Defined Benefit Scheme - 18 years a member

K

kitty81

Registered User
Messages
147
Hi, I am a complete novice when it comes to pensions & would love some input.

I joined the defined benefit scheme of my current employer 18 years ago, 9 years full time, remainder as a job sharer.

I am now considering a career change but would like to understand if there are any implications in leaving the scheme? I am 36 years old now & my company is a well known semi state organisation.

From my very limited knowledge, I understand I can leave the scheme but still receive a pension from it in years to come?

Can anyone give me any further info please?
Thanks in advance
 
Generally speaking if you leave service you get what’s called a “deferred benefit”. So you get a benefit payable from the normal pension age based on your years of service and your salary at date of leaving. So for example if you have the equivalent of 13.5 years service then you might get 13.5/60 x Pensionsble Salary as a deferred pension package from say age 65. The deferred benefit will generally be indexed from date of leaving to retirement.
The precise calculation will depend on the Scheme rules, but your HR people should be able to explain.
 
Thank you Conan. I really appreciate your reply.
By the sounds of it, the pension would be worth very little by the time I reach 60/65!
 
Not necessarily. Allowing for indexation the value will increase over time. And obviously the deferred pension will be in addition to any new pension funding you put in place in your new career.
 
Keep all your old P60's from your current job if not joining another pensionable scheme. Your highest 3 salary years over a 10 year period can be used to average out your actual earnings for tax purposes.
 
Thanks IsleofMan. I really wouldn't have known this at all so thank you for the tip!
 
If your new employer has a DB scheme, and you are entitled to join it, then you might be allowed transfer from the old one.
 
You mention that your employer is a semi state. I presume you are referring to your current employer as opposed to your new employer. If your new employer is also in the public sector, there may be arrangements in place for your service with your existing employer to be taken into account with your new employer. This assumes that the Public Sector Transfer Network that was in place when I was working is still operational - perhaps those currently involved in this area could confirm, or otherwise.

Otherwise, your pension should be indexed and should therefore more or less retain its current purchasing power.
 
Thank you Homer, yes my current employer is semi-state & my potential employer is in the private sector so I'm assuming I cannot link the two?

Another thing I was thinking about recently incase anyone here would have an answer....can you buy a dual pension? As in both my husband and I could be the beneficiaries of a single pension but it would remain in place should the unfortunate happen and one of us is no longer here come 65? A bit like a dual life insurance policy?
 
Kitty,
You cannot buy a “dual pension” as you describe it. Your new employer is providing a pension for you. However most schemes include a “death in service” benefit (perhaps a lump sum multiple of salary) to cater for a situation where you die before reaching retirement age. Such a lump sum would be paid to your estate.
At retirement, it is possible (under current rules) to purchase a “joint life annuity” ( a pension payable to you initially but with the pension continuing to a surviving spouse on your death in retirement- perhaps at 50% of the original pension).
 
You must log in or register to reply here.
Back
Top