Commercial Semi-State - DB Pension or DC

clonbolia

Registered User
Messages
13
Hello all,

I've searched the threads and can't find specific advice on the following. I'm a young employee and have been offered entry to my company's defined benefits pension scheme. The alternative is to join a DC scheme that is just starting up (the company will pay 9% of my salary into it).

I will be among the last employees allowed to join the DB scheme. It had a large actuarial deficit but they have recently fixed this (e.g. capped the cost of living at 4% maximum, weakened link from pensions to wage levels of existing employees). The company itself is Blue Chip.

From previous jobs, I have a significant DC pension pot (although don't ask me about invesment performance :) ....).

I am young - in my 30s - married and have young children. I do have a motive to leave something behind for them.

Any advice on how I make the choice? Any models or good websites? Among my concerns are:

a. Will I get treated fairly as among the last person into the scheme?

b. A 4% cap on cost of living adjustments? This seems to expose me to risk if hyperinflation occurs post-retirement.

c. If the PRSI pension is eventually means tested - would a DC pension give me better ability to avoid this means test (e.g. buying a house with my lump sum).

d. How do I compare risk (investment performance for DC) vs returns?

e. If I am in a DB pension, is my ability to contribute to PRSA's limited?

Any advice welcome.
 
Hi Clonbolia,

Im moving your question to Public Sector Pensions which is where commercial semi state DB pensions are discussed on AAM.

aj
 
Many questions!
a. the trustees are obliged to look after all members fairly, but current pensioners always have priority in the event of problems with funding deficits.
b. I think we're all in trouble anyway if hyper-inflation strikes!
c. I think it would be impossible to say with any certainty - too far into the future
d. Take professional advice on the risk/returns issue. As (the late, great) Red Adair said, "if you think hiring a professional is expensive, try hiring an amateur!"
e. Shouldn't be! (PRSA AVC's) & it's a good idea if you can afford it! Revenue rules set the limits.
 
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