Hi Guys,
I currently work for Shell in the north west and they are currently in the final stages of selling the refinery to Essar Energy an indian company. Obviously i would rather stay with Shell as i'm on a final salary pension but for the long term i think the sale is a good thing. The new company Essar have made initial talks with the union and have offered us 2 types of pensions. One is a defined contribution scheme and the other is a defined benefit scheme. I'm ok with the contribution scheme but dont really have much of a clue with the other one. If anyone has experience of pensions then i could really do with a bit of guidance and what i need to be looking at.
Thanks in advance
Rob

Final Salary is a defined Benifit scheme.

I would have hoped you would have been transfered un TUPE, Transfer undetaking of protection of earnings, and therefore your pension would be intact.

Have a word with your union rep.

We are being TUPE across but they are adjusting the pension. My current pension Shell pay 30% and I pay 6% and have 1/54th of my final salary. The new one is 1/60th Accurual Rate x Pensionable salary in the pension year x Pensionable service in the pension year. The example in the paperwork doesn't really look like it's worth a jot. The bumf says that we arn't expected to pay anything in. I can't work out if it's the same as final salary where the pot gets it's wealth. One of the guys who's been with shell has 38years in an his pot is over 1mill!!! Using the exxample mine will be lucky to hit 30k. Am I being think and missing something?

Rob

I'm not a pension expert, I'm sure the Union have their experts looking at it, but it does sound a little odd the way they plan to calculate it, and they do not want you to contribute

But the wording does suggest it is a final salary - '1/60th Accurual Rate x Pensionable salary in the pension year '

Both pensions they are offering are contribution free. We can contribute if we want but not mandated. Fingers crossed and thanks for your help.

A 1/60th accrual rate offers the opportunity to reach 40/60th or 2/3rds final salary as a maximum benefit if you achieve 40 years service.

The 1/54th would have been better but there are very few companies offering ANY type of defined benefit schemes these days that guarantee you pension based on the numbers of years in the scheme so its a good offer.

Defined Contributions offers no guarantees and is just a savings account with tax relief in its most basic form.

I used to be an Actuarial Consultant running the UK Pensions transfer division for Towers Perrin (US Actuary) so I have some experience

Gazellio wrote:

A 1/60th accrual rate offers the opportunity to reach 40/60th or 2/3rds final salary as a maximum benefit if you achieve 40 years service.

The 1/54th would have been better but there are very few companies offering ANY type of defined benefit schemes these days that guarantee you pension based on the numbers of years in the scheme so its a good offer.

Defined Contributions offers no guarantees and is just a savings account with tax relief in its most basic form.

I used to be an Actuarial Consultant running the UK Pensions transfer division for Towers Perrin (US Actuary) so I have some experience

As the benefit is "Defined" rather than the payment being defined you do not really need to know how much they are putting in as its their legal liability to provide the benefit guaranteed at retirement.

1/60th is the norm so I see no grounds for fighting for a benefit that may have been a little too generous originally especially in today's economic environment.

It worth noting that most employers are closing their defined benefit schemes and switching to defined contributions (Money Purchase) and Final Salary schemes are now hard to find.

No official given or implied here just a comment as I am no longer involved in pensions in any way!