Final Salary Enhanced offer

PierremontQuaker03

I worked for a company a few years back and was in a final salary pension scheme for 6 years, anyway I got an enhanced offer for them to buy me out. It went to a an independent adviser and they advised against the transfer, basically the advisers in a nutshell said that I would need double the enhanced offer to have the same pension.
I got a shock of the enhanced offer and thought it was a really good offer in the first place so was surprised when the advice was to turn it down.
Anyway, my question is why make the offer - I am sure they would have known that the advice would have been to say no?
My concern is the pension scheme is 75% funded and although the company is committed at this point in time to keep funding it, what if it pulls the plug. I am one of the youngest members in the scheme so I will be one of the last ones drawing a pension from it.
So I am thinking bird in the hand and all that.
Or..or...will they come back with a better enhanced offer at some point in the future?

xylophone

Anyway, my question is why make the offer - I am sure they would have known that the advice would have been to say no?

They made the offer to "get you off the books" as it were (reduce the fund's liability).

The advice might not have been to say no - there could have been circumstances where a positive recommendation would have been made.

Apart from that, the deferred pensioner might still have chosen to go ahead with the transfer against advice, although his choice of providers who would accept the transfer could well have been limited.

Dox

PierremontQuaker03 wrote: »

Anyway, my question is why make the offer - I am sure they would have known that the advice would have been to say no? The answer usually is 'no', however high the transfer value. Even so, it's highly likely that a number of members would simply see the £ signs and decide to transfer regardless of what the IFA advised.
My concern is the pension scheme is 75% funded and although the company is committed at this point in time to keep funding it, what if it pulls the plug. Funding the pension scheme isn't some sort of option. If the employer 'pulls the plug' as you put it, and the trustees decide to wind up the scheme, the employer will be on the hook for the whole cost of securing the benefits promised under the scheme's rules by means of something known as a 'buy out' - i.e. an insurer (or other authorised provider) will be paid to take over the liabilitiesI am one of the youngest members in the scheme so I will be one of the last ones drawing a pension from it.
So I am thinking bird in the hand and all that. If the employer goes bust and cannot fund the scheme, the Pension Protection Fund is there as the final safety net for members. You won't get the full benefits promised - see https://www.ppf.co.uk
Or..or...will they come back with a better enhanced offer at some point in the future? Who knows?*

*Sorry, crystal ball failure!

Thrugelmir

PierremontQuaker03 wrote: »

I got a shock of the enhanced offer and thought it was a really good offer in the first place so was surprised when the advice was to turn it down.
Anyway, my question is why make the offer - I am sure they would have known that the advice would have been to say no?

You are exchanging a guaranteed income for an unknown final outcome. On what basis did you appraise the offer.

The pension fund would like to offload future liabilities. At a 75% funding level the company has considerable contributions to make if investment returns are low for any extended period of time. There's no indication of any increase in Gilt yields in the short term. Something which would help the pension fund match assets to liabilities.