Going from High to low salary in a Defined Benefit Scheme

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laila

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I am wondering if there is anything to be done regarding a situation I find myself in. I have been working full time for 15 years in the university sector in admin. The pension scheme is defined benefit based on last years salary. One year ago I moved from a higher grade full time job to a part time job at a lower grade job. The move reduced my salary by 60%.
I wanted to work part time for child care reasons and this was all that was available to facilitate my hours which are mornings only. I am now considering leaving the job, again for childcare reasons and I am told that my pension will be frozen at my current salary as the defined benefit pension is based on final years salary.

It seems so unfair given that I have paid percentage payments into the scheme for 14 years when working full time and on a higher grade salary. I am in the process of asking if my pension could be retrospectively frozen from when I took on the new part time contract. If this is even possible it is totally dependent on the employers good will. Would I have any rights at all to have some account taken of 14 years full time service?
Any words of wisdom much appreciated.
 
Hi Laila - Would you have objected if you got a promotion before you retired and got the benefit of the salary increase in calculating your pension? You're seeing the other side of this double-edged sword. Is there any chance that you could return to full-time work for a period to reset your pension rights?
 
Laila
I presume that most of your salary reduction of 60% came about due to your working part-time and a smaller proportion due to your lower grade. It seems to me to be unfair to have to take a double-hit on the part-time work element. As a part-time employee, for each calender year, your "years" pension contributions are reduced in proportion to the hours worked; ie. if you work 20 hours per week where normal weekly hours is 40, your defined benefit pension service is credited with just 0.5 years per calender year. Its seems unlikely and certainly unfair that your final pensionable salary would be based on the reduced working hours (ie a 50% reduction in case of my example). Your reduced service already takes into account the part-time work.
To my knowledge, civil and public service schemes do not penalise part-time employees in this manner. Perhaps someone can clarify.
 
It's just another thing I dislike about defined benefit schemes. Normally it works the other way. Some people aim for a promotion just before they retire and so they get a much higher pension. After two years in the job, they retire early.

I don't know the answer to your question, but you could always take it up with the Pensions Ombudsman.

Brendan
 
Thanks everyone for all your advice. I probably would not be whinging if I was on the other side of the double edged sword but even on that side of the sword I can objectively see that a last minute promotion would not really be fair.

It seems my choices are to (a) seek to go back full time for a year in the future and then leave or (b) just swallow the bitter pill and live with the financial consequences of not having had the wit to leave 12 months ago.

If I take (a) it kind of seems a pointless exercise as my employer will have an unwilling employee for a year and then when I leave it will cost the same as if they just agreed to retrospectively freeze my pension to May 2005. I am just hoping that the employer will see the logic of this and concede.
 
Are you a member of [broken link removed]? If so, you should approach your union rep too, as your branch may have prior experience of negotiating less-than-straightforward pension situations on behalf of individual members. It might improve your negotiating position if you could point to some comparable precedent.

Of course, it might also disimprove your negotiating position :( — so you should probably seek union advice before engaging in discussions with your employer...
 
Im not familiar with the schemes in universities but I know of individuals elsewhere in the public sector who have "down shifted" but have continued to make superannuation contribution based on a higher 'superannuation' rate associated with their old job.

This situation arises regularily in the semi state sector. The exact mechanics of the arrangements are usually worked out between the Unions and Management.

aj
 
Without knowing the specifics of your grade/terms of employment it is difficult to say for sure but, in my experience, your pension scheme should average your earnings over the last three years at least. In fact, this has now changed in the public service "superannuation scheme" whereby the best three years from the last 10 may be used for averaging purposes. Check the scheme and check with the union.

Slim
 
to expand on the point made by hesabud.

Your salary for pension purposes should be your full time equivalent salary and not your actual salary. i.e. the salary you would get if you worked your job full time. Then insteadof getting one years service on this you get .6 oof a year.

Thus if you have worked 20 years full time and 10 years part time. you get

20 + 6 = 26 years on your current full time equivalent salary.

If your full time equivalent salary is less than your previous salary I not sure how you get over that.
Some schemes pensionable salaries are averaged over 3 years if that is any help.
At a minimum you should get the actuarial value of the contributions you have made to the scheme since you joined.
 
This happened me also.

I just had to take the drop due to the salary drop, but has been said before, I was not penalised for working part time. My salary for pension purposes is the full 40 hour week salary, but every year I accrued 0.6 years service.
this is standard, and you should insist on this.
 
I ran this by a few pensions experts whom I happened to meet last night. They were very surprised and said that most pension schemes had altered their rules to cater for part time employees. They suggested that if your employer has not changed their rules, you or your union should ask the trustees to change the rules. The rule change would have a retrospective effect.

Brendan
 
2.13 Third Level Education
2.13.1 The academic, administrative, and technical staffs of third-level colleges are covered by a number of different schemes operated by the college or institution in which they are employed.

In general, the more recently established institutions (e.g. Limerick and Dublin City Universities) have pension scheme terms similar to those applying in the civil service.

However, in a number of the older institutions (e.g. Trinity, the NUI universities), some pension terms are quite different. These schemes are, in general, non-contributory and are funded by the Exchequer. The majority of staff contribute 1½% of pay for membership of the spouses' and children's contributory pension scheme. For new entrants taking up service on or after 6 April 1995, there is a 5% contribution for the main superannuation scheme (with consequent uprating of salaries by 1/19th).


Staff of the Regional Technical Colleges come within the Local Government Superannuation Scheme (see section 2.15 below).
Click to expand...

As can be seen from the quotation above (full text is in the pensions key post) the rules associated with third level schemes vary.


You should get the scheme booklet associated with your scheme and determine how the shceme caters for 1) people moving from partime from whole time 2)people who are moving down a grade for what ever reason.


These scheme booklets are often availiable on company intranets so its worth trawling for it there.


As has been said before the trade unions are very well versed on these DB shcemes.


aj




 
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