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Putting It in and Taking it Out

ADrunkenMarcus
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Putting It in and Taking it Out

#429255

Postby ADrunkenMarcus » July 21st, 2021, 10:14 am

My workplace has a defined benefit pension scheme. According to the latest annual report available:

Since 2010, the number of pensioners has increased about 63%.
Since 2010, the number of active members (paying in) has increased about 4%.

There are 'preserved members' as well who have left the organisation, so they're no longer paying in but nor are they taking any benefit.

The current proportion of members who are active contributors has fallen from 46 to 33% in the last five years.

Food for thought.

I need to stuff my SIPP!

Best wishes


Mark.

PhaseThree

Re: Putting It in and Taking it Out

#429286

Postby PhaseThree » July 21st, 2021, 11:40 am

Don't Panic - The number of active, deferred and pension members of the scheme has little or no bearing as to whether your DB pension will payout as you expect.

What you need to know and understand is the funding level of the scheme and the strength of the Employer convenant.
The funding level tells you how close the funding of the scheme is to covering the expected future liabilities. (i.e the pension payments)
The covenant tells you how strong the employer is and how well they will be able to cover any potential underfunding of the scheme.
This information should be available from your scheme administrators or Trustees on request.

If your pension scheme does hit the buffers in a big way your pension ends up be being transferred to and paid by the Pension Protection Fund (PPF).
In which case you end up being paid around 90% of what your employer pension would have given you at retirement.

Alaric
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Re: Putting It in and Taking it Out

#429289

Postby Alaric » July 21st, 2021, 11:45 am

ADrunkenMarcus wrote:There are 'preserved members' as well who have left the organisation, so they're no longer paying in but nor are they taking any benefit.


The way that funding is supposed to work is that these people who have left the scheme as contributing and benefit accruing members impose no further costs on the scheme. If there is a shortfall, the employers are expected to put money in sooner rather than later.

ADrunkenMarcus
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Re: Putting It in and Taking it Out

#429427

Postby ADrunkenMarcus » July 21st, 2021, 7:46 pm

Thanks for the tips! One for further investigation.

Best wishes

Mark.


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