Yet another of the dwindling number of FTSE100 final salary pensions in the black has told retirement savers they can no longer accrue benefits from the scheme.
Retail giant Marks and Spencer is halting the scheme from April 2017.
As an alternative, the company is offering retirement savers a deal to join the Marks and Spencer defined contribution scheme and has put forward a sweetener of a four times annual salary death in service benefit and compensation based on a three-year cash supplement.
The pension offer is part of the settlement of a pay and retirement consultation carried out by the company that has seen wages rise by almost 15% to £8.50 an hour outside London and 39.60 an hour in the capital.
Marks and Spencer has one of only 29 of 100 FTSE100 final salary pensions in surplus.
It’s not an ordinary pension…
Last valued at the end of March 2015, the pension was £204 million in the black, making the scheme 102% funded.
The company wants to guard this surplus without having to inject more cash from profits, but even if the scheme is in a surplus now, this does not guarantee pledges of future benefits.
If the company falls into trading difficulties or goes to the wall, savers in the pension scheme may lose some benefits.
Expats with final salary Marks and Spencer pensions can look to a Qualifying Recognised Overseas Pension Scheme (QROPS) to secure their retirement.
Anyone can transfer their pensions out of the scheme into a QROPS if they are planning to retire abroad or are already expats but have not drawn on their fund.
QROPS alternative for expats
QROPS have no guaranteed pay out, just like the replacement defined contribution scheme offered by the company.
In fact, most features would stay the same, except for some key benefits:
- A QROPS has a 30% tax-free payment compared to 25% from the Marks and Spencer or any other onshore UK pension
- QROPS have a wider and more flexible range of investments than a UK pension
- QROPS will make payments to an expat’s local bank in the currency of their choice, including US dollars, euros, sterling and Australian dollars
- Surviving spouses or loved ones can inherit unspent pension funds
Further QROPS Information and Guidance
For more information about QROPS and the benefits it provides, download the iExpats QROPS Guide or complete the Get Advice form.
