# Options from wind down of DB scheme



## Feemar5 (30 Apr 2013)

Hello - I am totally " at sea" regarding pensions.   Our DB scheme is being wound up from March 17th 2013.   I am due to retire in July 2014 and under the DB scheme was entitled  to get a pension of 11,500.00.   I have now been informed By ATP that my transfer value to a new scheme is €135.329.00 which is the reduced value of the scheme.    I have been offered a transfer to the company DC scheme ( which is in existence for new staff since 2005) or PRB or transfer to a PRSA.     I would really appreciate any advice - what kind of pension could I expect to get from a DC scheme.    As I have so little time left to retirement I would appreciate any advice.

Many Thanks

Feemar


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## North Star (30 Apr 2013)

Hi Feemar5, I have ran a quick annuity calculation assuming that you are 65 and do not require a spouses pension, your €135k will purchase a pension of approx €4.3k per annum. If you are younger or require a spouses pension then this pension will be lower than this. This also assumes that you dont take any tax free cash from your pension. This is a complex area, which unfortunately will impact on your retirement income. We are going to see many DB schemes converting to DC schemes in similar fashion. Some independent advice  is probably needed to fully explain the various options open to you and help you  make the decision that is in your best interests. 
Regards Vincent


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## Conan (30 Apr 2013)

North Star,
I think your calculations are a little off.

€135,000 at age 65 would buy a single life non-escalating pension of about €6,900 p.a.
If 2% indexation was included, the annuity would start at circa €4,900 p.a.
If a 50% Spouses pension was added to the indexing annuity, then the staring annuity would be circa €4,300 p.a.


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## Feemar5 (30 Apr 2013)

*DB Wind up*



North Star said:


> Hi Feemar5, I have ran a quick annuity calculation assuming that you are 65 and do not require a spouses pension, your €135k will purchase a pension of approx €4.3k per annum. If you are younger or require a spouses pension then this pension will be lower than this. This also assumes that you dont take any tax free cash from your pension. This is a complex area, which unfortunately will impact on your retirement income. We are going to see many DB schemes converting to DC schemes in similar fashion. Some independent advice  is probably needed to fully explain the various options open to you and help you  make the decision that is in your best interests.
> Regards Vincent



Thank you Vincent for your advice - 4.3K seems very low  - I am meeting a rep from APT who administer our scheme so I will listen to him and probably seek independent advice.


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## Attica (30 Apr 2013)

Hi Feemar,
I suspect you and I are in the same pension scheme. Were you promised around 70% of your original DB entitlement? I have worked mine out to be around 47%,which is a far cry from 70%. The 4300 shown by North Star and even the 6900 mentioned by Conan are both between 37% and 60% of your DB entitlement. Our company has promised to invest some more funding but the pension consultants seem to think we are idiots so it is very doubtful if the extra funding will bring us up even to 70%. I realise that other schemes are in a worse position but it is scandalous that after decades working for a company, the modest expectations we had for retirement (very modest!) are whittled away by more than half.


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## Feemar5 (1 May 2013)

*DB Wind up*



Attica said:


> Hi Feemar,
> I suspect you and I are in the same pension scheme. Were you promised around 70% of your original DB entitlement? I have worked mine out to be around 47%,which is a far cry from 70%. The 4300 shown by North Star and even the 6900 mentioned by Conan are both between 37% and 60% of your DB entitlement. Our company has promised to invest some more funding but the pension consultants seem to think we are idiots so it is very doubtful if the extra funding will bring us up even to 70%. I realise that other schemes are in a worse position but it is scandalous that after decades working for a company, the modest expectations we had for retirement (very modest!) are whittled away by more than half.



Hi Attica - I suspect we may be in the same boat !!   Where can we go with this as it looks like a complete " rip off" - how 70% reduces to between 37 and 60% I can't understand.    We need to be really careful - did you see Prime Time tonight where a man lost 450K in a pension fund in IBRC.   Where can one get independent advice - as far as I can see everyone is trying to sell you something !


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## Feemar5 (1 May 2013)

Thanks for your figures North Star - they are a little bit more optimistic than Conan's - I will keep you posted with what I am offered.     Rgds, Feemar


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## North Star (1 May 2013)

Good morning Conan,
Apologies, I should have mentioned in my original post that the annuity level was escalating at 3% and guaranteed for 5 years. We prefer to show escalating/inflating pensions as in our view they are a better benchmark to facilitate 'like for like' comparisons with what a DB scheme was intended to provide.
Regards Vincent


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## Attica (1 May 2013)

North Star or Conan,
you both sound very familiar with pension matters. If a DB pension scheme has been wound up, and the transfer values are not 70% of the original as supposed, but are 70% of the minimum standard funding which in effect gives about 50% of DB pension, which seems to be what is happening with Feemar and self, what exactly does that mean?


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## Conan (1 May 2013)

If a DB scheme is wound up then whatever the value of the fund is divided between members. Currently, existing pensioners have to get 100% protection ( their pension will be bought out by means of an annuity) . Whatever is left is then divided between current and deferred members based on their accrued/earned entitlement.
That may result in members getting more or less than was anticipated. It just depends on the actuary working through all the numbers. For example, if a scheme is 80% funded (overall) but you then take out 100% of the liability for pensioners, the result may be that there is only as 60% left for current members. So the fact that a scheme might be funded to an 80% level overall does not mean that current members will get 80% on wind up.


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## sherlock (16 Jul 2013)

*Sounds like we are in the same boat!*

I don't believe in coincidences, so when I found this thread I figured I too am a victim of the same scheme. All of the above apply to me, and I also took independent advice on the value of the 70%. I got quite a shock too be told that it was nowhere near what I was led to believe, and was indeed told it smacked of sharp practice, ie, lull me into thinking that 70% was not so bad considering. Right now I am hopping mad, but there seems to be little appetite among my colleagues for questioning the company on this.Is it because everyone believes the 70% value, ie taking it at face value? What are our union doing? if anything. Will it take a class action like the Element 6?


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## JoeRoberts (21 Jul 2013)

You also need to remember that the 70% is 70% of your legal transfer value.
This transfer value, even if it was 100%, would not be enough to buy your accrued annual pension to date. Your adviser should also consider how the transfer value is actually calculated.


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