Pension Discussion

winkey_2

Not sure if this is the right place but here goes, my occupational pension is being reduced a year before I receive my state pension what can I do about this, being reduced nearly in half 

Flugelhorn

winkey_2 said:

Not sure if this is the right place but here goes, my occupational pension is being reduced a year before I receive my state pension what can I do about this, being reduced nearly in half 

probably worth starting your own thread and add a bit more detail - then I am sure people will be able to give more advice 

MallyGirl

singhini said:

@Moneycraver05

I totally empathise with you OP. I too have a Final Salary Pension (aka: DB Pension) and worked at my company just 7 years and the latest forecast i got last week suggested i will receive £3,600 a year pension.
To me it looks a bit rubbish, especially when i compare it to the current Cash Equivalent Transfer Value (CETV) stated on the form which is £104,000
At £3,600 a year it will take 29 years to amass the £104,000 

Is that a recent CETV as the rates for these have dropped significantly in the last few years. Is that £3,600 the salary on leaving or genuinely what they predict you will get at retirement age. There are very likely to be annual increases (RPI/CPI/some fixed amount) so it is important to make sure you are comparing like with like.
My DB pension with similar salary has a CETV of half yours.

singhini

@MallyGirl
Yes the CETV and £3,600 are recent figures (they sent the info last week).

The figures look wrong to me so i have left them a message today to contact me ASAP to discuss.
In 2017 the figures were £108k with £4,500 annual pension
These 2025 figures are £104k with £3,600 annual pension 
 
I thought final salary was straight forward to understand  i.e.   
Finishing salary x accural rate x length of service + annual RPI/CPI etc... since leaving
So for me thats something like: £38,500 x 1/60th x 7 years = £4.490 + RPI/CPI etc... since 2008 (so i make that something like £5,700 using fag pack analysis not £3,600

How can it have gone down over time from £4,500 in 2017 and now £3,600 in 2025?????

Is my understanding correct i.e. Finishing salary x accural rate x length of service + annual RPI/CPI etc... since leaving

LHW99

How can it have gone down over time from £4,500 in 2017 and now £3,600 in 2025?????

I think with a DB the "pension" they give can be a figure based on a certain predicted inflation rate. When the basis of prediction changes, so does the "pension" they quote. It only gets accurate when you ask for one based on a definate retirement date (fairly close to the date you plan to retire). (Don't take that as gospel though)

Hoenir

Fink_Nottle said:

Moneycraver05 said:

I worked in a university from 2018-2023 an paid in to their pension scheme for 4 years of this. I contributed 6.5% and my employer contributed 16.9% approx (great!... or so I thought!).

I always find it a bit odd when employers brag about how much they contribute to a DB pension. Perhaps they're obliged to do this, but it's not especially useful to the average future pensioner (and I wonder if this had added to the OP's confusion a little).

It's a fact not a brag. As it's forms part of the employee's remuneration package. Just happens that the cash goes directly into a pension scheme rather the pay packet. There's also benefits such as dependent's pension and death in service benefits. 

Calculate what it would cost to prove the same level of benefits yourself and you'll appreciate those provided by the employer's group scheme. 

Moneycraver05

Hi all,

OP again.

Thank you for all of your replies it's finally sunk in...yes, I can be a bit slow and these things take their time to get inside my head sadly.

Weirdly though, as somebody suggested in this thread, none of my colleagues seemed to grasp it either when I mentioned it. 

I took all of your advice on board and read through my scheme paperwork throughly. It took 5/6 read throughs to finally comprehend what I am paying into and I can see why many people here were so repulsed with the idea that I would be opting out of this haha

My only slight frustration is that I didn't grasp the concept when with my previous employer as that might of made me stay. The only saviour is that my current employer pays slightly more in my salary to make up for the pension difference so I've now found myself putting away the difference in a savings account to make it look better.

In a nutshell, I appreciate all your patience and guidance. Thank you very much

michaels

Hoenir said:

Fink_Nottle said:

Moneycraver05 said:

I worked in a university from 2018-2023 an paid in to their pension scheme for 4 years of this. I contributed 6.5% and my employer contributed 16.9% approx (great!... or so I thought!).

I always find it a bit odd when employers brag about how much they contribute to a DB pension. Perhaps they're obliged to do this, but it's not especially useful to the average future pensioner (and I wonder if this had added to the OP's confusion a little).

It's a fact not a brag. As it's forms part of the employee's remuneration package. Just happens that the cash goes directly into a pension scheme rather the pay packet. There's also benefits such as dependent's pension and death in service benefits. 

Calculate what it would cost to prove the same level of benefits yourself and you'll appreciate those provided by the employer's group scheme. 

But the remuneration is the amount of DB promised, not how much the employer is accruing towards paying out on that promise.

Cobbler_tone

michaels said:

Hoenir said:

Fink_Nottle said:

Moneycraver05 said:

I worked in a university from 2018-2023 an paid in to their pension scheme for 4 years of this. I contributed 6.5% and my employer contributed 16.9% approx (great!... or so I thought!).

I always find it a bit odd when employers brag about how much they contribute to a DB pension. Perhaps they're obliged to do this, but it's not especially useful to the average future pensioner (and I wonder if this had added to the OP's confusion a little).

It's a fact not a brag. As it's forms part of the employee's remuneration package. Just happens that the cash goes directly into a pension scheme rather the pay packet. There's also benefits such as dependent's pension and death in service benefits. 

Calculate what it would cost to prove the same level of benefits yourself and you'll appreciate those provided by the employer's group scheme. 

But the remuneration is the amount of DB promised, not how much the employer is accruing towards paying out on that promise.

Employer expense was one of the main reasons most schemes are now closed, or at least closed to new members. There is an internal fairness argument I guess. Ours closed to new members in 2005 and altogether in 2021, I was pleased to get another 16 years in. I calculated the 'loss' to me of around £300k for my last 13 years to 65. The business were contributing an equivalent of 48% of my salary and now 12%. They put tens of millions into the scheme to bring it back to health and now liabilities are under control with deferred and declining membership.
They are the gold standard and in most cases people would be crazy to try and transfer out of them for some £'s.

pterri

Cobbler_tone said:

michaels said:

Hoenir said:

Fink_Nottle said:

Moneycraver05 said:

I worked in a university from 2018-2023 an paid in to their pension scheme for 4 years of this. I contributed 6.5% and my employer contributed 16.9% approx (great!... or so I thought!).

I always find it a bit odd when employers brag about how much they contribute to a DB pension. Perhaps they're obliged to do this, but it's not especially useful to the average future pensioner (and I wonder if this had added to the OP's confusion a little).

It's a fact not a brag. As it's forms part of the employee's remuneration package. Just happens that the cash goes directly into a pension scheme rather the pay packet. There's also benefits such as dependent's pension and death in service benefits. 

Calculate what it would cost to prove the same level of benefits yourself and you'll appreciate those provided by the employer's group scheme. 

But the remuneration is the amount of DB promised, not how much the employer is accruing towards paying out on that promise.

Employer expense was one of the main reasons most schemes are now closed, or at least closed to new members. There is an internal fairness argument I guess. Ours closed to new members in 2005 and altogether in 2021, I was pleased to get another 16 years in. I calculated the 'loss' to me of around £300k for my last 13 years to 65. The business were contributing an equivalent of 48% of my salary and now 12%. They put tens of millions into the scheme to bring it back to health and now liabilities are under control with deferred and declining membership.
They are the gold standard and in most cases people would be crazy to try and transfer out of them for some £'s.

My employer is now able to drop their contribution dramatically (to the minimum allowed) because it was so much in surplus AND the fund has derisked some of its investments. My benefits have stayed the same, so yes while it’s interesting to see what the employer contribution is it makes no difference to the pension obligation.