Final Salary pension - options now its closed?

Bufger

Current age: 35

I worked for a company for 11 years (from 2008) and managed to get into their final salary pension scheme before they changed it in 2009 to a defined contribution scheme.

I left that company earlier this year and joined another company on a completely different scheme.

I found that I had amassed £220,000 into my final salary pension. I'm worried that by the time i'm able to retire the pension will be terrible. Nobody is adding to it (as its closed), hundreds of thousands of people are in that scheme and I just cant imagine they can sustain it?

I dont know what my options are to be honest. I'm starting to think managing retirement funds myself is a good idea via a couple of BTL properties and other investments.

Anyone with experience of final salary pensions that are miles away from retirement please advise, should i just leave it in and forget about it? whats the worst that could happen to it? What are the most cost efficient methods of getting it out?

Many thanks - B

bluenose1

I would not consider moving your DB pension. Most places don't have then anymore as the liability is all the scheme not you. Even if it did go bust there is a government commitment for you to get 90% of the intended Annual Pension.
I would wait until a lot closer to retirement to make a decision what to do.

sandsy

Just because the scheme is closed doesn't mean nothing is happening to your pension.

The pension you accrued by the time you left continues to increase roughly in line with inflation. The growing cost of providing it falls on your ex-employer who is obligated to keep funding the scheme, no matter what the cost.

agent69

OP was only in the DB scheme for a year (2008 - 2009), so I assume the £220k is in the DC scheme that took its place (2009 - 2019)

hyubh

agent69 wrote: »

OP was only in the DB scheme for a year (2008 - 2009)

I read it as 2009 being when the final salary scheme closed to new entrants, not to future accrual full stop, though reading it again, it is ambiguous, so maybe the OP can clarify...

Brynsam

Bufger wrote: »

Current age: 35

I worked for a company for 11 years (from 2008) and managed to get into their final salary pension scheme before they changed it in 2009 to a defined contribution scheme. Presumably you mean that you managed to get into the final salary scheme and stayed in that until you left the company earlier this year, and were never a member of the defined contribution scheme?

I left that company earlier this year and joined another company on a completely different scheme.

I found that I had amassed £220,000 into my final salary pension. That sounds like a transfer value (also abbreviated to CETV - cash equivalent transfer value) I'm worried that by the time i'm able to retire the pension will be terrible Your pension will be whatever the rules of the scheme say they will be. Nobody is adding to it (as its closed), hundreds of thousands of people are in that scheme and I just cant imagine they can sustain it? 'They' don't have any choice - if there are no longer any 'active' members, the employer will have to pay the full cost of the scheme, including running costs, until such time as it is finally wound up and 'bought out' with an insurer - at a huge cost to the employer

I dont know what my options are to be honest. I'm starting to think managing retirement funds myself is a good idea via a couple of BTL properties and other investments. There's nothing in your post to suggest you'd have a clue where to start. All the information I've shown above will be in the scheme booklet and/or the leaving service benefit statement you will have received. Have you actually stopped and read either of these, never mind both?!

Anyone with experience of final salary pensions that are miles away from retirement please advise, should i just leave it in and forget about it? whats the worst that could happen to it? If the employer remains solvent, you'll get the promised benefits - whatever your pension was at the time you left the scheme, revalued between now and the time you draw your benefits from the scheme. Read the booklet/leaving service statement. If the employer goes under, the Pension Protection Fund steps in. Read the booklet/leaving service statement. What are the most cost efficient methods of getting it out? If you want to transfer to another pension scheme, you will need to take financial advice from a suitably qualified/authorised adviser who is prepared to advice on DB transfers. Expect to pay upwards of £5K for the advice; it is a hugely risky area for advisers

Read the booklet/leaving service statement....

AnotherJoe

What Brysnam said, or to put it another way you are doing a very good headless chicken impersonation on the basis of ? who knows what?

What will your finally salary pay out when you are ?65? Whats the forecast? Forget the £220k, if its a final salary they will be paying you something like 1/60th of your salary per year of employment (might be 1/80th, might be some other fraction)
So, as you worked there for 11 years you'd get (say) 11/60th your final salary when you left, every year. So, lets say you earned £32k a year when you left, it would pay you £5,900 a year.
As for "the worst that could happen to it", company goes bust, cannot fulfill its obligations, the government steps in and pays 90%, eg in my example £5,300 a year.

Parking_Trouble

I'd make sure the pension scheme have your up to date contact details. Let them know if you move. Make sure you get an annual statement or have access to the administrators website if they have one.

The reason being I've have a couple of deferred DB pensions and the scheme rules have changed since I left 38 and 33 years ago. I hadn't given them a thought until a few years ago which may have cost me.

hyubh

Brynsam wrote: »

If the employer remains solvent, you'll get the promised benefits - whatever your pension was at the time you left the scheme, revalued between now and the time you draw your benefits from the scheme.

Yes... and the fact the scheme is now closed to future accrual is orthogonal to that.

Brynsam

Parking_Trouble wrote: »

I'd make sure the pension scheme have your up to date contact details. Let them know if you move. Make sure you get an annual statement or have access to the administrators website if they have one.

The reason being I've have a couple of deferred DB pensions and the scheme rules have changed since I left 38 and 33 years ago. I hadn't given them a thought until a few years ago which may have cost me.

You don't get annual statements when you have left active membership of a final salary scheme. What you do get is an annual Summary Funding Statement, which shows you the financial health of the scheme.

The rules which apply to you are the rules in force at the time you left active membership of the scheme. Any future changes would apply only if they are improvements. You can't retrospectively reduce benefits, so the changes to which you refer are very unlikely to have 'cost you' - so no need to worry on that score.

Terron

AnotherJoe wrote: »

What will your finally salary pay out when you are ?65? Whats the forecast? Forget the £220k, if its a final salary they will be paying you something like 1/60th of your salary per year of employment (might be 1/80th, might be some other fraction)
So, as you worked there for 11 years you'd get (say) 11/60th your final salary when you left, every year. So, lets say you earned £32k a year when you left, it would pay you £5,900 a year.
As for "the worst that could happen to it", company goes bust, cannot fulfill its obligations, the government steps in and pays 90%, eg in my example £5,300 a year.

That £5,900 would likely be adjusted for inflation.


I started taking a couple of DB pensions this year. One was a FS scheme. The company was taken over in the late 90s after I left, and the company that did so was itself taken over early this century. The scheme continues despite that. The pension was based on my final salary adjusted for inflation.


My other pension was a hybrid scheme which was closed to new contributions in 2003 and replaced by a DC scheme. Again the FS part is based on my final salary adjusted for inflation