DB pension wound-up - options?

I

Inigo

Guest
I spent some years working in an organisation with a nice shiny DB pension scheme. Lots of promises made about the generous pension and weren't we so lucky to have it! Now it's being wound up. I no longer work there now.

Firstly, I didn't think they could just break all the promises they made years ago. They certainly never warned us they could. But, it would seem that they can do just that.

Secondly, what to do with the fund? It's not enormous. I can apparently transfer it to their DC scheme or to a PRSA. I don't have a PRSA right now but I probably should get one. I'm not working at this moment as I'm back studying. I'll be in a new public sector job next year. I have an old public sector pension from some years back as well.

Any suggestions as to what I could do? Is there any point in making a fuss over the broken promises?
 
Transfer it to a Buy Out Bond or a PRSA. That way it is in your own name and you have control over it. The Revenue have announced that they are going to allow the ARF option for transfer values from DB, which they didn't allow before. It is due to come into effect in 2-3 weeks (well, we'll wait and see).

Can't see you making a fuss being of any benefit. Most defined benefit schemes can't meet their liabilities. Almost 80% of DB liabilities are for people who used to work for these companies. Employers will not be ploughing in millions for ex employees.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
SBarrett said:
Transfer it to a Buy Out Bond or a PRSA.
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One thing to watch out for with PRSA choice is the requirement for a LCP cert which can cost up to 2K!!! I have no idea what it adds to the client other than a handy fee for the actuary!
 
The LCP cert isn't applicable on scheme wind up Brendan.

The reason behind it was to avoid the massive stakeholder pensions charging situation in the UK. The thing is, PRSAs are not used very much (but seem to get a lot of attention on AAM), so there is little need to the LCP to be produced. I doubt any actuaries are retiring on the back of all the certs they've issued!


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
SBarrett said:
The LCP cert isn't applicable on scheme wind up Brendan.

The reason behind it was to avoid the massive stakeholder pensions charging situation in the UK. The thing is, PRSAs are not used very much (but seem to get a lot of attention on AAM), so there is little need to the LCP to be produced. I doubt any actuaries are retiring on the back of all the certs they've issued!


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
Click to expand...
What is an LCP??
 
Inigo said:
What is an LCP??
Click to expand...

Sorry, LCP is a firm of actuaries who carry out the Certificate of Benefit Comparison.

If you transfer from an employer scheme to a PRSA (except in scheme wind up), you have to have this comparison done. It compares the estimated fund value of your pension if you stayed where it was or transferred it to a PRSA.

It is a lengthy document (27 pages +) that a is required under legislation to be completed to avoid a situation in the UK where people were advised to move out of company schemes and into other pensions that were more expensive. The cost of getting it completed (€1,000 plus VAT), usually puts people off transferring to the PRSA.

But as I said, this doesn't apply to you because the scheme is being wound up.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Will the old employer cover the admin costs for their DC scheme? Did you get more information on their DC scheme in general? If so I would consider that as well as a cost effective way.

Otherwise a PRSA should be an option (buy-out bonds can apparently become problematic should you emigrate)
 
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