Offer from Morrisons Pension

BungalowBel

My son works at Morrisons (Supermarket).  He has received  letter to take a 'One-Time Winding -Up Sum Offer to Take your RSP  (Retirement saver Plan) Section benefits as an Immediate One-Off cash Sum'.  (Italics bit inserted by me).

He doesn't understand the letter.  Neither do I.

My main question is:  Will he still be in any sort of Pension Scheme if he takes the money? 
I have watched the video they provided; it seems to be encouraging people to take it (pointing out all the nice things they could do with the money).  Surely they can't leave him without a Pension?

I'm not convinced.

Does anyone know anything about this?

My son is 45 and has worked there for 15 years.  The lump sum is around £6.5k minus tax.

Thanks in advance.

ETA: Thanks, I have found the answer myself.  The Morrisons Pension Scheme has been bought out by AVIVA and those who were in the RSP can take their money if they wish.

I think I will advise him to leave it where it is.

sgthammer

It *sounds* like the company has looked at its long-term liabilities and would really like to wind up its pension scheme. 

But as it can't legally do without one, it may be a situation where they're planning a transfer to an outsourced provider (such as, say, NowPensions - others exist, but my knowledge of the market is limited), probably on less favourable terms to employees, and they're offering the lump sum buyout as an alternative. Is there anything in the video to indicate this is the case?

In any event, £6500 is pretty pitiful after 15 years. £36 a month might even be less than he's paid in.

BungalowBel

I have found out that the Pension Scheme has been transferred to Aviva and Morrisons are offering the chance to RSP members to take their money if they wish.

I agree it never was a very good Pension, but better than nothing.

@sgthammer, thankyou for your comment.

Exodi

My sister received the same letter.

I believe that scheme was closed some time ago for new contributions, so she likely will have been paying into a different scheme (but still had these benefits built up in the old scheme), but I'm not certain.

I really need to do some more research on the matter.

Rodders53

Securing your benefits for the future - Retirement Saver Plan (RSP)

Read that as a starter for 10.

He won't get a RSP section pension from Morrisons / Aviva if he takes the (trivial) lump sum.  But he will likely still be in another pension scheme section with them.
The letter should detail how much that sum would give him in today's money when he reaches Pensionable age.

Mr_Benn

Mrs Benn works for Morrisions part time. If I recall correctly, as part of changing pension providor they changed (lowered)  the % the company pays from 5% to 3%. 

BungalowBel

Rodders53 said:

Securing your benefits for the future - Retirement Saver Plan (RSP)

Read that as a starter for 10.

He won't get a RSP section pension from Morrisons / Aviva if he takes the (trivial) lump sum.  But he will likely still be in another pension scheme section with them.
The letter should detail how much that sum would give him in today's money when he reaches Pensionable age.

Yes it does - £10.5k.

Exodi

To aid the discussion, I've included the offer letter sent to my sister below.

I've done the Maths and the difference between her offer now and the amount payable equates to 3% increase per year if you work off gross numbers. (I haven't considered income tax because this would be counterbalanced by tax relief when it's put back into another pension). They then uprate both numbers by CPI capped at 2.5%, meaning it's unlikely to keep pace with inflation.

From a financial perspective, it seems like taking the WULS and dumping into a SIPP might be the best option - on the assumption you can beat a return of up to 5.5%?

I'd imagine there would be no issue with MPAA due to small pot rules but is this something that should be confirmed?

BungalowBel

Mr_Benn said:

Mrs Benn works for Morrisions part time. If I recall correctly, as part of changing pension providor they changed (lowered)  the % the company pays from 5% to 3%. 

I found on the AVIVA website that Morrisons will pay in 5% from March 2005, the employee paying 3%.  My son is also part-time, he has a contact for 25 hours per week and is a section supervisor.

Albermarle

From a financial perspective, it seems like taking the WULS and dumping into a SIPP might be the best option - on the assumption you can beat a return of 5.5%?

Presume a current employee will now be paying into a new pension scheme , along with their employer.
Could they maybe transfer this WULS into that? Would probably be easier than opening a SIPP for many people.

BungalowBel

He has the option of it going into the Aviva scheme, if he doesn't cash it in, as far as I understand.  He wouldn't cope with a SIPP.