Not bad if you can get it

#1
Read somewhere recently that annuity rates for pensions in the private sector are sinking?! a £million pot will only pay you £27,000 per annum if you want it index linked and half rate to your other half following your death. Looking at our redundancy programme I reckon any Lt Col and above will be in receipt of a figure like this on leaving! Alright for some eh?
 
#5
We are already there. Public sector pension schemes are underwritten by the taxpayer. There is no investment of the salary deductions taken from public sector employees salaries; it is simply offset against the pensions of those already retired.

Some public sector pension funds are in surplus because the current workers are paying more in contributions than the retired are drawing out. Some are in deficit, with the difference topped up by the taxpayer. The money in those in surplus is not invested anywhere to grow.

The deductions from a public sector workers pension no-where near match the benefits they will draw out when they retire. The gap is paid from the government current account, which is currently propped up by borrowing. The whole thing is underwritten by income of workers in the private sector, from company taxes, council tax and business rates.

To make matters worse, the pensions of private sector workers have been completely fucked by government policy, primarily Gordon Brown who removed a tax break which makes it impossible for private sector pensions to grow the pots needed to pay final salary pensions. So private sector workers are fucked twice.

The whole thing is a vast Ponzi scheme. As in all Ponzi schemes, there will come a day of reckoning!
 
#7
bobthebuilder - we are still one of the richest countries on earth and we still have AAA credit rating. (USA does not). We are leap years away from even thinking that there may be a problem meeting our public sector pension payments. You sound as if you are with the privater sector and I sympathise with you over what Brown did to private pensions. However it would be wrong to say that public sector pensions will be affected badly in the future because of the reasons you state. They are beginning to change things of course such as moving away from index linking which will affect new entrants - but I think existing pensioners can rest peacefully.
 
#8
bobthebuilder - we are still one of the richest countries on earth and we still have AAA credit rating. (USA does not). We are leap years away from even thinking that there may be a problem meeting our public sector pension payments. You sound as if you are with the privater sector and I sympathise with you over what Brown did to private pensions. However it would be wrong to say that public sector pensions will be affected badly in the future because of the reasons you state. They are beginning to change things of course such as moving away from index linking which will affect new entrants - but I think existing pensioners can rest peacefully.
You Sir are having a larf! ( and you're also factually wrong about the index linking)
 
#11
rpi to cpi for starters!
Which effects all members not just new entrants.

Lets take the NHS for an example of what's happening, purely because I know the schemes inside out.

1995 scheme. 1/80th Final Salary used to be 6% Employee contribution and RPI linked in payment with an NRD of 60.

Contributions are rising to 11% and its now CPI linked as you stated.

2008 Scheme which wasn't compulsory for people to switch to, 1/60th and CPI Contributions rising to 11% NRD 65

New, new scheme is being brought in (2015 ish) because the 2008 scheme failed to produce the results the government wanted.

(Probably ) a Career averaged earnings scheme with a retirement age pegged to state retirement which will rise to 70 within 15-20 years, with Employee contributions (possibly) rising to 14%.

Now the government changed from RPI to CPI whats to stop them changing it to 1% fixed escalation?

Life time allowance dropping to £1.25M, Thats going to hit pretty much all senior doctors, so they will face a tax charge.
 
#12
bobthebuilder - we are still one of the richest countries on earth and we still have AAA credit rating. (USA does not). We are leap years away from even thinking that there may be a problem meeting our public sector pension payments. You sound as if you are with the privater sector and I sympathise with you over what Brown did to private pensions. However it would be wrong to say that public sector pensions will be affected badly in the future because of the reasons you state. They are beginning to change things of course such as moving away from index linking which will affect new entrants - but I think existing pensioners can rest peacefully.
I think perhaps you need to do a little more research before making such comments. Bob is spot on, and if you think public sector workers can rest easy on their laurels, you need to put the coffee machine on and take a long hard sniff
 
#13
Future public sector pensions will be based on "average salary over the period of employment" and not as at present based on rank on retirement/length of service - the latter being by far the more expensive. (Again this will only affect new entrants). This coupled with the change from rpi to cpi will save the country many £millions over future years.
 
#14
What do they care, the private sector will be forced to pay it. No one on the public payroll contributes anything at all. It's just a moneygoround.
 
#15
Well if you are concerned about the Likleyhood of your pension or not, you could always consider the Self Investment Route (its called SIPPs). This will let you take your pension pot at 55 and use the money to fund your own pension, you can't take your state pension but you can take any occupational you might have such as a military pension which isn't paying out. Tis could be of use if you have got to wait a few years before the pension does pay out, and you are in a no hope of a job scenario.

However, this is not for those who are of weak minds and spirits, as all the risk is yours (with some safe guards), and you really do need an excellent IFA to do the work for you. You will also have to pay the IFA out of your pocket as they no longer get commission from Insurance companies for the products they sell you. However the city slickers who do the investments on your behalf still get commission, usually 3%pa of the fund value, not just the growth made.

It's an option, not for everybody, but for a few they work well, you have just got to be one of the few.
 
#16
Future public sector pensions will be based on "average salary over the period of employment" and not as at present based on rank on retirement/length of service - the latter being by far the more expensive. (Again this will only affect new entrants). This coupled with the change from rpi to cpi will save the country many £millions over future years.
What are you sources?

My understanding of the new NHS 2015 proposal is that it will be a compulsory switch for all members. Benefits accrued under the 1995 and 2008 schemes will become deferred until the NRD of the respective scheme and all future contributions will be applied to the new, new NHS pension scheme.
 
#17
You sound as if you are with the privater sector and I sympathise with you over what Brown did to private pensions.
You are making a pretty big assumption there. Actually I'm in the group you refer to in your OP, as alright jack. Doesn't mean I think it is right or expect to die being paid my full pension.

The changes that people are alluding to in terms of moving to CPI, average salary pensions and the like are tinkering at the edges. Read the Hutton Report. And Hutton isn't some elite tory public sector bashing banker; he is a card carrying socialist who was a Minister in the Blair and Brown governments.

The illusion that Britain is a rich country doesn't hold up. We may be the 6th largest economy in the world, but our level of public debt is the largest of any G20 country. We are also a trading economy, which means our economy is large because of the cash flows through it, not the cash flows into it. A big difference.

The country's wealth which you point to to suggest that Britain can afford it's public sector pension bill doesn't actually belong to the government or the country. It belongs to the private individuals who have created it, either through their endeavours or by purchasing equity in businesses. I can only assume that you are proposing a raid on private wealth to continue to prop up the black hole of public sector pensions.

The only way out of this is to move everybody onto properly managed superannuation schemes which have the tax breaks and incentives to grow over time and fund pensions when they are paid. Get it right and we would provide fair, equitable, affordable pensions for all. Moreover, we would build a pot of investment money that could underwrite the infrastructure spending the country desperately needs. Instead, we continue to piss away cash from the current account.
 
#18
Read somewhere recently that annuity rates for pensions in the private sector are sinking?! a £million pot will only pay you £27,000 per annum if you want it index linked and half rate to your other half following your death. Looking at our redundancy programme I reckon any Lt Col and above will be in receipt of a figure like this on leaving! Alright for some eh?
I think you have seriously under-estimated the annual pension of a Lt Col leaving the service, particularly those on Late Entry Commissions.
 
#19
Dead right he has, Slipperman. If I were still serving, approaching retirement at full career with no further promotion beyond Lt Col, I would get a lump sum of 112k and an index linked pension of 37k a year. To achieve this level of pension index linked at 55 would require a pension pot well north of 2M quid.

Now look at salary and pension contributions. Making the very sweeping (and obviously flawed) assumption that I had earned my final salary throughout my career and that the MoD contributed 8% of that salary to my pension pot every month, I would have contributed just about 500 a month to my pension for 34 years. At a 5% annual compound growth, my pot would be worth around 500k. To generate a 2M pot, I would have needed to contribute an implausible 2k a month. In reality, 8% of my salary over my career would have generated a much smaller. If I live to 75, I would draw pension benefits worth 850k in cash terms at todays rates (ie no consideration for inflation, which is, in effect neutral as the pension is index linked).
You can all, no doubt, pick some big holes in my logic, but the scale remains the same.

I could do this exercise for any rank receiving a pension or for any public servant; the conclusion would be the same.
The pension benefits of the public sector employee grossly outweigh those in the private sector on a salary for salary basis and significantly outweigh the value of the contributing salary deductions.
 
#20
Well if you are concerned about the Likleyhood of your pension or not, you could always consider the Self Investment Route (its called SIPPs). This will let you take your pension pot at 55 and use the money to fund your own pension, you can't take your state pension but you can take any occupational you might have such as a military pension which isn't paying out. Tis could be of use if you have got to wait a few years before the pension does pay out, and you are in a no hope of a job scenario.

However, this is not for those who are of weak minds and spirits, as all the risk is yours (with some safe guards), and you really do need an excellent IFA to do the work for you. You will also have to pay the IFA out of your pocket as they no longer get commission from Insurance companies for the products they sell you. However the city slickers who do the investments on your behalf still get commission, usually 3%pa of the fund value, not just the growth made.

It's an option, not for everybody, but for a few they work well, you have just got to be one of the few.
Anyone leaving the Armed Forces at the IP point, who considers "cashing in" their Forces pension for the product you describe would seriously need to be certified. Unlike the guaranteed monthly pay cheque for life from Xafinity Paymaster, self Investment offers no concrete guarantee. Like you say, you would need balls of steel and serious powers of a Psychic to go down that route.
 

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