M Brian

my works final salary scheme is closed for new entries at end of this month.
dunno whether join now or not.

ive got 40 years no doubt till i retire and doubtful ill work in same place and if it will still exist in 40 years time lol not sure if that has any bearing.

the new scheme will be a contribution match type - i.e. i pay 5% work pay 5% not sure if this is better or not?

Clare

A final salary pension scheme is one of the best employer pensions you can get, very few Companies offer them anymore and many closed entry to them some time ago.
If you have the opportunity to join one, I would do so asap. It doesn't matter if you dont work for the Company for the rest of your life, it can be frozen or transferred depending on the scheme, either way its a good investment to have for the future, and far more rewarding than a standard pension scheme or state pension.

M Brian

see thats what EVERYONE says lol

but i dont get it?!!

for example the scheme says... it will give me back 25% of my total contributions as pension salary. (well thats one of the options)
or 2% of my salary times by service so - times that up works out between 2-3k a year.
so for example.. I work 5 years into the fund goes 8500 - 25% = 2125 per year pension.

but supposing new one... work 5 years same 8500 goes in. the company puts in 8500 - interest over 40 years at say 4% gives a 65k pot at pensionable age? - therefore I'd have to last 20-30 years until the final pension scheme was better off?

or what am I missing?

(i think im only expected to live until 71 as male born in 1980 anyway??)

RichardC

At this moment, it doesnt matter if you get it or not. Just sign the goddam papers, lol

as said, one of the best schemes you can get on, you can always cancel it later, but dont lose your chance to join it by thinking too long.

Rich

Clare

Why dont you book an appointment with your Company Pensions Advisor, they will know each scheme and the pros and cons, and be able to help you a lot better than anyone on here.
Pensions are complicated things and each scheme has quirks and small print.
Also bear in mind that all estimated financial outcomes are just that, estimates, and things could change at any point in the future and you could end up paying in a far higher percentage than you anticipated, and your Company could end up paying lower.

I have a frozen Final Salary Pension at present but when I was active in the scheme, the Employee contribution rose from 5% to 8% in order for the 'pot' to achieve its expected output.

Good luck with whatever scheme you decide to go with, and fair play to you for taking your pension seriously at the right age

Andy_R

iTrader: (3)

Look at it in terms of what you will get back come retirement.

Final sallary schemes will fall into one of the two catogories.

1/60th of final salary for every year you contribute
or 1/80th of final salary & in addition to upto 1.5(max) times pensionable earnings as a lump sum.

It is the norm with final salary schemes that death in service benefit is included.


So on 40years service you would either have 40/80th's of final salary + 1.5 times final salary tax free lumpsum.


or

again on 40 years 40/60th's of your final salary or should you elect to take a tax free lumpsum the 40/60th's reduces to 30/60ths & 1.5 times final salary.

=both very very similar but use differing methods of reaching the same ends.

If one were to die whilst recieving benefit from a final sallary scheme, 1/2 the pensionable income would be payable to ones spouse.

It is also likely(scheme dependant) that should you be unable to work due to I'll health you will recieve benefits equal to you working up&to retirement age.

Fot talking sake at age 55 one has a heart attack, can not return to work after working and contributing to the scheme for the past 30years. The equaion to work out pensionable earnings would be based on the 30years contributions + 10years that could have potentialy been worked therefore pensionl benefits would be paid based on 40years service.


With a Money Purchase Scheme one simply builds up a fund in order to purchace an anuity(pension basicaly) and as you correctly say 25% of the fund can be taken as a tax free lumpsum.

Life assurance is not part of this type of scheme however Pension Term Assurance can be added as a benefit which reduces the value of units being bought each month.

Real Life figures based on Ł100k

Lets assume your retireing today aged 65 and you have Ł100,000 to buy an anuity

Now you've thought about things in depth and want income to increase by 3% each year the anual income before tax would be Ł4700.

This amount stops when one dies, so ones spouse would recieve no more.
If one were to purchase this anuity today and fall down dead tomorrow tough, no more is paid out.

The same on a joint life basis would provide Ł4,590 based on a male 65 and female 65 again increasing by 3% each year.

If one of the two were to die then 50% Ł2350 per annum would be paid to the survivor for life.

thats enough for now....any questions speak up I'll do my best to answer.

Personaly id join your Final Sallary scheme asap.

M Brian

yeah its just the expense at the moment.
just had to move into a new area to get this job and take on a much higher mortgage, but suppose it forces me into doing it now if a final salary type scheme is decent.

does it make a difference with the scheme becoming closed to new entries? as there won't be any new contributors and so probably have to keep sinking money in to fund it?

HR weren't very helpful in offering up any advice, as they aren't allowed and told me to seek financial advice elsewhere!
I would of thought with company this size there would be someone allowed to give me level 3 advice at least.

Rolls

iTrader: (2)

LOL i'm very much in the same boat Melv.....
But i just signed to forms, and started paying into a pension, especialy as everyone that i spoke to said that the pension is one of the best things my employer has to offer! (final salary scheme jobbie too)

Paddy

If I had an employer to offer that type of scheme I'd bit their fucking arm off!

I'm by no means a financial whizz, that's what the accountant is for, but one thing to do if you're worried about pensions is pay into a Mini Cash ISA. Every year pay in the limit to new ones and in 30 years there'll be a fair old wedge in them with the interest

M Brian

Paddy.
Id do this with the ISA anyway now.
(well used to.. bought house, didnt do... now do again and hit my 3k last year. and have already put another 1.5k in now )
but you don't get the employers contribution on a private scheme or savings.

i'm just a bit worried about having to pay out over Ł100 a month more at the moment.

ah well I think you can pull it out within 2 years anyway if Its isn't right.

gurnE

Agreed.

Join it while you still can!!

deleted

if your company pay into it its always worth it

David Ramsey

Definately join

M Brian

old or new though


apparently the old one is 6% employee 9.1% employer.
dunno how that works but hey!

Clare

This is correct.

David Ramsey

Correct, if it's less than 2 years you can get your contributions back, more than this and it'll be frozen till you retire.

A.J.

I put 8% in mine a week !! sounds alot but company put 15% a week. Thats also includes any overtime worked.

Iain Mac

Get into a final salary scheme if you can - every time!

Money purchase pensions can go down as well as up! They don't just accrue interest - instead, the cash that goes in is invested on your behalf (after the managers take their fees) and the ONLY guarantee with one of these is that the managers get their money.

If the stock market goes down, so does your pension, even though most will progressively move your money to relatively safe investments as retirement approaches.