Pensions

[Goring Gull]

bit of a boring topic really but who has a pension, private, or work related?

I have final salary one which is a very good company scheme and no longer open to new employees but i seem to be putting more and more into it, my only concern is that it may get wound up due to the current pension climate. The company have taken action to cover the additional costs but would i be better coming out of it and investing the money elsewhere? Or should i look at it as money i've never seen and not worry to much and let what will be , be?

 

[bhafc99]

While you have a final salary one, I'd stick in it. You're better off than most. Most final salary schemes are now closing to new entrants, but if you've already got one then you're in a good position.

I have a personal pension. I was talked into one by my bank (Lloyds) when I graduated, and dutifully paid into it for 15 years. It was shit. The performance was crap. After 15 years it was worth less than I'd paid into it. Nver ever invest with a bnak's in-house team.

Though it cost me a lot in fees to move it, I did, to Skandia. They regularly win pension awards, and offer a scheme where you can choose any unit trust to invest your pension, any number or combination of them, change things around whenever you want as often as you want for no fee - it's brilliant. In the two years I've been with them, my pension has grown by 24% - which begins to make up for the 15 years of minus performance from Lloyds.

 

[Gritt23]

bit of a boring topic really but who has a pension, private, or work related?

I have final salary one which is a very good company scheme and no longer open to new employees but i seem to be putting more and more into it, my only concern is that it may get wound up due to the current pension climate. The company have taken action to cover the additional costs but would i be better coming out of it and investing the money elsewhere? Or should i look at it as money i've never seen and not worry to much and let what will be , be?

I would say you are better staying in the scheme. Final Salary schemes do cost the companies a lot, but there is pretty tight regulation about which ensures that there is a "Minimum Funding Requirement", which means that the company must ensure there is always at least 80% of the money needed to pay out all members, within the fund at any one time.

There is also watertight legislation which stops company's wriggling out of the liability. If the company tried to "re-organise" by way of a packaged receivership, for example, to try to avoid the pension scheme liability, then the Pension Regulator has the power to reverse the re-organisation.

Companies cannot get out of funding it.
If the company goes under, there will always be a substantial % of the liability covered by the fund value.
The company cannot pull out a trick to re-organise and avoid the liability.

It's a great scheme for the members, which is why entry is closed on most, these days. Stay in it!

 

[Wardy]

Stick with it. The company will find it very hard to get out of the ones that they have already got on this scheme.

 

[zefarelly]

I had a final salary scheme at a previous job, the only thing that lasted !

I don't believe private ones are a good investment, I'm planning on investing as much as possible in property and vintage cars

 

[Dandyman]

Final Salary Pension Scheme with work, to which I contribute 6% of my monthly salary. The scheme works on the basis of a pension of final salary x 1/80 x years in the scheme and a lump sum of 3 times that amount. My lovely employers are currently trying to start a strike by messing around with some of the schemes provisions.

 

[Gritt23]

Stick with it. The company will find it very hard to get out of the ones that they have already got on this scheme.

It's more than "very hard" to get out of, it's impossible. Even if the company goes bust, the fund is ring-fenced, and the members will get at least 80% of what they are due, and will probably get more.

 

[Marshy]

I work for the NHS and the only reason is because of the pension.

If they ever take that away, there will be no staff left !

 

[Dandyman]

It's more than "very hard" to get out of, it's impossible. Even if the company goes bust, the fund is ring-fenced, and the members will get at least 80% of what they are due, and will probably get more.

I thought employees were not creditors if the company goes under. Was that not what happened with Robert Maxwell and the Mirror Group pensioners ?

 

[Gritt23]

Final Salary Pension Scheme with work, to which I contribute 6% of my monthly salary. The scheme works on the basis of a pension of final salary x 1/80 x years in the scheme and a lump sum of 3 times that amount. My lovely employers are currently trying to start a strike by messing around with some of the schemes provisions.

To defend the employers this may be to do with how the liability is calculated. As a wild guess, I would suggest they are looking at switch from "Gilt Matching" to "Minimum Funding Requirement", or perhaps, refusing to switch to "Gilt Matching" when they have been advised to do so.

Essentially this comes down to whether the funds should be invested in fixed interest gilts or whether the funds can be in a range of equities. There are arguments on both sides, and in my personal opinion, the massive additional cost required to switch to Gilt Matching does not justify the possible reduction in risk to the fund.

Many advisors speak as if the Gilts are risk-free but that is simply not the case, as the movements in interest rates have a very significant affect on their value, so there ARE risks involved in having the fund "Gilt Matched."

I don't know the company, so I could be miles off here, but that would be my guess of what the issue is all about, and the issue is very contentious, but isn't half as bad as it probably sounds on the shop floor. Human Nature means that a very complicated investment and acturiarial debate ends up as "The fuckers are trying to cut our f***ing pensions."

Find out what the issue is, and I bet the truth isn't half as bad as it sounds. If they ARE acting improperly, then contact The Pensions Regulator.

 

[TSB]

Stick with it, i work in pensions and final salary ones are invariably far better than PP's

 

[Gully]

Similar situation to Marshy as a public sector employee, I have a non-contributory pension that I could draw if I choose in one years time, plus a gratuity payable at point of leaving the organisation of three times the annual rate of pension. The pension is index linked when I reach the grand old age of 55, until that point it will remain the same. Not as good a system as the final salary scheme, but how many people will be drawing a pension when they are 42?

 

[Gritt23]

I thought employees were not creditors if the company goes under. Was that not what happened with Robert Maxwell and the Mirror Group pensioners ?

The employees are not creditors, but the trust fund is not an asset of the company either.

The fund has Trustees, who govern how the money is collected and paid out. These are seperate from the company itself, and the Trustees are personally liable should there be any malpractise. If the fund is short of what it requires to meet the liability it demands more money from the employer, therefore the Trustees responsibility is to ensure there is always a "Minimum Funding Requirement" in the fund.

If the company goes bust, the Trustees will not be able to get any more contributions from the employer, but the fund is secure, and can pay out based on the investments assets it owns.


Back in the days of Maxwell, the Pension Fund was accessible to the company, and he was dipping his fingers in the till all the time. That is no longer possible, the company cannot lay it's hands on a penny of the fund. It's not their asset, it's not in their name.

 

[Goring Gull]

Sticking with it, i will be then it's just it seems such a long way off 31 years and i keep seeing £140 quid go each month.

 

[DIFFBROOK]

I work in the Civil Service. Good to see that they are sticking to age 60 and keeping the non contributory pension. 1/80th of my salary x number of years in. Basically equates to half my final salary at age 60. I will also get 3 times that amount tax free.

Thing is bird flu is gonna get me first

 

[Gritt23]

I work in the Civil Service.

Is it true that they are not permitting you to take advantage of the "A-day" changes coming in this year?

 

[DIFFBROOK]

Is it true that they are not permitting you to take advantage of the "A-day" changes coming in this year?

"A-Day" what is that??

 

[Blackadder]

I believe Civil Servants are NOT alllowed to take adavantage of "A day" which allows people over the age of 50 to draw cash against their accrued pension whilst they are still working.

Going back to the original question. You'd be mad to give up your final Salary Pension. It's worth a bundle compared to contributory pensions dependant on the Stock Market!

 

[DIFFBROOK]

I believe Civil Servants are NOT alllowed to take adavantage of "A day" which allows people over the age of 50 to draw cash against their accrued pension whilst they are still working.

Going back to the original question. You'd be mad to give up your final Salary Pension. It's worth a bundle compared to contributory pensions dependant on the Stock Market!

If that is the case, then no we are not. Not a penny until we retire. Btw new entrants will have to work longer to get their pension. Not sure how long or on what terms as its still up for discussion.

 

[Yorkie]

I was in a final salary pension scheme (Electricity Supply Pension scheme)
As I got made redundant in 2002 and I was over 50 it kicked in straightaway. I now have a monthly income from it despite only being 57.