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Been paying into a company pension for over a decade, now what?

rousetafarian

Moderator
Hi,

Can anyone shed some light on the best course of action to seek advice around my pension contributions?

Firstly I know zero about the right type of pension to be in, or to avoid? I am no Martin Lewis ;)

I know I can seek out an IFA who, god willing will have my best interests at heart but what other options do I have?


I paid into a 'Defined Benefits scheme' from 2001 > 2010, at which point my employer canned the Final Salary pension scheme, and changed it to a 'Defined Contribution Scheme'. I have paid into the new scheme for a year or so.

130 x payments, each of around £200.00 to £300.00 for over 10 years is a massive amount of money to me - not taking into consideration my employers historic contributions (are they guaranteed to be safe?)

What do I do to ensure future financial stability? The 'Defined Benefits scheme' would have not been affected by investments or changes as it would have been linked to a final salary

Can my bank help or is that just suicide, considering their recent form?

A really boring subject......sorry

Thanks for looking
 

nheather

Distinguished Member
Usually, possibly legally, when a pension scheme is changed the t&cs upto that point are protected.

So if you have done 10 years on final salary and they change it to an investment type then your final pension will comprise 10 years based on final salary plus the remaining years on an investment scheme.

For most employees, pensions can be changed whenever the employer wants to because they are not contractrual. But any change can only be applied going forward and not retrospectively.

Cheers,

Nigel
 

Apsilon

Senior Moderator
Generally, if you have £100,000 in your pension pot when you retire, your return is about £6k a year or thereabouts.

Most companies will match contributions upto 7% or sometimes 10% of your salary. So if for arguments sake you save £200pm and 7% of your salary is £200pm, your company will add that to your outlay meaning you have £400 going in PM.

So £5k a year going in, will mean 20 years paying in for £6k return if you retire with £100k in the pot. 40 years for £12k.........:thumbsdow

Toss as most people these days can't even afford that. I gave mine up years ago and invested in property to let. Most will be paid off in 10-15 years and will give me a much better return than any pension could :)

Pensions are only worthwhile if its a final salary pension (not many companies do this now) or if you work for the services (fire/police etc) or teachers as they offer almost full wage pensions when you retire.

There must be some finance peeps on here who can advise you better tho :)
 

brumhee

Distinguished Member
Your final Salary benefits should be protected. It's best to talk to you employer who can direct you to the scheme trustees and give you an idea as to how much a month you will get back.

Also check whether you were contracted out or not - this means that the liability to pay your second state pension lies with the pension scheme not the government. It doesnt always mean you will get more money though.

It really is worth with the defined contribution to shop around and consider taking it annually in arrears as this can increase the amount you get back, if you don't need the money up front.

Rule of thumb at the moment is around 5% of the fund back per year is you retire at the normal retirement age for your sex.

Your bank may be able to help you if not most have a tie in to a provider that can he advise on their own products.

With pensions though I think it's always best to go independent.
 

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