Questions on employer changing final salary pension

[simontrent]

Hoping someone can assist.

I'm currently in the company defined benefits pension scheme. There has been talks over the past years about moving this to defined contributions (the scheme was closed to new entrants 5 years ago). I am considering moving companies due to other opportunities.

If I do leave, can they still transfer me to their defined contributions scheme or will my fund be locked on the day I leave?

Thanks

[The Leaper]

1. Your employer has the right to change, discontinue or wind up the final salary scheme at any time. If they decide to do so you will become entirled to a deferred pension based on your completed pensionable service at the date of change, and final pensionable salary also calculated at the date of change (this means that any future increases in pensionable salary will not be taken into the calculation).

2. Your employer may offer you the option of converting your accrued pension into a capital value and transfering it into the new defined contribution scheme. You will need to decide whether or not to accept such an offer.

3. If you do not take the offer it is likely that the scheme will be discontinued and your accrued benefit will be one of its liabilities to be paid when you retire etc.

4. It is quite possible for the employer to then decide to wind up the scheme. In this event, all liabilities will have to be secured by the trustees using assets to secure an appropriate individual annuity with an insurance company. In your case this will be a deferred annuity policy. It's possible that you could take a transfer to another approved pension arrangement before the scheme is wound up.

5. If you do have an individual deferred annuity policy issued to you, it is likely that you will be able to trransfer it to another approved pension arrangement at any time, although this may be subject to the insurer's approval.

6. So, much depends on what the employer decides to do at the point of change, but you will not lose your accrued rights and you may be able to convert them to the defined contribution basis if you wish.

7. All the above assumes that the scheme's resources are sufficient to secure all accrued liabilities. If not, then there's the possibililty that your accrued benefits will be reduced.

8. Maybe you will need to consider getting independent financial advice ahead of the change. Indeed, a good employer will offer this at their own expense, so that members can freely make their own decisions about the options available.

R.

[Zigster]

You would only transfer to defined contributions for future service / future contributions. Your past service would remain in the final salary plan (unless you chose to transfer it elsewhere).