DB schemes that don't guarantee an income with reference to service
Sean_Fernyhough
Member
This is a beast I haven't come across in 30 years. I'm dealing with a member of the E.ON UK Retirement Balance Plan who is going to be made redundant in the summer. The scheme builds a retirement balance used to purchase a scheme pension (or an OMO) based on the percentage of a member's pensionable pay the member wishes to have credited to their retirement balance each year. Other features are:
1) Accumulated retirement balance is uprated by RPI to 2.5%.
2) Employer contributions meet the cost over and above member contributions of providing the retirement balance at NRD.
3) There is an actuarial reduction to the retirement balance for early retirement.
4) Transfer values appear (needs to be checked) to be on the basis of the member contributions only (i.e. in this member's case the reduction on transfer appears to be around 50% rather than the 14% actuarial reduction for taking early retirement form the scheme).
Can someone help me to articulate the difference between this scheme and a cash balance scheme (initially) to the adviser?
Many thanks.