Help! Final Salary Scheme closing.

leosayer

Here are some of the concessions you might want to consider asking for as part of the consultation

Extra days annual leave

Provision of a calculator for both DB and DC schemes

Creation of a link from the old scheme to the new so that your DB tax free cash can be taken from your new DC pot without a reduction in your annual DB pension

Salary sacrifice method for making additional DC contributions

Agreement to share company NI savings when additional DC contributions are made

MX5huggy

Is your current pension provision from access to public service schemes? Because historically your work was public sector but was outsourced to private sector? 

FIREDreamer

leosayer said:

Here are some of the concessions you might want to consider asking for as part of the consultation

Extra days annual leave

Provision of a calculator for both DB and DC schemes

Creation of a link from the old scheme to the new so that your DB tax free cash can be taken from your new DC pot without a reduction in your annual DB pension

Salary sacrifice method for making additional DC contributions

Agreement to share company NI savings when additional DC contributions are made

Don’t forget to ask for the managing director’s wife’s recipe for ratatouille. 😀

Marcon

leosayer said:

Here are some of the concessions you might want to consider asking for as part of the consultation

Extra days annual leave

Provision of a calculator for both DB and DC schemes

Creation of a link from the old scheme to the new so that your DB tax free cash can be taken from your new DC pot without a reduction in your annual DB pension

Salary sacrifice method for making additional DC contributions

Agreement to share company NI savings when additional DC contributions are made

No harm in asking, but if the employer's paying 25%, you can forget all the above save for salary sacrifice for any personal contributions. 

The two schemes can only be linked if they are established under the same trust - and the likelihood of the employer wanting to do that if very low, when some form of group personal pension would be a much simpler and cheaper option (and would include a modeller for the DC scheme).

OP - there are some pretty unrealistic suggestions cropping up on this thread, so although they might be worth asking, don't get your hopes up. 

Marcon

anonn_2 said:

Marcon said:

anonn_2 said:

Hi,

I am useless with pensions and was wondering if anyone could help?

I have been told today that we are entering into a consultation period as my company wants to change our final salary scheme to a Defined Contribution scheme. 

We have been told to seek Financial advice but its all too complicated for me to process and it is stressing me out!  

I have been in the scheme for 11 years and current pension is £27,000 - we have been told that instead of 18% the company will contribute 25% indefinitely. 

My current salary is just under £40,000. 

My husband says that I should be requesting compensation but have no idea where to start?

Any advice is much appreciated xx

Why do you need financial advice? If the scheme is going to close and the alternative is a DC scheme, the employer will have to contribute to that, and there won't be alternative options - but 25% is a thumping good contribution rate. You could always pay in more if you want a bigger pension. 

Your DB scheme is simply doing what the vast majority of such schemes in the private sector have done and are doing. Chances of compensation? Likely to be nil, unless membership of a DB scheme is a contractual entitlement (highly unlikely, but have a look at your terms of employment in case).

Hi ,

Thanks for your response. I think it is our contract as they want us to sign a new one to confirm we will be on the new DC scheme x

Then you need to check - 'thinking' is not the same as 'knowing' - and you'd be in a much stronger position if you had the (highly unlikely) contractual right to be in a DB scheme.

MacPingu1986

Echo what Marcon's said above re somewhat unrealistic suggestions for compensation/extra concessions - yes can't hurt to ask but the answer is almost certainly going to be no.

I do think it's worth emphasizing that 25% employer contribution to a DC Scheme is absolutely fantastic - 14% employer contribution was the highest I'd ever seen previously and anything north of 10% counts as "good" to me. Essentially the 25% rate DC scheme *is* the compensation for the DB Scheme closure.

Marcon

MacPingu1986 said:

Echo what Marcon's said above re somewhat unrealistic suggestions for compensation/extra concessions - yes can't hurt to ask but the answer is almost certainly going to be no.

I do think it's worth emphasizing that 25% employer contribution to a DC Scheme is absolutely fantastic - 14% employer contribution was the highest I'd ever seen previously and anything north of 10% counts as "good" to me. Essentially the 25% rate DC scheme *is* the compensation for the DB Scheme closure.

25% employer contribution seems to be the going rate for a number (not all) of private schools who are changing from TPS to a DC alternative.

westv

MacPingu1986 said:

Echo what Marcon's said above re somewhat unrealistic suggestions for compensation/extra concessions - yes can't hurt to ask but the answer is almost certainly going to be no.

I do think it's worth emphasizing that 25% employer contribution to a DC Scheme is absolutely fantastic - 14% employer contribution was the highest I'd ever seen previously and anything north of 10% counts as "good" to me. Essentially the 25% rate DC scheme *is* the compensation for the DB Scheme closure.

I did get 20% from 1997 - 2010 and 18% from 2010 to 2018.

Marcon

anonn_2 said:

Also my husband thinks that as i will not be getting the same pension before - under the new scheme the company should provide projections as to what i may get in DC model and pay a % of the difference in compensation

I think you need to wean your husband away from the compensation culture...that's not going to happen. It's the sort of remedy used where someone was advised to opt out of a continuing DB scheme in favour of setting up a personal pension. 

anonn_2

Hi guys, 
There was no one to contact today so only managed to get a copy of my pension statement. I have been told by a senior colleague that  the Final Salary pension IS in our contract and this is why they are asking us to sign a new contract confirming we are happy to move to the DC model.

I hope someone can make sense of this?