Offered by some
employers, and sometimes called 'final salary' or 'defined
benefit' schemes, occupational pensions usually provide
based on:
- The number of years you have been a member of the
scheme (known as pensionable service);
- your pensionable salary (often averaged over the
last three years before retirement, or sometimes the
best 365 days in 5 years); and
- the proportion of those earnings you receive as
a pension for each year of membership (called the
accrual rate).
The most common accrual rates are 1/60th or 1/80th
of your pensionable earnings for each year of pensionable
service, and the scheme is run by trustees who look
after scheme members’ interests.
In the News
Some salary-related occupational schemes
have made the news because the employer has become insolvent,
and there was insufficient money to pay the pensions
it had promised to its current and former employees.
The government set up a Pension Protection Fund in
April 2005 to help protect members of salary-related
schemes. The fund pays some compensation to scheme members
whose employers become insolvent and where the scheme
does not have enough funds to pay members' benefits.
Please note however, the level of compensation may not
be the full amount.
Is it Right for You?
Think carefully if you are planning not to join your
employer's pension scheme. It is not usually a good
idea to turn down a pension scheme to which your employer
will contribute on your behalf.
The benefits of these schemes are:
- your pension benefits are linked to your salary
while you are working, so they automatically increase
as your pay rises;
- If it is a final salary scheme your pension entitlement
is not dependent on the performance of the stock market
or other investments;
- the pension scheme will normally increase your
pension income each year in line with the Retail Prices
Index (RPI) or a set percentage, whichever is the
lower.
Changing Jobs
If you change jobs, you stop paying into the pension
and can leave it where it is (called a preserved or
deferred pension). Alternatively, you could transfer
it to your new employer or a scheme of your choice.
Get the Full Story
Robert Bruce Associates
can offer you specialist, helpful and clear advice on
Occupational Schemes, to help you make an informed
choice. Our qualified advisors will ensure any decision
is made only once you have all the facts in hand, and
only as a result of establishing your personal wishes
and criteria.
Why not call us today?
Get the most out of
your retirement.
Call us today
on: 0845 838 7377
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