Final salary pension - a question.

[iantr]

[sidicks]

I responded for the benefit of others, not you.

But if you think that trolling and spoiling another finance thread is helpful, then that says a lot about you.

On your way now, back to the cartoons sub-forum?

Edited by sidicks on Thursday 18th August 22:57

[iantr]

sidicks said:

I responded for the benefit of others, not you.

But if you think that trolling and spooling another finance thread is helpful, then that says a lot about you.

On your way now, back to the cartoons sub--forum?

I see what you did there.

[Ozzie Osmond]

All I would add to this DC/DB discussion is one very simple point - all that can be "got out" from any scheme is "what's gone in plus investment return". Everything else is just a description of whether the returns are paid out individually or pooled, with the backing of a pension promise from a solvent employer.

The BIG difference is who carries the risk - employer (DB) or employee (DC)

Now that private sector DB schemes have adopted such risk-averse investment strategies - partly due to legislation - there is every opportunity for employees to earn an excellent pension from a DC arrangement costing the same amount. DC is not necessarily "worse".

What is obviously unsustainable is for people to think that for 5% of earnings paid in for 40 years they can draw out 50% of earnings for 25 years of retirement.... Hence the massive public sector problem.

Edited by Ozzie Osmond on Friday 19th August 14:13

[Ozzie Osmond]

sidicks said:

For those that can afford it, higher contributions and higher benefits is likely to be the best thing to do. However many people, particularly those on lower wages, will not be able to afford increased contributions, so reduced benefits makes more sense for them.

^^^ This, for the "cost" reasons outlined above.

[mph1977]

Ozzie Osmond said:

<snip>

What is obviously unsustainable is for people to think that for 5% of earnings paid in for 40 years they can draw out 50% of earnings for 25 years of retirement.... Hence the massive public sector problem.

Edited by Ozzie Osmond on Friday 19th August 14:13

as usual the mis representation of the Public secotr schemes ...

[sidicks]

mph1977 said:

as usual the mis representation of the Public secotr schemes ...

I'm sure you will enlighten us with your 'expertise'...

[mph1977]

sidicks said:

mph1977 said:

as usual the mis representation of the Public secotr schemes ...

I'm sure you will enlighten us with your 'expertise'...

so you deny that schemes with 5% employee contribution are vanishingly rare ?

so you deny the sums paid by employers to the scheme managers as employer contributions ?

[sidicks]

mph1977 said:

so you deny that schemes with 5% employee contribution are vanishingly rare ?

I've said no such thing.

Maybe the previous poster was exaggerating, but I think there are still plenty of schemes with sub 10% employee contribution for some members?

mph1977 said:

so you deny the sums paid by employers to the scheme managers as employer contributions ?

The employer is the taxpayer - that's where the money comes from - sorry you don't understand how public services are funded!

HTH

Edited by sidicks on Friday 19th August 16:38

[Sheepshanks]

sidicks said:

So not content with the massive existing liabilities of Public sector final salary schemes, you think the government (taxpayer) should take on significantly more risk?

Not sure i agree!!

Ultimately if people don't have sufficient income in retirement then it becomes the Government's problem anyway.

[sidicks]

Sheepshanks said:

Ultimately if people don't have sufficient income in retirement then it becomes the Government's problem anyway.

But the people who could afford to invest in this wouldn't be the ones requiring government subsidy due to having insufficient income!

[Sheepshanks]

sidicks said:

But the people who could afford to invest in this wouldn't be the ones requiring government subsidy due to having insufficient income!

Isn't a big part of the problem that many people who could afford to invest choose not to?

[sidicks]

Sheepshanks said:

Isn't a big part of the problem that many people who could afford to invest choose not to?

Again, the ones that could afford to invest but choose not to, are unlikely to be the ones the government needs to subsidise in retirement1

[Ozzie Osmond]

All would say is that people who are planning to throw themselves upon the mercy of the state in old age are in for a nasty surprise. There simply won't be enough money to go round and the kids aren't going to fall for it - they'll have enough problems of their own.

[Crafty_]

Government may change final salary pension laws to help companies: http://www.telegraph.co.uk/pensions-retirement/new...

hmmm....

[Welshbeef]

Crafty_ said:

Government may change final salary pension laws to help companies: http://www.telegraph.co.uk/pensions-retirement/new...

hmmm....

This would have a disproportionate impact to the public sector schemes. Basically id say it's fair game that whenever the annual budget is in deficit you apply these rules and only come surplus it's changed.


If however public sector pensions are not changed then it will be unbelievably unfair.

[sidicks]

Accrued benefits should be protected, otherwise a dangerous precedent is set - it's future accrual that needs to be addressed.

[Welshbeef]

sidicks said:

Accrued benefits should be protected, otherwise a dangerous precedent is set - it's future accrual that needs to be addressed.

I'd not be totally convinced about that - from a fairness perspective why should current workers have to pay in he most and get the least out over existing retired or deferred pensions?


Personally I hope it isn't as I'm on DC currently my DB are all deferred so I'd lose out not good.

[sidicks]

Welshbeef said:

I'd not be totally convinced about that - from a fairness perspective why should current workers have to pay in he most and get the least out over existing retired or deferred pensions?

Existing accrued benefits should be preserved - those promises have already been made.

Future accrual should change simply because the costs of future accrual is expected to be more expensive!

[Ginge R]

Existing and accrued DB public sector pensions have already been hammered. Annual rises of next to nothing (ask me about it!) and annual pay increases of 1% for the past five years or so have meant that the state has effectively, deflated away lots of the existing liability. So, the line between past and future has become blurred anyway. Insidious clauses in pension legislation c.2012 also give the state flexibility and lots of scope to further revise downwards (read: cripple) pensioners income expectations without the need for further primary legislation.