are in I'll health might it be better to move.

xylophone

How old are you?

Have you obtained a new state pension statement?

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

In 2013 my final salary pension was frozen at my 2013 salary by the company.

Your pension is now deferred.

When did you start working for the company?

Why would you not take your DC pension at age 60 and then an unreduced pension at 65 followed by your state pension?

Wednesday100

xylophone wrote: »

Your pension is now deferred.

I think not. The OP is still in the DB scheme, but the OP's final salary pensionable pay has been capped. I am in the same situation. If this is similar to my case, inflation will significantly erode the value of the final salary element as it does not rise with inflation until the OP leaves the scheme and does become a deferred member.

Another option for the OP is to leave the DB scheme (become a deferred member) and join the 100% DC scheme going forward. So this means Philb84 would not transfer out the pension built up so far, but become a deferred member, meaning the inflation protection probably does kick in (although that may also be capped at 2.5%). This would then create the benefit of a mix that squirrelpie mentioned between a DB and DC.

shinytop

think not. The OP is still in the DB scheme, but the OP's final salary pensionable pay has been capped. I am in the same situation. If this is similar to my case, inflation will significantly erode the value of the final salary element as it does not rise with inflation until the OP leaves the scheme and does become a deferred member.

This happened to me - my pensionable salary was capped but the DB pension that had accrued up until that point still goes up with inflation. The same happens with an old DB pension where I left the job years ago.

Edit - but yes, I am a deferred member not a current one.

Marcon

OP - can you clarify exactly what your current position is, please, particularly in respect of the DB scheme? Are you a deferred member (in which case your final pensionable salary won't change between now and retirement, but the pension will revalue in deferment); or are you an active member, building up years of future service based on your 2013 salary?

xylophone

The OP is still in the DB scheme, but the OP's final salary pensionable pay has been capped.

The OP said

The company then set up a DC pension scheme to top up my pension with the difference in my pay from 2013.

Have I misunderstood? Apologies if so.

It seemed to me that the DB Scheme had been closed to contributions and a new DC scheme put in place?

And surely the DB Scheme would have to revalue until scheme pension age? And does he have any GMP?

Perhaps the OP can clarify.

Marcon

xylophone wrote: »

And does he have any GMP?

Not unless he joined the scheme at the age of 12 or 13!

xylophone

Not unless he joined the scheme at the age of 12 or 13!

Indeed - I misread the first post!