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Pension question

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  • 30-09-2014 10:41pm
    #1
    brick1
    Registered Users Posts: 18 ✭


    I left my job last year, with preserved pension entitlements (defined benefit).
    I now hear from my previous colleagues that the employer wants to change the pension to a defined contribution type next year. Do I hold my benefit due to the fact I am gone ; will any change agreed affect me and do I need to seek professional advice to investigate this?


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    #2
    SBarrett
    Registered Users Posts: 160 ✭✭SBarrett


    In most cases, they close the DB scheme and it is DC for new member and current members going forward. It will not convert retained DB to DC.

    However, you have to ask yourself, will the full DB benefits be paid in full? There is obviously a funding issue here. As a past member, you are entitled to a copy of the annual and actuarial reports. I would get a copy of these and see how big the deficit is. As I don't know the company, I have no idea whether they have the financial wherewithal to pay the deficit so all members get their full entitlement.

    The DB pension used to be the gold plated pension. Now there is a risk that these benefits won't be paid, so make sure you are making an informed decision.


    Steven


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    #3
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    brick1 wrote: »
    I now hear from my previous colleagues that the employer wants to change the pension to a defined contribution type next year.

    The answers to most of your questions can be provided by your former colleagues based on what the employer has told them.

    First, ask them if their accumulated benefits under the old (DB) scheme are being preserved. Common practice in this situation is that benefits under the old scheme are frozen (i.e. you can't accumulate any additional years of service) and all future contributions put into a DC scheme. This is typically what happens nowadays when companies realise that they can't afford the risks associated with providing the benefits associated with a DB scheme.

    As a member of the DB scheme you are entitled to be updated by the trustees if there is a change to your benefits. The fact that they haven't written to you suggests that your preserved benefits are being retained.


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