Final Sal trsf value VERY low!

Jazzyjeff_2

I'll try and provide as much detail as possible:

I've just left a final salary pension scheme after 21 months service, leaving on a salary of £26,000. The Scheme is 60ths, retirement age of 60, and was lump sum in event of death of 4 x sal. The scheme is also very well funded.

The scheme closed to new members 13 months ago and I could of changed to defined contribution with 16% company payment. So giving me about £4k over this period.

I have been offered £2,200 for the whole 21 months, around 5%. Even though this is only the employee contribution rate. I know they con you when you leave but surely this is laughable considering I should be getting closer to the 16% offered as an equavalent...

Is there anything I can do?:mad:

jonathon_hart

Hi.

Do you have to transfer the benefit?

Does seem a little low, however not sure there is really much you can do except not transfer or wait to see if it increases - note however you may get charged if you request another transfer value within 1 year.

You could ask for an explanation of how the transfer value was calculated - put prepare for something quite technical if you do.

Does the transfer value contain any sort of adjustment?

Also a Final Salary transfer value is calculated as the amount needed to be invested now in order to produce the same benefit on retirement - so comparisons to contribution rate is not really applicable.

Jonathon

Jazzyjeff_2

Less than 2 years service - transfer within 3 months or get nothing...

I accept your points but its the best comparison I have, really cheesed off that I have lost over £2,500 from not accepting to change to defined contribution 13 months ago!

I think its really unfair that this unregulated - to offer me 5% is pathetic when everyone knows final sal. pensions are pretty valuable yet all I'm being offered is a value equavalent to my contributions (albeit the first 9 months it was non-contributory). If what they say is true then surely every company would have a final sal scheme as according to them it costs nothing, they invest the 5% you contribute and hey presto the scheme is fully paid up for when you retire.

purch

Most company schemes will have the 2 year rule

The rule would have been in place when you started your employment and joined the scheme

Why would you expect the company to give you anything more than your own contributions back, when the rules of the pension scheme are that you don't ??

The company will have the Pension Scheme in place to reward employees for long service, not people who leave after less than 2 years

Dick_here

I don't think you've any reason to complain.

Jazzyjeff_2

purch wrote: »

Most company schemes will have the 2 year rule

The rule would have been in place when you started your employment and joined the scheme

Why would you expect the company to give you anything more than your own contributions back, when the rules of the pension scheme are that you don't ??

The company will have the Pension Scheme in place to reward employees for long service, not people who leave after less than 2 years

Because with defined contribution you get the WHOLE value, so why with defined benefit should you just get back your contributions. It should be a fair transfer value. Long term service is rewarded by building up years and getting promotions.

Fair enough if I can't do anything but its definitely not fair and i'm peed off I didn't agree to change to defined contribution 13 months ago and now have closer to £5k to transfer rather than £2.2k

Also, from my readings its true that you can get EITHER your contributions back OR a fair transfer value calculated by the company (with the transfer value normally higher than the contributions - especially on such a good scheme). So I think you're wrong with your statement on the rules of the scheme.

purch

you're wrong with your statement on the rules of the scheme.

Yep I am almost certainly...

It's your scheme, you signed up to it so you should know the rules

If the company are breaking their own scheme rules then do something about it

If they are not, quit moaning about something you signed up to !!!!

Retired_I.F.A.

You probably read this forum way too much when you chose not to have the 16%, most of the members here think final salary schemes are the dogs !!!!!!!! when in reality they are either a dog or a load of.

Actually you were lucky in a way, I left my first employers scheme also a 60th's after 5 years membership and the transfer value was not enough to get me back in to SERPS.

jonathon_hart

Have you actually had contributions deducted from your pay to go into the scheme - if so yes they should be offering you a refund as well.

Jazzyjeff_2

I don't know why some people come on and post with such attitude - I've clearly explained everything and said I don't think its fair but accept that I may not be able to do anything.

What's the point in posting comments like stop moaning / tough luck/ and you accepted the terms....why not just refrain from posting altogether? Or maybe you having nothing better to do but post arsey comments?

Thank you for the friendly post 'retired IFA'

Jazzyjeff_2

jonathon_hart wrote: »

Have you actually had contributions deducted from your pay to go into the scheme - if so yes they should be offering you a refund as well.

Yes but only 2% for the last 12 months and 3% for one month. 5% was taken from my pay and then 3% last year and 2% this year given back to drip feed in the new contribution. Roughly £550 if my sums are right.

I have requested a breakdown as all I've been given is a figure of £2,200 and nothing else, no mention of length of service and nothing on calculations at all (granted they will be complex but something would of been nice, even a description).