When a company announces, as Vodafone did this week, that it is closing its final salary pension scheme to existing members. Does this mean that members who have already retired and are drawing their pensions will move to an alternative, and most likely inferior scheme. Or just employees who are still working?
No. Once someone is a pensioner, there'd need to be a change in legislation to affect their pensions.
FoFP
"M Holmes" wrote
Not quite - what if the funding level of the pension fund drops below 100% and the sponsoring employer(s) can no longer make up the shortfall?
But the pension isn't paid by the pension fund, it's paid by the annuity provider. In other words the pension fund's involvement ceases when the employee becomes a pensioner.
"Ronald Raygun" wrote
That's very rarely the case - most big schemes will pay pensioners directly from the pension fund.
I have received several gloomy letters letting me know of the deficit in our scheme, and explaining how much more the company were paying into the scheme to try to reduce this.
They also discontinued sending out monthly pension slips (unless we wrote to insist on them continuing). I didn't bother, they still send the annual income and deductions statement, and I have enough paper to shred periodically, but it gives an impression of dire financial status.
In our case, they explained that they would then have to pay funds into an insurance company, who would take over the commitment, but that assumes that they have the funds to do so. AIG were into that kind of business, weren't they... :-(
This all is very very confusing! If paid from one fund, does it mean that the amount paid doesn't or shouldn't change?
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