Pension Question

The pension fund should be separate from the company assets, so short of blatent fraud (Robert Maxwell-style), the failure of the company should not affect the fund.

Whether the company owners are alleged (probably by a disgruntled member of staff; let's face it, how would somebody really know?) to have their money in the Cayman Islands, this is irrelevant. It could be illegal (unlikely if the whole firm appears to know about it) or it could be good tax planning, and good planning generally is what you would expect your bosses to be doing!

Also do remember that the well known pension mis-selling scandals of recent years were mostly centred on getting people to do what you are suggesting - to get a personal pension to match the benefits of the scheme your man has now, he would have to make pretty big contributions.

Presumably he would get 2/3 of final if he stayed there till 65?

These are general comments only.

Lola

He will have a preserved pension made up of two parts, a Guaranteed Minimum Pension or GMP, which replaces the SERP and S2P entitlement, and which has to be revalued according to various formulae laid down in the rules. Also the remaining pension has to be revalued by 5% or the RPI, whichever is the lower, each year.

It's a risk leaving it where it is, if the pension fund is not fully funded, but getting a better deal elsewhere is improbable.

In message , Lola writes

It may be all above board but, if they do a Maxwell, then dissappear to the Cayman Islands, there will be little the UK legal system will be able to do to get the money.

I think I'd be wanting to transfer it, even if it meant taking a hit on it.

Yes, but with the falls in share prices in recent years the vast majority of company pension funds are underfunded. If the company goes bust then administrators take over the fund, and make charges for their services to the fund. Under current rules pensions is payment take priority, the rest (if anything) is shared amongst people yet to retire.

There have been several cases in the last year or two of companies going bust leaving people out of a job and losing the whole (or the vast majority) of their pension.

With the FTSE100 having risen about 30% this year, any fund which remained invested in equities should not be looking at much of a loss.

Indeed, but depends on the size of the hit. Same decision as many had to do qith Equitable.

Lola wrote: [snip]

That will not happen - only those who work for the company until retirement will be entitled to the full 2/3. Someone ceasing to be employed at age 43 will get nothing like 2/3.

"Rhoy the Bhoy" wrote

Not necessarily - if the scheme allow for accelerated accruals of (say)

30ths, then it would only take 20 years service to arrive at 2/3. But I agree it would be unusual!

"> That will not happen - only those who work for the company until

The pension is frozen when he leaves - so he will get 2/3 of his final salary as it was when he left - not 2/3 of the salary at retirement age

I though the rule was that they are up-rated by the lower of: inflation or 5%?

How is somone of 43 going to have earnt a 2/3 pension?

tim

"tim" wrote

That's just the minimum increases required (and minimum is taken over entire period, not each year) - could be very different...

By accelerated accruals??!

Dream on. (Sorry)