Final salary pension schemes should end
Discussion
sidicks said:
Sticks. said:
Hmm, I struggle to call £5k gilt edged though I see your point. As I say though, pre 2001 govt offered pensions etc rather than competitive pay.
The competitive pay aspect is old news and many reports confirm that gap no longer exists.You also need to remember that a £5k index-linked annuity at age 60 is broadly equivalent to a £10k non-escalating annuity at age 65....
Sidicks
Just to set aside the sniping from both sides.
Is not the pace of change a significant problem?
To say a pension system / benefits will change significantly is far different depending where you are in your working lifetime.
The prospect of going from final salary to career average is very different when viewed by a thirty year old to someone late fifties say.
The younger person has time to take some effective action, the person with maybe 5-6 years to go has not got the same options, even if they bung away 15% of their salary, aiui max allowed by HMRC into a employer scheme.
Is not the pace of change a significant problem?
To say a pension system / benefits will change significantly is far different depending where you are in your working lifetime.
The prospect of going from final salary to career average is very different when viewed by a thirty year old to someone late fifties say.
The younger person has time to take some effective action, the person with maybe 5-6 years to go has not got the same options, even if they bung away 15% of their salary, aiui max allowed by HMRC into a employer scheme.
F i F said:
Just to set aside the sniping from both sides.
Is not the pace of change a significant problem?
To say a pension system / benefits will change significantly is far different depending where you are in your working lifetime.
The prospect of going from final salary to career average is very different when viewed by a thirty year old to someone late fifties say.
The younger person has time to take some effective action, the person with maybe 5-6 years to go has not got the same options, even if they bung away 15% of their salary, aiui max allowed by HMRC into a employer scheme.
Definitely it's an issue, but an issue being faced by employees of private sector comapanies every week. Where I work they announced last week the final salary scheme was being closed to existing members & they would have to switch to defined benefit. The majority of employers who this affects are in their 50's with as you say little scope to make up the shortfall on the pension they had been planning for. Is not the pace of change a significant problem?
To say a pension system / benefits will change significantly is far different depending where you are in your working lifetime.
The prospect of going from final salary to career average is very different when viewed by a thirty year old to someone late fifties say.
The younger person has time to take some effective action, the person with maybe 5-6 years to go has not got the same options, even if they bung away 15% of their salary, aiui max allowed by HMRC into a employer scheme.
GT03ROB said:
F i F said:
Just to set aside the sniping from both sides.
Is not the pace of change a significant problem?
To say a pension system / benefits will change significantly is far different depending where you are in your working lifetime.
The prospect of going from final salary to career average is very different when viewed by a thirty year old to someone late fifties say.
The younger person has time to take some effective action, the person with maybe 5-6 years to go has not got the same options, even if they bung away 15% of their salary, aiui max allowed by HMRC into a employer scheme.
Definitely it's an issue, but an issue being faced by employees of private sector comapanies every week. Where I work they announced last week the final salary scheme was being closed to existing members & they would have to switch to defined benefit. The majority of employers who this affects are in their 50's with as you say little scope to make up the shortfall on the pension they had been planning for. Is not the pace of change a significant problem?
To say a pension system / benefits will change significantly is far different depending where you are in your working lifetime.
The prospect of going from final salary to career average is very different when viewed by a thirty year old to someone late fifties say.
The younger person has time to take some effective action, the person with maybe 5-6 years to go has not got the same options, even if they bung away 15% of their salary, aiui max allowed by HMRC into a employer scheme.
Someone with only 1 year until retirement is only missing out on one years' final salary accrual (and will instead get a money purchase benefit for this component) and will still have 39/40ths of the expected final salary benefit.
Someone 10 years form retirement might now be missing out on 10/40ths of the expecetd final salary benefit but will have 10 years to plan accordingly.
I can't see a reason as to why this is unfair, and as stated, it has applied to private sector schemes for some time.
Sidicks
sidicks said:
GT03ROB said:
F i F said:
Just to set aside the sniping from both sides.
Is not the pace of change a significant problem?
To say a pension system / benefits will change significantly is far different depending where you are in your working lifetime.
The prospect of going from final salary to career average is very different when viewed by a thirty year old to someone late fifties say.
The younger person has time to take some effective action, the person with maybe 5-6 years to go has not got the same options, even if they bung away 15% of their salary, aiui max allowed by HMRC into a employer scheme.
Definitely it's an issue, but an issue being faced by employees of private sector comapanies every week. Where I work they announced last week the final salary scheme was being closed to existing members & they would have to switch to defined benefit. The majority of employers who this affects are in their 50's with as you say little scope to make up the shortfall on the pension they had been planning for. Is not the pace of change a significant problem?
To say a pension system / benefits will change significantly is far different depending where you are in your working lifetime.
The prospect of going from final salary to career average is very different when viewed by a thirty year old to someone late fifties say.
The younger person has time to take some effective action, the person with maybe 5-6 years to go has not got the same options, even if they bung away 15% of their salary, aiui max allowed by HMRC into a employer scheme.
Someone with only 1 year until retirement is only missing out on one years' final salary accrual (and will instead get a money purchase benefit for this component) and will still have 39/40ths of the expected final salary benefit.
Someone 10 years form retirement might now be missing out on 10/40ths of the expecetd final salary benefit but will have 10 years to plan accordingly.
I can't see a reason as to why this is unfair, and as stated, it has applied to private sector schemes for some time.
Sidicks
Certainly with the completely unfunded aspect of many public sector schemes I can see a different approach having some financial attraction albeit none from a political / employee relations sense. Note:- I can't see them actually going down this line tbh, ie not protecting accrued benefits as it is the only way to introduce any degree of allowing people time to adjust.
Off-topic: To some extent it's a similar argument to student tuition fees. If your kids are 10 years plus away from university you/they have some chance to deal with the proposals, but if doing their A-levels already.
sidicks said:
GT03ROB said:
F i F said:
Just to set aside the sniping from both sides.
Is not the pace of change a significant problem?
To say a pension system / benefits will change significantly is far different depending where you are in your working lifetime.
The prospect of going from final salary to career average is very different when viewed by a thirty year old to someone late fifties say.
The younger person has time to take some effective action, the person with maybe 5-6 years to go has not got the same options, even if they bung away 15% of their salary, aiui max allowed by HMRC into a employer scheme.
Definitely it's an issue, but an issue being faced by employees of private sector comapanies every week. Where I work they announced last week the final salary scheme was being closed to existing members & they would have to switch to defined benefit. The majority of employers who this affects are in their 50's with as you say little scope to make up the shortfall on the pension they had been planning for. Is not the pace of change a significant problem?
To say a pension system / benefits will change significantly is far different depending where you are in your working lifetime.
The prospect of going from final salary to career average is very different when viewed by a thirty year old to someone late fifties say.
The younger person has time to take some effective action, the person with maybe 5-6 years to go has not got the same options, even if they bung away 15% of their salary, aiui max allowed by HMRC into a employer scheme.
Someone with only 1 year until retirement is only missing out on one years' final salary accrual (and will instead get a money purchase benefit for this component) and will still have 39/40ths of the expected final salary benefit.
Someone 10 years form retirement might now be missing out on 10/40ths of the expecetd final salary benefit but will have 10 years to plan accordingly.
I can't see a reason as to why this is unfair, and as stated, it has applied to private sector schemes for some time.
Sidicks
GT03ROB said:
Even with 20 plus years of defined benefit contributions I can't make up the shortfall of 1/4 final salary unless I jack my contributions up to equal 1/4 of my current salary.
Hence the logical conclusion that with current longevity and interest rates, final salary pensions schemes are unaffordable for both private and public sectors and should be phased out!Sidicks
sidicks said:
GT03ROB said:
Even with 20 plus years of defined benefit contributions I can't make up the shortfall of 1/4 final salary unless I jack my contributions up to equal 1/4 of my current salary.
Hence the logical conclusion that with current longevity and interest rates, final salary pensions schemes are unaffordable for both private and public sectors and should be phased out!Sidicks
Really must concentrate harder on picking my lottery numbers this week........
sidicks said:
Hence the logical conclusion that with current longevity and interest rates, final salary pensions schemes are unaffordable for both private and public sectors and should be phased out!
So the question becomes, who should pay and how much? Earning an adequate pension at age 65 costs roughly 12% of lifetime earnings; a decent pension costs 16% and a good pension costs 20%. In other words 12%, 16% or 20% "invested" each and every year of someone's working life.Let's now assume the government is going to make participation in a pension scheme compulsory.
What % do people think is realistic to be contributed by,
A. Their employer?, and
B. Themselves?
[If self-employed, add A+B!]
Ozzie Osmond said:
So the question becomes, who should pay and how much? Earning an adequate pension at age 65 costs roughly 12% of lifetime earnings; a decent pension costs 16% and a good pension costs 20%. In other words 12%, 16% or 20% "invested" each and every year of someone's working life.
For comparison, the number I've seen for a typical final salary scheme is more like 30%...!!Edited by sidicks on Tuesday 12th October 15:18
Tsippy said:
Quinny said:
pugwash4x4 said:
Yes i do- do you understand just how little work the average public sector worker actually does? Not all to be sure, but some of the stuff I've seen beggars belief.
Yeah, those lazy, nurses, coppers, firemen, teachers doctors etc.... bloody spongers the lot of them
Your insulting comments are misguided. I would still not think twice in rescuing you and your family from harm. This is why people like me should have their pensions left alone. We are professional take risks when it goes wrong to help you plus we have paid £300 per month into them.
mshpool said:
This is why people like me should have their pensions left alone. We are professional take risks when it goes wrong to help you plus we have paid £300 per month into them.
You should have your pensions accrued to date left alone, and future pension accrual based on an affordable scale.Having said that, changes to benefits accured to date would be consistent with what happened to the private sector under Gordon Clown. Still, two wrongs do not make a right!
Sidicks
sidicks said:
mshpool said:
This is why people like me should have their pensions left alone. We are professional take risks when it goes wrong to help you plus we have paid £300 per month into them.
You should have your pensions accrued to date left alone, and future pension accrual based on an affordable scale.Having said that, changes to benefits accured to date would be consistent with what happened to the private sector under Gordon Clown. Still, two wrongs do not make a right!
Sidicks
Final salary is in no way either a 'pension' or an investment vehicle, its is a political stunt, a guarantee of a future standard of living, you can see why labour in particular fell in love with its abilty to build a voting base.
el stovey said:
I'm not sure why people on here get so excited at the prospect of someone else having their pension scheme closed.
it's because of that wel known logical fallacy of 'I pay your wages' directed towards anyone who works in the public sector. and exactly how many private sector final salary schemes became untenable because of the Management taking 'contribution holidays' and effectively gambling an increasing proportion of the pension fund on the stock market.
mix in the myths about public sector sick pay and the gold plated pensions that MPs and high graded whitehall snivel serpents get ...
it's unsuprising that the average daily wail lower middle mangement functionary or the average red top reading NMW earner swallows the lies that the popular press put about ...
sidicks said:
el stovey said:
Don't you think it's fair that they continue to get their agreed pension?
The agreement was (typically) to provide a pension of 1/60th of final salary for each year worked. That commitment will still remain in place for past accrual.There is no reason why that this benefit should not be changed for the future either by requiring higher contributions or by providing the same benefit at a later date.
Many private sector employees also started with a final salary pension scheme which was subsequently removed when it was found to be unaffordable. There is no reason why the public sector should be any different.
Sidicks
hpow many private sector FS schemes became unaffordable due to the contribution holidays taken by the employers in favour of reporting short term higher profits and risk profile of equity investments over exposing what was in the fund to the vagureries of the international financial markets ?
pugwash4x4 said:
The choices used to be:
Work in the public sector with no chance of being made redundant/being sacked/having to work particularly hard/take much personal risk BUT on the flop side not get paid much during your working life, but get a good pension
OR
work privately with increased risk of losing your job, getting pair better than public sector, but have to negotiate your own pension.
The choices now are:
Public sector- as before
Private sector- get shafted every which way, earn less, pensioned less, far greater risk etc etc but STILL pay the same taxes for the public sector as above.
public sector often forgets that its our taxes that pays their pensions!
what a suprise , a posting based solely in jealousy and relying solely on th myth that the entire public sector runs like labour run councils or the byzantine world of the Sir Humphreys in the Whitehall snivel serpentry Work in the public sector with no chance of being made redundant/being sacked/having to work particularly hard/take much personal risk BUT on the flop side not get paid much during your working life, but get a good pension
OR
work privately with increased risk of losing your job, getting pair better than public sector, but have to negotiate your own pension.
The choices now are:
Public sector- as before
Private sector- get shafted every which way, earn less, pensioned less, far greater risk etc etc but STILL pay the same taxes for the public sector as above.
public sector often forgets that its our taxes that pays their pensions!
Just complete the cliche bingo an 'I pay your wages' statement ...
turbobloke said:
What is unaffordable, is unaffordable. If it's so, and the evidence seems to be clear but a read of the report should confirm (if it's of the required quality), then the country can't afford it.
What has firemen, nurses and other job titles got to do with "we can't afford it"?
how much would you expect a Graduate, with post graduate qualifications , 10 years experience and team coordination / team leader skills to get , especially if their role was 'life critical' and 'mission critical' .... What has firemen, nurses and other job titles got to do with "we can't afford it"?
the Answer in the NHS is top of band 5 - 27 534 gbp , no car , no computer, no phone, no private healthcare, hot desking 10 : 1 for access to a computer ...
mph1977 said:
el stovey said:
I'm not sure why people on here get so excited at the prospect of someone else having their pension scheme closed.
it's because of that wel known logical fallacy of 'I pay your wages' directed towards anyone who works in the public sector. and exactly how many private sector final salary schemes became untenable because of the Management taking 'contribution holidays' and effectively gambling an increasing proportion of the pension fund on the stock market.
mix in the myths about public sector sick pay and the gold plated pensions that MPs and high graded whitehall snivel serpents get ...
it's unsuprising that the average daily wail lower middle mangement functionary or the average red top reading NMW earner swallows the lies that the popular press put about ...
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