Final Salary - going part time

[fosal29]

Hi,
On behalf of a colleague i am trying to find out how the Final Salary pension is calculated. A while back i watched a video by a union rep and he stated that it is worked out on your best 2 years from your last 3 which is fine. But my colleague (section C) wants to go part time from 55 onwards reducing his hours from 39 to about 23. Obviously his salary will drop so is it worked out on his reduced salary which would seem very unfair after 20 odd years service. Thanks, hope this makes sense.

[RobertT]

This is covered in the in the plan guide, available here. These are the important bits:

Your final salary pension is worked out as:

Final pensionable pay – This is used to calculate your pension benefits that relate to your service before 1 April 2008 and the lump sum benefit paid to your dependants if you die while still working for the Company. It is either:

Your highest pensionable pay for any calculation year during the last three years of your reckonable service, ending on your last day of reckonable service; or, if greater, the highest average of your pensionable pay in any three consecutive tax years in the last 10 years before you leave service, take your benefits or die.

So my reading of that is, his pension could be based on either full or part time hours, depending on how long he works part time before he leaves/takes his pension.

Also bear in mind that we don’t yet know what will happen after April 2018! The original plans for section C final salary(pre 2008) pension was that it would go up with inflation rather than be linked to pay as it is now. That may or may not change!

[fosal29]

This is covered in the in the plan guide, available here. These are the important bits:

Your final salary pension is worked out as:

Final pensionable pay – This is used to calculate your pension benefits that relate to your service before 1 April 2008 and the lump sum benefit paid to your dependants if you die while still working for the Company. It is either:

Your highest pensionable pay for any calculation year during the last three years of your reckonable service, ending on your last day of reckonable service; or, if greater, the highest average of your pensionable pay in any three consecutive tax years in the last 10 years before you leave service, take your benefits or die.

So my reading of that is, his pension could be based on either full or part time hours, depending on how long he works part time before he leaves/takes his pension.

Also bear in mind that we don’t yet know what will happen after April 2018! The original plans for section C final salary(pre 2008) pension was that it would go up with inflation rather than be linked to pay as it is now. That may or may not change!

Many thanks Robert, I'm not sure how many years after 55 he wants to work but it seems if he stays past 62 the part time salary will start to kick in. I will pass this on, thanks again.

[stevepostman]

Sorry to chip in just a query if someone took there pension at 55 does the above apply to them. With regards to three years part time or the best three years in ten consecutive years.

[RobertT]

Sorry to chip in just a query if someone took there pension at 55 does the above apply to them. With regards to three years part time or the best three years in ten consecutive years.

Yes.