Limit of 2/3rds final salary with defined contribution pensions

G

GeneralZod

Registered User
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I'm having trouble understanding DC pension rules because the restrictions seem unbelievably unfair.

Is it really the case that the maximum pension is limited to 2/3rds final salary even though there's a risk
the pension fund could end up at zero?

Shouldn't there be no cap or at least a higher cap to compensate for this extra risk. DB pensions don't have this risk.

The rules for calculating final salary look grossly unfair too.

They seem to prevent a gradual career wind down on lower salaries without very negatively affecting the size of the
pension that can be taken in the end.
 
Any Salary in the ten years before retirement can be used!
 
CapitalCCC said:
Any Salary in the ten years before retirement can be used!
Click to expand...

CapitalCCC, can you provide a link for that? That's good news if true. I'm under the impression it's the average of the final 3 years worked. Link here [broken link removed] with the final 3 years restriction mentioned.
 
Then you can use any three in last ten.

Contact revenue.
 
Thanks CapitalCCC.

The 3 years don't have to be contiguous? Does the average have to be taken over 3 years or can it be an average of up to 3 years?
 
3 year continuous within ten years of retirement Or you could use pay over any twelve month period with five years of retirement.
 
I also think that the salaries can be indexed with inflation.

i.e. if your salary 10 years ago was the highest in REAL terms you can use them.
 
Does the final salary not apply to each seperate employment ?

So if someone earned say 100k ( 28 yrs service ) until they were say 53 yrs old, then took a job in a local store for 12 yrs earning 30k.

Based on a simple 40/60th DB scheme in each employment, would allowable pension not be

100 x 28/60 = 46.6k
plus
30 x 12/60 = 6k
Total allowable = 52.6 k

Ignoring CPI allowances and the 10 yr rule.

Surely his limit would not be 30 x 40/60 = 20k based on final employment only
Does anyone know for sure ?
 
Aidan119 we're talking about DC here so the rules might be slightly different but from as far as I can tell from what was said above the lower salary job in the last ten years could be ignored for final DC salary calculation purposes as long as there's three contiguous years of salary after age 50 on the better paying job.

I found an informative link on max benefits at the IAPF web site.
 
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