- Helping members of occupational pension schemes to better understand their benefits.

19th October 2019
:: Scheme Member | Why MyCompanyPension? | Free services - value for money or a false economy?

Free services - value for money or a false economy? 
The internet is full of 'free information and advice'. But if it's no longer accurate what value can you place on it?
At this website represents our core activity - so we make sure it is accurate, up to date and relevant. At least 3 people work on every Factsheet that we produce, with each of them being signed off by a qualified actuary. Many of our Factsheets contain more than 100 hours of work before they are approved for release. We continuously update our material.
That's not to say that we never make a mistake - but as soon as one is spotted we take immediate action to remedy it.
As the sayings go:
open speech marksMistakes are a great educator when one is honest enough to admit them Close speech marksand willing enough to learn from them.
open speech marksBy ignorance we mistake, and by mistake we learn.Close speech marks
What follows below are all quotes from websites we surveyed on 12th March 2007. They include some very large and well respected organisations. The information was supplied free - but not necessarily accurate - as you will see. Each of the following quotes is in relation to defined benefit / final salary schemes.

Defined benefit schemes, of which a final salary scheme is one type, provide benefits which are promised - not guaranteed. This statement, or those like it, is probably the most common mistake we find on financial websites. If they can't get this right...



Since the 6th April 2006, there is no maximum to how much a person can contribute into a registered pension scheme (which a final salary scheme is a type of). There is only a limit to how much of the contribution the person would receive tax relief upon. How long before this website gets updated...


It's that word guarantee again...




Ouch ! We had to read this several times to understand exactly what they were trying to say. In fact it is well out of date. Since, 6th April 2006, and subject to the Scheme Rules, defined benefits schemes can provide whatever they like in terms of pension and cash without reference to final salary (so long as the benefits paid do not exceed those contained in HMRC rules).  
The word guarantee is so popular
 - and so wrong in this context...



It's that word maximum again - you can contribute as much as you want, it's just that there is a ceiling for tax relief purposes.

Since 6th April 2006, and subject to the Scheme Rules, defined benefit schemes can be much more flexible, limited only by the creativity of the sponsoring employer and the trustees (and HMRC rules). Oh, and that word guarantee again...


In terms of 40ths being common...  

  • Approximately 77% of pension scheme have an accrual rate of 60ths or 80ths
  • Some 6% have an accrual rate more generous than 60ths, whilst
  • 17% fall into the 'other' category (such as 1/120ths).
Source: NAPF Survey, The State of Britain’s Pensions, 2005  
that word guarantee again...  

Prior to 6th April 2006, there was a limit on the amount of pension that a defined benefit scheme could provide for scheme members. Whilst many schemes will have retained this, since 6th April 2006, it is not an HMRC rule.

This is no longer an HMRC rule (since 6th April 2006) - even though some schemes may have chosen to retain it.


You just can't keep from finding the word guarantee used incorrectly...



At MyCompanyPension we do our best to ensure all of our material is accurate all of the time.


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