DB pension - going part time .

alfmurph

My wife is a member of her companies DB final salary pension scheme . 30 years .
She gave them notice she wanted to retire 31st january 2020 . Age 63 .
Pension company said they would send her letter with her options .
It has not arrived so far .
Since then company has persuaded her to work 20 hours a week [ part time ] until end of march .
Her normal hours are 35 .
HR have told her they only change the pension contributions she pays in once a year at start of april .
Does that mean they will still take the same amount of her part time wages for 2 month's until retirement .
If so would she be better doing this or just choosing one of her pension options now and not paying contributions for next 2 month's.

hyubh

alfmurph wrote: »

HR have told her they only change the pension contributions she pays in once a year at start of april .
Does that mean they will still take the same amount of her part time wages for 2 month's until retirement .

What's the pension scheme? E.g., is it a public sector one...?

GDB2222

Most DB FS pension schemes work on a notional full time salary. Part timers pay their contributions based on the appropriate fraction of that, and they accrue pension based on a fraction of the year. Hope that makes sense. However, not all schemes work like that. Which scheme is it?

winspiration

If it's a final salary pension, will working part time affect (i.e. reduce) the amount she receives?

alfmurph

It is not lgps.
Just concerned that if she is part time her final salary wage would lower her final pension if it is taken into considerstion especially as her company has hinted this part time role could extend past march if she wants .

hyubh

alfmurph wrote: »

It is not lgps.

OK, and not any other public sector scheme either? Reason I asked was that the way you phrased things, it wasn't clear whether the lack of a contribution adjustment concerned the contribution rate rather than the contribution amount. Modern public sector schemes tier employee rates by pensionable pay (i.e. earn more, pay a higher contribution rate), however employers may only make rate adjustments once a year (some do it each payroll month, but that is not required).

Just concerned that if she is part time her final salary wage would lower her final pension if it is taken into consideration especially as her company has hinted this part time role could extend past march if she wants .

Normally, as has been stated by GDB2222, final salary benefits are worked out using whole-time equivalent pay, with service pro-rated for any part time working. This means it is the rate of pay that is important, not the amount. However, if you could confirm the scheme, we might be able to be more sure on that point.

Triumph13

Get confirmation from HR and/or the pension administrators, but in every case that I have seen going part time is treated for pension accrual purposes as still having the full time salary, but only accruing the appropriate fraction of a year's worth of accrual each year - eg if you drop to 50% of normal hours you'd accrue 6 months' worth of pension.
As regards the not changing the pension contribution, does that refer to the amount or to the percentage? Many schemes, particularly in the public sector, have graduated contribution rates depending on salary. It would make sense that they would only review that annually not at every change in hours / salary.