Real world example of public sector pension changes...
Discussion
Just thought i'd share this to give some sense of reality for anyone who keeps seeing this on the news. Have to admit i was a little baffled about how my pension contributions would change and even a little nervous.
Anyway, paperwork landed on my doorstep this morning and my contributions per month for an above average salary have gone up by...
...wait for it...
£24. TWENTY FOUR f
kING QUID A MONTH. I'd been stting myself wondering how bloody much i was going to lose and it turns out to be roughly six quid a week.
Scaremongering, striking fking aholes. I soiled my armour, i was so scared.
Anyway, paperwork landed on my doorstep this morning and my contributions per month for an above average salary have gone up by...
...wait for it...
£24. TWENTY FOUR f
kING QUID A MONTH. I'd been stting myself wondering how bloody much i was going to lose and it turns out to be roughly six quid a week.Scaremongering, striking f
king aholes. I soiled my armour, i was so scared.VinceFox said:
Just thought i'd share this to give some sense of reality for anyone who keeps seeing this on the news. Have to admit i was a little baffled about how my pension contributions would change and even a little nervous.
Anyway, paperwork landed on my doorstep this morning and my contributions per month for an above average salary have gone up by...
...wait for it...
£24. TWENTY FOUR fkING QUID A MONTH. I'd been stting myself wondering how bloody much i was going to lose and it turns out to be roughly six quid a week.
Scaremongering, striking fking aholes. I soiled my armour, i was so scared.
Puts it well into perspective deosn't it?Anyway, paperwork landed on my doorstep this morning and my contributions per month for an above average salary have gone up by...
...wait for it...
£24. TWENTY FOUR f
kING QUID A MONTH. I'd been stting myself wondering how bloody much i was going to lose and it turns out to be roughly six quid a week.Scaremongering, striking f
king aholes. I soiled my armour, i was so scared.About 8 years ago my Private Sector company announced that it was changing the pension contributions for its scheme. It was 'like it or lump it', basically they were trying to 'encourage' people to leave the scheme.
Contributions for me (not on big money, probably less than equivalent public sector job) went from £70 a month to £190 a month. That was hard to swallow. I dodnt go on strike though. No one lost their summer holiday, no one else was inconvenienced.
Well done OP for posting this 
As well as dispelling the myth about how much money is involved in this issue, you've done public sector workers a great service by showing that you are not all the money grabbing, strike happy types that get the most media attention
By the way, lovely Capri!
Cheers
As well as dispelling the myth about how much money is involved in this issue, you've done public sector workers a great service by showing that you are not all the money grabbing, strike happy types that get the most media attention
By the way, lovely Capri!
Cheers
Corsair7 said:
Puts it well into perspective deosn't it?
About 8 years ago my Private Sector company announced that it was changing the pension contributions for its scheme. It was 'like it or lump it', basically they were trying to 'encourage' people to leave the scheme.
Contributions for me (not on big money, probably less than equivalent public sector job) went from £70 a month to £190 a month. That was hard to swallow. I dodnt go on strike though. No one lost their summer holiday, no one else was inconvenienced.
So you didn't kick up a fuss and got screwed over.About 8 years ago my Private Sector company announced that it was changing the pension contributions for its scheme. It was 'like it or lump it', basically they were trying to 'encourage' people to leave the scheme.
Contributions for me (not on big money, probably less than equivalent public sector job) went from £70 a month to £190 a month. That was hard to swallow. I dodnt go on strike though. No one lost their summer holiday, no one else was inconvenienced.
Private pension companies have been ripping off their customers for years. But rather than doing anything about it private sector employees would rather play begger thy neighbour with public sector workers who do.
I'm sure the impact of the changes varies considerably depending on individual salary level etc.
What is really stupid is that according to the IFS it won't actually save the government diddly squat in reality.
So it's double stupid.
The government for causing unrest with pointless change.
And public servants for listening to agitators and not the facts, and not realising just how privileged they are anyway.
What is really stupid is that according to the IFS it won't actually save the government diddly squat in reality.
So it's double stupid.
The government for causing unrest with pointless change.
And public servants for listening to agitators and not the facts, and not realising just how privileged they are anyway.
shauniebabes said:
Private pension companies have been ripping off their customers for years.
Too true, but nowhere near as much as Grodon Brown did when he scrapped the pension fund ACT credits - that shafted a lot of people's pension plans. Those who were close to retirement suddenly had a huge gap in their projected funds and the rest of us were suddenly poorer (though in a less urgent way) too.Good on the OP for posting.
Slightly O/T is an interesting piece from the BBC in 2007, written by Evan Davies, about the Brown tax raid: http://www.bbc.co.uk/blogs/thereporters/evandavis/...
Evan Davies said:
So what does this whole story of the chancellor's first, big tax reform tell us? It doesn’t allow us to say he destroyed the pension system, for two reasons. Firstly there were enough other, bigger things going on that did more damage.
And secondly, it was open to us to keep our pensions alive, by investing more in them if we wanted to fill the hole he had left. The chancellor may have put an obstruction in the pensions road, but he wasn't driving the car that crashed into it. That was in the hands of employers who were free to increase contributions but chose instead to accelerate the closure of final salary schemes.
With the benefit of retrospect - what has happened to both private pension schemes and also now those in the public sector - I imagine Davies would now revise those opinions.And secondly, it was open to us to keep our pensions alive, by investing more in them if we wanted to fill the hole he had left. The chancellor may have put an obstruction in the pensions road, but he wasn't driving the car that crashed into it. That was in the hands of employers who were free to increase contributions but chose instead to accelerate the closure of final salary schemes.
Edited by Digga on Wednesday 8th February 10:25
Can I just say it is not the private sector business that has been screwing pensions but the government and legislation.
Companies used to run a final salary scheme. They had pension trustees and were able to make pretty much any investments they wanted and all was quite flexible. This worked very well, until legislators started to specify what safe investments they the pension schemes should invest in.(all because someone was a crook then fell off a boat).
This all appeared sensible until the safe investments ie gilts don't return the same returns, add in poorer actuarial returns and suddenly these pensions start to cost a lot more money to provide for.
Then you have Gordon taking the tax free divis away and it pretty much nails the nail in the coffin for final salary schemes.
So it isn't businesses its politicians who have stuck their oar in and knackered it up. It just takes the Public Sector longer to cotton on.
Companies used to run a final salary scheme. They had pension trustees and were able to make pretty much any investments they wanted and all was quite flexible. This worked very well, until legislators started to specify what safe investments they the pension schemes should invest in.(all because someone was a crook then fell off a boat).
This all appeared sensible until the safe investments ie gilts don't return the same returns, add in poorer actuarial returns and suddenly these pensions start to cost a lot more money to provide for.
Then you have Gordon taking the tax free divis away and it pretty much nails the nail in the coffin for final salary schemes.
So it isn't businesses its politicians who have stuck their oar in and knackered it up. It just takes the Public Sector longer to cotton on.
A little perspective on public sector pensions:
Me, Private sector:
I was in a defined benefit (final salary) scheme that worked on 1/60th of final salary accrued for every year in the scheme, with a retirement age of 60. I contributed at 5%.
This has now closed & been frozen. I'm now in a defined contribution (money purchase) scheme that has a nominal retirement age of 65 & my monthly contributions have gone up by +/- £200, before tax relief. I contribute at 10% & my employer at 15%.
Sounds like a raw deal? I'm not best pleased about it, although it's still better than any other option I could go for.
Missus, civil service - been there since age 17:
We've not paid any attention to any recent changes,if they affect her at all, & most of the previous fuss was about changes applicable to new starters, But a pension projection that she received a couple of years ago showed that if she retired at age 60 - after 43 years service, entire working life - she'd get a yearly pension of £14K with a lump sum, that has to be taken - no option to increase the yearly amount instead, of just under £30K.
She contributes at 1.5% (seems low, but it has always been a given that low wages in the civil service were offset by a good pension), her final salary scheme accrues at 1/80th per year, so a civil servant can not ever get a pension that's more than just over 1/2 their salary. I believe the retirement salary is now based on a career average rather than the last 2 years before retirement that was used previously.
Given that most civil servants are on comparatively low salaries you can see that they're not retiring on large sums.
As I understand it, anyone starting in the civil service in the last (10??) years would be on a less beneficial scheme than her.
Hardly the gold plated, film star wages, amount that civil servants are portrayed to receive is it?
I wouldn't like to retire on £14K after 43 years.
The politicians of all sides have been very vocal in pointing out that civil servants retire on an index linked pension, without mentioning that, except for a very small number of "Sir Humphry" types, it's an index linked small pension. They have played to the green eyed monster of the masses.
Me, Private sector:
I was in a defined benefit (final salary) scheme that worked on 1/60th of final salary accrued for every year in the scheme, with a retirement age of 60. I contributed at 5%.
This has now closed & been frozen. I'm now in a defined contribution (money purchase) scheme that has a nominal retirement age of 65 & my monthly contributions have gone up by +/- £200, before tax relief. I contribute at 10% & my employer at 15%.
Sounds like a raw deal? I'm not best pleased about it, although it's still better than any other option I could go for.
Missus, civil service - been there since age 17:
We've not paid any attention to any recent changes,if they affect her at all, & most of the previous fuss was about changes applicable to new starters, But a pension projection that she received a couple of years ago showed that if she retired at age 60 - after 43 years service, entire working life - she'd get a yearly pension of £14K with a lump sum, that has to be taken - no option to increase the yearly amount instead, of just under £30K.
She contributes at 1.5% (seems low, but it has always been a given that low wages in the civil service were offset by a good pension), her final salary scheme accrues at 1/80th per year, so a civil servant can not ever get a pension that's more than just over 1/2 their salary. I believe the retirement salary is now based on a career average rather than the last 2 years before retirement that was used previously.
Given that most civil servants are on comparatively low salaries you can see that they're not retiring on large sums.
As I understand it, anyone starting in the civil service in the last (10??) years would be on a less beneficial scheme than her.
Hardly the gold plated, film star wages, amount that civil servants are portrayed to receive is it?
I wouldn't like to retire on £14K after 43 years.
The politicians of all sides have been very vocal in pointing out that civil servants retire on an index linked pension, without mentioning that, except for a very small number of "Sir Humphry" types, it's an index linked small pension. They have played to the green eyed monster of the masses.
re: Private (defined contribution) Pensions: Having worked for a company which developed pension and annuity administration software, I have stopped paying into a private pension. The sheer complexity of the charging and fee arrangements on pension is quite staggering, and always represented the most costly elements of the development work.
Once you finally make it to retirement, the annuity company will then start by taking <> 5% of your fund, before they even think about giving you an annuity where you have to live circa 20 years just to see your fund value back.
Far better to save/invest in products which you can retain an element of control, with transparent costs
Once you finally make it to retirement, the annuity company will then start by taking <> 5% of your fund, before they even think about giving you an annuity where you have to live circa 20 years just to see your fund value back.
Far better to save/invest in products which you can retain an element of control, with transparent costs
Camoradi said:
re: Private (defined contribution) Pensions: Having worked for a company which developed pension and annuity administration software, I have stopped paying into a private pension. The sheer complexity of the charging and fee arrangements on pension is quite staggering, and always represented the most costly elements of the development work.
Once you finally make it to retirement, the annuity company will then start by taking <> 5% of your fund, before they even think about giving you an annuity where you have to live circa 20 years just to see your fund value back.
Far better to save/invest in products which you can retain an element of control, with transparent costs
Totally understand. I find the blatant obfuscation of pension fund overheads scandalous. If the FSA had any bOnce you finally make it to retirement, the annuity company will then start by taking <> 5% of your fund, before they even think about giving you an annuity where you have to live circa 20 years just to see your fund value back.
Far better to save/invest in products which you can retain an element of control, with transparent costs
ks or teeth it would have addressed this; I defy most people to understand what they are actually being charged and how.Leadfoot said:
A little perspective on public sector pensions:
Me, Private sector:
I was in a defined benefit (final salary) scheme that worked on 1/60th of final salary accrued for every year in the scheme, with a retirement age of 60. I contributed at 5%.
This has now closed & been frozen. I'm now in a defined contribution (money purchase) scheme that has a nominal retirement age of 65 & my monthly contributions have gone up by +/- £200, before tax relief. I contribute at 10% & my employer at 15%.
Sounds like a raw deal? I'm not best pleased about it, although it's still better than any other option I could go for.
Missus, civil service - been there since age 17:
We've not paid any attention to any recent changes,if they affect her at all, & most of the previous fuss was about changes applicable to new starters, But a pension projection that she received a couple of years ago showed that if she retired at age 60 - after 43 years service, entire working life - she'd get a yearly pension of £14K with a lump sum, that has to be taken - no option to increase the yearly amount instead, of just under £30K.
She contributes at 1.5% (seems low, but it has always been a given that low wages in the civil service were offset by a good pension), her final salary scheme accrues at 1/80th per year, so a civil servant can not ever get a pension that's more than just over 1/2 their salary. I believe the retirement salary is now based on a career average rather than the last 2 years before retirement that was used previously.
Given that most civil servants are on comparatively low salaries you can see that they're not retiring on large sums.
As I understand it, anyone starting in the civil service in the last (10??) years would be on a less beneficial scheme than her.
Hardly the gold plated, film star wages, amount that civil servants are portrayed to receive is it?
I wouldn't like to retire on £14K after 43 years.
The politicians of all sides have been very vocal in pointing out that civil servants retire on an index linked pension, without mentioning that, except for a very small number of "Sir Humphry" types, it's an index linked small pension. They have played to the green eyed monster of the masses.
£14k p.a. (with inflation increases??) is worth around £500k.Me, Private sector:
I was in a defined benefit (final salary) scheme that worked on 1/60th of final salary accrued for every year in the scheme, with a retirement age of 60. I contributed at 5%.
This has now closed & been frozen. I'm now in a defined contribution (money purchase) scheme that has a nominal retirement age of 65 & my monthly contributions have gone up by +/- £200, before tax relief. I contribute at 10% & my employer at 15%.
Sounds like a raw deal? I'm not best pleased about it, although it's still better than any other option I could go for.
Missus, civil service - been there since age 17:
We've not paid any attention to any recent changes,if they affect her at all, & most of the previous fuss was about changes applicable to new starters, But a pension projection that she received a couple of years ago showed that if she retired at age 60 - after 43 years service, entire working life - she'd get a yearly pension of £14K with a lump sum, that has to be taken - no option to increase the yearly amount instead, of just under £30K.
She contributes at 1.5% (seems low, but it has always been a given that low wages in the civil service were offset by a good pension), her final salary scheme accrues at 1/80th per year, so a civil servant can not ever get a pension that's more than just over 1/2 their salary. I believe the retirement salary is now based on a career average rather than the last 2 years before retirement that was used previously.
Given that most civil servants are on comparatively low salaries you can see that they're not retiring on large sums.
As I understand it, anyone starting in the civil service in the last (10??) years would be on a less beneficial scheme than her.
Hardly the gold plated, film star wages, amount that civil servants are portrayed to receive is it?
I wouldn't like to retire on £14K after 43 years.
The politicians of all sides have been very vocal in pointing out that civil servants retire on an index linked pension, without mentioning that, except for a very small number of "Sir Humphry" types, it's an index linked small pension. They have played to the green eyed monster of the masses.
Her contributions accumulated with interest are probably less than £100k.
And she bears no investment or longevity risk.
That is why it is 'gold-plated'.
HTH
Sidicks
Camoradi said:
re: Private (defined contribution) Pensions: Having worked for a company which developed pension and annuity administration software, I have stopped paying into a private pension. The sheer complexity of the charging and fee arrangements on pension is quite staggering, and always represented the most costly elements of the development work.
Old pension products were more complicated. New ones are much less so.Camoradi said:
Once you finally make it to retirement, the annuity company will then start by taking <> 5% of your fund
Not true.Camoradi said:
, before they even think about giving you an annuity where you have to live circa 20 years just to see your fund value back.
Only if you are expected to live 20+ years.. (which therefore seems very reasonable!)Camoradi said:
Far better to save/invest in products which you can retain an element of control, with transparent costs
Flexibility? YesTax relief? No
Transparent? Varies
Sidicks
sidicks said:
Camoradi said:
re: Private (defined contribution) Pensions: Having worked for a company which developed pension and annuity administration software, I have stopped paying into a private pension. The sheer complexity of the charging and fee arrangements on pension is quite staggering, and always represented the most costly elements of the development work.
Old pension products were more complicated. New ones are much less so.Camoradi said:
Once you finally make it to retirement, the annuity company will then start by taking <> 5% of your fund
Not true.Camoradi said:
, before they even think about giving you an annuity where you have to live circa 20 years just to see your fund value back.
Only if you are expected to live 20+ years.. (which therefore seems very reasonable!)Camoradi said:
Far better to save/invest in products which you can retain an element of control, with transparent costs
Flexibility? YesTax relief? No
Transparent? Varies
Sidicks
2) I have seen plenty of annuity quotes with 5% fee taken at outset
3) If you retire at 65, and live to average age, you'd hope they might actually do something with your money, perhaps invest it and pay you some of the profits?
4) Are you in pension / annuity sales?
sidicks said:
£14k p.a. (with inflation increases??) is worth around £500k.
Her contributions accumulated with interest are probably less than £100k.
And she bears no investment or longevity risk.
[Qb]That[/b] is why it is 'gold-plated'.
HTH
Sidicks
Agreed. She would never be able to afford a pension like that. Someone on £100k wouldn't. It's an uncosted bribe, a guarantee of a future standard of living, and essentially a very exspensive way of buying votes. Want to know why your council tax is rising ? That's why. Personally I'd give them back what they'd payed in and tel them to do one. Her contributions accumulated with interest are probably less than £100k.
And she bears no investment or longevity risk.
[Qb]That[/b] is why it is 'gold-plated'.
HTH
Sidicks
Camoradi said:
1) Accepted. Some of the more dubious arrangements are no longer permitted
The main reason for the previous arrangements was because the policyholder wanted advice but didn't want to pay for it up front and hence it had to be recouped over the term of the contract.Camoradi said:
2) I have seen plenty of annuity quotes with 5% fee taken at outset
Not standard and certainly not a compulsory requirementCamoradi said:
3) If you retire at 65, and live to average age, you'd hope they might actually do something with your money, perhaps invest it and pay you some of the profits?
They invest in low risk assets to provide guaranteed benefits. On top of which they have regualtory reuqirements to hold additional reserve capital and obviously incur expenses in looking after these policies.Camoradi said:
4) Are you in pension / annuity sales?
No, but I understand how this stuff works. It seems you don't understand it as well as you think!
Sidicks
Leadfoot said:
A little perspective on public sector pensions:
.....
Hardly the gold plated, film star wages, amount that civil servants are portrayed to receive is it?
I wouldn't like to retire on £14K after 43 years.
The politicians of all sides have been very vocal in pointing out that civil servants retire on an index linked pension, without mentioning that, except for a very small number of "Sir Humphry" types, it's an index linked small pension. They have played to the green eyed monster of the masses.
This is similar to a friend of mine who's been in the CS since the mid/late 70s. He also pays 1.5% 'widows and orphans' fund iirc, you're not looking at that and thinking its the cont are you?.....
Hardly the gold plated, film star wages, amount that civil servants are portrayed to receive is it?
I wouldn't like to retire on £14K after 43 years.
The politicians of all sides have been very vocal in pointing out that civil servants retire on an index linked pension, without mentioning that, except for a very small number of "Sir Humphry" types, it's an index linked small pension. They have played to the green eyed monster of the masses.
Seems to me a big difference in opportunity and reward between the Senior CS and the rest.
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