Alan

Hi,

I am just helping out a friend who is about to retire.

His pension plan seems to be quite low in my opinion. Before he meets with the directors, what should his pension be annually/monthly as a percentage of final salary?

Any advice or relevant websites would be appreciated

Thanks

Alan

Tiggs

what should it be? or what would be nice?

2/3rds final salary would be nice but it depends on what he has accrued.

if hes in a scheme that gets him a fund of money to buy a regular income it will come down to how much the fund is worth (along with how old he is, etc)

if hes in a scheme where each year of work gets him a % of his current pay it depends on how long he has worked there.

its not normally the case that too much bargaining can be done at this stage!

Alan

Do you have any references to specific websites that say something like:

On average pension should be x% of final salary?

I think he has the opportunity to negotiate the pension, due poorly devised pension plan.

Tiggs

no becuase its like saying "how much should my pay be".....theres a zillion factors that make up his final pension...pay, length of service, fund performance, age, health...etc, etc...some will be relevant, some wont and some others will be that i didnt list.

give some figs and i can be more specific...if he goes in and says "i want 2/3rds final salary" and has been flipping burgers for them for 3 years it may not happen!

AndyC_772

iTrader: (2)

It usually depends on length of service - typically it's something like 1/60th final salary for every complete year served with the company. So, if he works there 30 years, he'll retire on half pay.

'Final salary' is typically defined as something like 1/3 the total amount actually paid during the last 3 years' service - so a one-off bonus paid on the last day doesn't artificially increase salary entitlement.

Alan

Figures: 40+ years as a director of an NGO.
Working almost 7 days a week, and given the organisation a great reputation.

I can't disclose the final slary for obvious reasons, but we are not talking about huge figures. Probably about the same as a teacher working the same number of years.

EiW

It comes down to:

age
past contributions/plans
is it a final salary (defined benefit) scheme or a money purchase (defined contribution) scheme?
how much does he contribute?
how much do they contribute?

The simple answer is 'as much as he can afford', bearing in mind the (age-related) IR limits

Suresh

According to the pensions dept, they maximum possible pension is 75% of average salary at my company for 40 years service. I think the salary averaging period is the 10 years prior to retirement. The pension itself is benefits-based and therefore has nothing to do with specific contributions, but length of service and the general salary level reached. A contributions-based one would payout an amount dependent upon pension fund performance.

HTH
Suresh