changing the rules for DB scheme

[Attica]

I am in a DB scheme(non-contributory) for over 20 years with my company. About 3 years ago they started a DC scheme for new staff. Now the DB staff are being asked to contribute up to 8% of final pensionable salary to the DB scheme. Despite having a staff member on the committee, we have not been given any reason for this request, but rumour has it the scheme has lost 13 or 14 million.
I know many schemes lost money this year, but one man I know says he made money on his own investments by transferring in time out of lossmakers into commodities. Why did our committee not see the loss coming as he did? Why didn't all these whizkids listen to the David McWilliamses etc?
I know the company is legally entitled to change or even discontinue the scheme for prudential reasons. But, if I refuse to contribute, can they throw me out of the scheme altogether? If I contribute, how can I have some say in the running of the fund? A single staff rep has no power at all there among 7 or 8 higher authority figures.

 

[Don_08]

I'm surprised they have not communicated the reasons behind this. You should really raise this with your HR and get better answers, or has this just leaked out and not been officially communicated?

You are entitled to get copies of the most recent actuarial valuation and audited accounts. Request these from your trustees. I think they have to provide them within 4 weeks. You might get a big surprise as to how much the employer actually pays for your pension as a % of your salary. Very lucky to have had the benefit of a non-contributory DB scheme up til now, and I would imagine the employer's costs got so prohibitive the choice they had was ask the members to pay something towards it or stop it altogether.

If you refuse to pay the contributions you will either become a deferred member of the scheme and you will not get any credit for future service or you will accrue future service at a lower accrual rate. They may or may not permit you to join the DC arrangement. I'm sure they have made a decision on what would happen if members refuse to pay.

 

[Attica]

Thanks, Don 08. It was officially advised but with no reason given other than "current economic climate" - along with a year's pay pause etc. I do appreciate the amount given by the company all these years. What has angered me is the lack of honest communication about the fund loss and I heard that the staff person on the committee suggested early this year that the funds should be moved to commodities, but wasn't heeded.
I believe you are right about deferment if anyone refuses to pay. I will follow up with HR....

 

[johnnygman]

Thanks, Don 08. It was officially advised but with no reason given other than "current economic climate" - along with a year's pay pause etc. I do appreciate the amount given by the company all these years. What has angered me is the lack of honest communication about the fund loss and I heard that the staff person on the committee suggested early this year that the funds should be moved to commodities, but wasn't heeded.
I believe you are right about deferment if anyone refuses to pay. I will follow up with HR....

I can see you are upset and perhaps rightly so, but switching to commodoties could have been equally as bad if not worse depending on your timing, look what has happened to the price of oil in the last few months, all commodity indices are also under heavy downward pressure.