GKN Pension

Mark_Cooper

I have a pension of 22 years with GKN, I'm 47 and took redundancy 2 years ago the company was on it's last legs. My question is would I be better leaving the pension where it is or taking it out (if I can?) and putting it into an account for the future?

regards
Mark

Retired_I.F.A.

You cant take it out now only leave it till 50 or later or transfer it to a new employers scheme a personal pension or a section 32 buyout bond. You need to see an IFA before doing either.

Mark_Cooper

how much money would I lose if any doing one of these?

regards

Mark

Retired_I.F.A.

What makes you think your going to lose money? No IFA is a charity so there will be a cost involved in transferring but if it's not likely to make you money no IFA is going to recommend you do. Unless you opt for paying a fee as opposed to commission it wont cost you one penny.

EdInvestor

Final salary pensions are now protected by the Govt under the Pension Protection Fund, so there's no need any more to worry about your pension going down the tubes.

If the scheme is underfunded because the company is doing poorly then they would probably give you a low transfer value if you tried to move it, which would mean you were worse off.Your pension will increase automatically by inflation up to 5% p.a until you retire. It may be worth considering moving it to a new company scheme if it's a good one.

Retired_I.F.A.

Ed's talking crap again as usual.

The government after the Maxwell affair finally got round to introducing a law that gives members of final salary schemes the same protection as that which was legislated for in the 60's if insurance companies went under likewise in that they now guarantee 90% of the benefits. Effectively making final salary schemes as secure as personal pensions.

If the scheme is underfunded because the company is doing poorly

Ripping you off she means, as the GKN scheme like all final salary schemes were ruled to be a part of pay years ago by the European Courts. Thus underfunded means they are not paying your wages plain and simple.

...then they would probably give you a low transfer value if you tried to move it.

Possible but definitely not probable.

which would mean you were worse off.

No it would not. The transfer value reflects what you are entitled to be that an underfunded scheme benefit likely to only pay out 90% or a well funded one that'll pay it's liabilities.

Your pension will increase automatically by inflation up to 5% p.a until you retire.

So what? If the benefits were revalued at 20% p/a the transfer value would still account for such.

It may be worth considering moving it to a new company scheme if it's a good one.

and then dismissing that option if you have the slightest bit of common sense.
The better the benefits of any new employers scheme the less benefits your transfer value will buy. You get no employers contribution added to any transfer value, you simply buy x years service in the new scheme which will provide you with the worst possible annuity at NRD.

Mark_Cooper

Thanks, I think, confused me big time now. The reason I asked in the first place I was just worried that GKN would take a lump sum if I took it away from the pension scheme, and I could lose my money, and thought it would be safer in a bank
account.
regards

Mark

EdInvestor

You can't move a pension to a bank account, only to another pension scheme.

Retired IFA you are out of date again.

Please check up on the recent new legislation setting up the Pension Protection Fund, which now guarantees final salary schemes.

http://www.pensionprotectionfund.gov.uk/

This has nothing whatsoever to do with Maxwell.

Mark_Cooper

ok thanks.

regards

Mark

Retired_I.F.A.

EdInvestor wrote: »

.

Retired IFA you are out of date again.

Please check up on the recent new legislation setting up the Pension Protection Fund, which now guarantees final salary schemes.

http://www.pensionprotectionfund.gov.uk/

This has nothing whatsoever to do with Maxwell.

My apologies it's 100% in some cases and 90% in others subject to a cap.
hardly the 100% g-tee you keep saying is it?

and it has everything to do with Maxwell. Without the publicity that lot got do you really think it'd be there today?

EdInvestor

The PPF was set up following a load of pension fund collapses starting in the late 90s which resulted in thousands of workers losing their entire pensions and demonstrated very clearly that the post-Maxwell measures did not work.

Where have you been for the last 10 years, this issue was continually covered in the press, the workers demonstrated at regular intervals outside the HoC and at party conferences and took the Govt to court here and in Europe.There was a major campaign.

Difficult to believe anyone interested in pensions would have missed it.The PPF (and the FAS which deals with pre PPF failed schemes) were the result.They offer a much stronger guarantee than anything seen before.