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defined benefit pension scheme

  • 27-10-2021 3:11pm
    #1
    aidanki
    Registered Users Posts: 1,279 ✭✭✭


    My company currently operate a defined benefit scheme, and Im ticking along nicely putting in my 4% of salary. Im doing AVCs as well another story.

    I was wondering how much would the company be putting in to keep it afloat. 

    Im actually going to be leaving, location is more suitable in the new position, and going to another multinational also with a defined benefit scheme. Am I as well off leaving the pension with MultiNational 1 or taking it with me.


    Both Multinational 1 and Multinational 2 will be around in 25years time when Im retiring.  



Comments

  • #2
    coylemj
    Registered Users, Registered Users 2 Posts: 25,479 ✭✭✭✭coylemj


    I was wondering how much would the company be putting in to keep it afloat.

    As much as is required to meet the funding requirements laid down by current legislation and overseen by the Pensions Authority. If the scheme is underfunded, the trustees typically will be required to set out a schedule whereby the company will make extra payments to bring it back into the black. As a member of the scheme, you have the right to see the annual report. In which there should be details of the last actuarial evaluation. Which will tell you if it's over or underfunded.

    Am I as well off leaving the pension with MultiNational 1 or taking it with me.

    You may not have the option. It won't cost to ask but the company you're moving to may not allow you to bring your fund over from another scheme. It may be best to just leave it where it is, especially as you feel confident that your (soon to be) former employer will still be around by the time you retire. You will be classed as a deferred pensioner in the first company scheme.

    Have you sufficient service with your current employer to have your pension benefits vested?

    Post edited by coylemj on


  • #3
    aidanki
    Registered Users Posts: 1,279 ✭✭✭aidanki


    https://www.boards.ie/discussion/comment/118080897#Comment_118080897


    thanks for reply, please explain vested 8 years i probably do

    I guess I’m wondering the following

    the classic dB is you are entitled to 2/3 of your final wage at retirement after paying 40 years of pension.

    how does moving company effect that



  • #4
    coylemj
    Registered Users, Registered Users 2 Posts: 25,479 ✭✭✭✭coylemj


    Your pension rights become 'vested' after a set number of years service. How many years varies, you need to ask at work. If you leave the company after that period, you are entitled to deferred benefits. I worked for a company with a non-contributory DB scheme, if you left before 10 years service, you got nothing. That may or may not be allowed since the passing of the Pensions Act 1990.

    If you leave before your benefits are vested, your AVC money and your employee contributions (if any) are safe, that's your money but the slice of the company scheme attributable to you and funded by company contributions would be gone, straight back into the company's profits. So do not go anywhere until you're sure that your benefits are vested.

    https://www.pensionsauthority.ie/en/lifecycle/glossary/?index=V

    Are you 100% certain that you'll be able to join the DB scheme in the company you're thinking of moving to? Because an awful lot of DB schemes in the private sector are now closed to new members.

    As I said above, I think the most likely scenario is that the new company will not allow you to bring money (to buy years of service) so you would start with zero years service and your benefits in the old job would be preserved. You would go back to them when you reach the normal retirement age (defined in the scheme) at which point they would start paying you a reduced pension.

    Post edited by coylemj on


  • #5
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,739 Mod ✭✭✭✭Henry Ford III


    Be very careful with this OP, and get professional advice.

    On the basis that both employers and their D.B. schemes will still be around when you reach NRD it'd make no sense for the new Employer to offer any transfer option. So they won't. It is possible to do something like this within the civil service scheme "knock for knock" but if they are private schemes it won't happen.

    Remember that a D.B. scheme expresses benefits in terms of pension (years of service) as opposed to money.



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