mistrust of company transferring pension fund

leixlip_pa

hi all, i just wondered if i would be able to find out how the transfer of money from a defined benefit pension to a defined contribution pension scheme is done. some questions i have are: (1) how am i to know how big the pot of money is to begin with? (2) are there special arrangements for employees with less than 10 years service left to retirement?
other questions might follow on from the answers.

Pablo Sanchez

As it is a defined benefit scheme and not defined contribution (where you can always find out the accurate current value) an actuary needs to calculate what your years of service 'translate' (ie current transfare value) to, unfortunatly i think this calculation may be beyond the understanding of mere mortals......thats why they get paid so much:D

There may be some complication on switching out of a defined benefit occupational scheme after 15 years service+ as they are not allowed to be transfered to a PRSA but they are allowed to be transferred to another occupational pension scheme (defined benefit or defined contribution) or a Buy out Bond after this period of service.

Hope it makes sense

leixlip_pa

thanks pablo sanchez, i'm afraid that you are dealing with a five year old mechanic going on sixty five - when it comes to finances - which is probably why i find myself down about 30% on last years pension pot which was'nt all that big to begin with.
however, five years ago i could have expected to retire in seven years time (2011) on 27/60ths of my final salary. now after all the calculations and transfers (and depreciations) have taken place, it seems my pension will be closer to 12 - 15% at best.
what i find strange is that apart from the nose dive in share prices which was bad enough, there was'nt enough of the pot transferred to give me a retirement figure close to my defined benefit scheme figure of 27/60ths.
is there a way to check that this actuarial figure was arrived at fairly and above board?

Pablo Sanchez

Hi Leixlip,

You mentioned that you were part of a defined benefit scheme, at retirement you should be receiving a annual pension of 27/60th's of your annual pay for life. You will also have the option at retirement to convert some of this annual pension to a tax free lump sum of up to 1.5 times your annual salary.

You mention that your pension 'pot' is down by x% due to the stock market, this sounds more like a defined contribution pension where every month for example you invest €100 and your employer agrees to invest €100. This investment would build up through the years and throughout you always know what the total amount of your and your employers investment is worth.

If you believe that figures are not adding up firstly i would contact the scheme trustees, they may be able to clear up how they arrived at that figure, or put you in touch with the person they deal with in the Life Insurance company they invest through, who may be able to shows the figures behind it.

Let me know how you get along

leixlip_pa

thanks pablo, much appreciated, the company are the pension trustees and as i dont trust them to play fair then i would like to find the information without going through them.

Thomas_S_Hunterson

Pablo Sanchez wrote: »

You mention that your pension 'pot' is down by x% due to the stock market, this sounds more like a defined contribution pension where every month for example you invest €100 and your employer agrees to invest €100. This investment would build up through the years and throughout you always know what the total amount of your and your employers investment is worth.

What happens with defined benefit schemes if the pension fund does not have full coverage (due, for example, to poor investment performance) is that members looking to transfer out of the scheme will only be offered a percentage of the actuarial value of their benefit at NPD.

leixlip_pa

hi sean k, thanks for the reply, it is my mistrust of the company/ trustees and their lack of transparency in dealing with this fund that leads to the doubts that i have.
i question the independance of the actuary/ insurance company/ new pension scheme managers in agreeing the size of the pot and the distribution of same.

Pablo Sanchez

Maybe get in touch with the pensions ombudsman if you have a complaint or for advice on who to contact in this circumstances.

leixlip_pa

hi pablo sanchez, thanks for your help. i do agree that it seems to be my next course of action in this situation. just to be flippant - just because i am paranoid, it does'nt mean they are not out to get me!!!