Joining DB PensionScheme

Hi All,

I will be joining my company DB Pension Scheme in January 2015.
The company contribution is approx 8% of salary and my contribution is approx 8% of salary. I plan to pay another 10% of salary in avcs.

My question is:
Due to the nature of my position I am aware that most likely the DB pension scheme will be wound up probably around the end of 2017.
I would imagine that what will continue after this will be a DC scheme.

In the event that this happens- will my avcs be safe when looking to transfer from the DB scheme to the DC scheme?/ Are there any other issues I should think about when joining the DB Scheme in January.
The DB scheme is currently fully funded and the expectation is that it will stay that way.
Many thanks for any thoughts

Your AVC's are invested separately to the main scheme and in a DC arrangement.

If the scheme is being wound up in 2 years, is there any point in joining it? Your benefits will be very small. If you transfer out in the future, the transfer value will be even smaller.

You say the employer will contribute 8%; in DB schemes, they have to contribute what is required to provide the benefits.

I would question the benefit of having 2 years DB pension...


Steven
www.bluewaterfp.ie

thanks for the reply Steven.
I suppose my question boils down to this:
Given 2 scenarios either joining or not joining, would it be better to join and get some benefit from it, rather that not join and get none.

If my avcs were protected and I got a transfer value of at least my own contributions then to me I am not losing at least (maybe i am over simplifying the situation!)

You could always ask them would they let you join a defined contribution scheme?

My worry would be that you are one of the last in. As the fund dwindles, they may have to put more money in and won't want to.

Steven
www.bluewaterfp.ie

was thinking the same Steven, they do operate an exec DC scheme, I can always ask that given the circumstances can I join that instead,

Thanks for your help,
Mark

Mark_jmc said:

thanks for the reply Steven.
I suppose my question boils down to this:
Given 2 scenarios either joining or not joining, would it be better to join and get some benefit from it, rather that not join and get none.

If my avcs were protected and I got a transfer value of at least my own contributions then to me I am not losing at least (maybe i am over simplifying the situation!)

Click to expand...

I don't see any reason not to join if the DB scheme is reasonably well funded and if there is nothing significant coming up that is likely to cause a substantial disimprovement in the funding position (for example, a whole load of retirements).

In the event of a wind-up, your AVCs will be a priority liability and will be fully protected. On wind-up, you will receive a transfer value in respect of your accrued DB benefit, which will be calculated as a preserved benefit if you have at least two year's qualifying service (service as a scheme member plus any 'transferred in' service). If the scheme is significantly underfunded, this could be less than the contributions you have put in and the further you are from retirement age, the lower the transfer value is likely to be as a percentage of contributions paid.