markyb
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| posted on 14/7/09 at 08:21 AM |
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final salary pensions
Wwe were sitting talking in work the other day about the closing of different companies final salary pensions and the fact that it will happen to ours
some day. No one was sure what would actually happen to the money in this pot so was wondering if anyone had been in a similar situation ? Arising
from the conversation there were various ideas/queries :
Do we get a choice of keeping previous payments in the old scheme and get it frozen at current rates or are all funds shifted to the newer (i.e. crap)
scheme ?
If I left the company before the scheme closed could they move it to the crap scheme some time in the future without my permission ?
cheers
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Colnago_Man
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| posted on 14/7/09 at 08:30 AM |
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I was in the same situation a couple of years ago, the final salary scheme was closed and we move to a money purchase scheme.
We were told at the time we could not move any funds between the two schemes because they work in very different ways. Wiith hind sight this was a
good idea as my final salary 'pot' of money has remained static while the value of the money purchase scheme has dropped.
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markyb
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| posted on 14/7/09 at 08:44 AM |
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that was what I was hoping to hear - plus when it does close I would at least know what some of my pension will be when I retire
cheers
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Dick Axtell
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| posted on 14/7/09 at 08:52 AM |
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Oh Boy!!!!!! Have you raised a really multi-barbed, thorny-edged issue here. In fact, a right bucket-full of worms, excuse my mixing metaphors.
I used to work for Lucas Automotive, part of Lucas Industries. Both of these outfits have gone, either broken up or sold off, and the automotive
remnant became TRW Automotive UK, a subsidiary of TRW Inc. in the US.
The Lucas Pension Scheme became the TRW Pension Scheme, and the sequence of events has been :-
i) April 2005 - Final Salary scheme closed; any new employees can only join a money-purchase version of the Scheme. (Money-purchase = Defined
Contributions).
ii) April 2009 - Scheme closed to ALL new employees.
iii) September 2009 - Scheme closed to ALL EXISTING employees. This means that everyone who stays with TRW automatically becomes a
"deferred" pensioner. This change brings significant reductions in benefits.
Sorry it doesn't provide immediate answers to your questions. AFAIK, such answers depend mostly, if not wholly, on the rules governing your
particular pension scheme.
Suggest that you get yourself a copy of the rules ASAP.
Having discussed the latest changes in our Pension Scheme with former colleagues, its clear that some will probably up sticks and leave, in order to
protect existing benefits, whilst others will have to make alternative pension provisions.
That ain't so straightforward, particularly if you're in the middle-age range. For anyone starting a personal pension scheme at the 40+
age, the contributions will be significantly greater than those of the occupational type.
There are some financial commentators who have suggested that younger people might well be advised to look at different forms of long-term investment,
in order to provide for their old age, e.g. residential property (students accommodation anybody?), bullion dealers, or even land.
Here's wishing you luck!
Work-in-Progress: Changed to Zetec + T9. Still trying!!
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nick205
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| posted on 14/7/09 at 08:58 AM |
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quote:
Originally posted by markyb
No one was sure what would actually happen to the money in this pot
Surely that's the problem in the first place - all these final salary pension schemes are running at a heafty deficit meanin there is no
"real" money in the pot to move around?
The whole final salary concept seems unfeasible to me anyway and should have been curtailed long ago particularly by the government!
I've never been in one so on the one hand it's of little consequence to me what happens to them. On the other hand the government will
inevitably have to take even more from me in future taxes to meet the commitments they've already made in this area 
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need4speed
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| posted on 14/7/09 at 09:29 AM |
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BT closed it's scheme to new members years ago and in april this year to existing members.
Think it will be a growing trend.
Dave
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MikeR
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| posted on 14/7/09 at 09:32 AM |
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heard a story of a well known electronics firm who promoted people from low wage jobs to manager jobs for the last few months of employment in the
final salary scheme....
net effect, you get a much larger pension for the rest of your life.
final salary is wonderful if you've got it and keep it till your retire.
Gov. has a major black hole in its pension accounts for teachers / police / civil servants etc
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markyb
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| posted on 14/7/09 at 10:00 AM |
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quote:
Originally posted by MikeR
heard a story of a well known electronics firm who promoted people from low wage jobs to manager jobs for the last few months of employment in the
final salary scheme....
net effect, you get a much larger pension for the rest of your life.
cant see that happening with my company - they are too busy coming up with ways to keep my wage at the same level it was 10 years ago !!!! (and the
sods keep succeeding) 
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smart51
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| posted on 14/7/09 at 10:29 AM |
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You can take your money out and move it to another scheme, don't take no for an answer. They don't want you to and may make it difficult
but you can. Some schemes will quote you two figures, the money "in" the scheme and a lower value you can take out.
Find a good financial adviser and take their advice whether to leave the money where it is or put it somewhere else. I'm in the middle of this
at the moment with a mixed bag of former pension schemes. I've been advised that if the total transfer value of your pension(s) is over about
£30,000 you may be better off transferring to an outside scheme, depending on how long it is until you retire.
I've heard of someone in his 50s who has been given notice that their scheme is changing from final salary to money purchase. He is considering
retiring whilst he is sill in the final salary scheme to protect his guaranteed pension, then working part time or as a contractor to supplement his
reduced pension.
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Dick Axtell
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| posted on 14/7/09 at 01:08 PM |
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Right, in reverse order :-
Colin, you wrote "- You can take your money out and move it to another scheme, don't take no for an answer."
It took one of my former colleagues nearly 3 years to extract his money from the TRW fund.
need4speed - Re BT :-
Yeah, but 18 years ago, the then Govt effectively guaranteed this pension fund. This means that the guarantor of last resort is - You, Me, Them, and
every UK taxpayer.
nick205 -
Not all final salary schemes are in deficit, although, I agree that many are. Comments in recent financial journals suggested that some private sector
f/s schemes are/will become unsustainable. If that's the case, then won't that observation apply equally to the public sector? If the Govt
(of whichever political pursuasion) insists on maintaining guaranteed f/s pensions, the resultant social divisions could generate civil unrest.
What about those who are already in retirement? Where can they have a voice? Ain't no representation on the Board of any Trustees, (in UK), as
far as I'm aware, and they are much greater in number.
Sic transit gloria el mundi, or -
Non le carborundum illos illegetimos!!
[Edited on 15/7/09 by Dick Axtell]
Work-in-Progress: Changed to Zetec + T9. Still trying!!
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donny
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| posted on 14/7/09 at 01:37 PM |
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markyb,
I'm just about to change jobs from one where I am in a final salary scheme to one where I am not. I am keeping my invested money in the
existing fs scheme. I am many years from retiring but I believe that when I do the only people on a fs scheme will be government and civil servants.
From other postings in this thread this is very much the trend. I also have a pension from a previous employer, again fs which has been left. I
don't even consider the state pension which will be gone long before I retire!
Cheers,
Donny
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JohnN
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| posted on 14/7/09 at 02:25 PM |
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If an FS pension is deferred, for example if you were to leave the company that you were with and get a job where there wasn't a final salary
scheme.
Could the company you left, but with whom you have a deferred pension, subsequently change that deferred final salary pension to something else, or is
it safe?
I thought the only way to safeguard a FS pension was to start taking it?
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scottc
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| posted on 14/7/09 at 03:07 PM |
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quote:
Originally posted by MikeR
heard a story of a well known electronics firm who promoted people from low wage jobs to manager jobs for the last few months of employment in the
final salary scheme....
Not any more. Final Salary is 'normally' defined as the average of your last 3 years salary.
http://www.sotoconnect.com
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