More years drawing a pension than contributing?
Discussion
Saw this car related article: http://webcache.googleusercontent.com/search?q=cac...
And, while having nothing but respect for the work the chap has spent his life doing - it really made me ponder the 'real economics' of people retiring early to spend more years drawing a monthly income far in excess of the original monthly contributions and for a much longer period.
No investment strategy could possibly fund these lifestyles / lifespans.
I know of so many people of this chap's age group with timeshares in Portugal, sportscar in the garage, etc and they're just early retired run of the mill public servants, teachers, fire folks, etc etc
Future generations will never see the like.
And, while having nothing but respect for the work the chap has spent his life doing - it really made me ponder the 'real economics' of people retiring early to spend more years drawing a monthly income far in excess of the original monthly contributions and for a much longer period.
No investment strategy could possibly fund these lifestyles / lifespans.
I know of so many people of this chap's age group with timeshares in Portugal, sportscar in the garage, etc and they're just early retired run of the mill public servants, teachers, fire folks, etc etc
Future generations will never see the like.
http://www.bbc.co.uk/programmes/b07pd34k
In this programme, people discuss their pensions and lives in their sixties and beyond.
9 minutes in - a couple, 72 and 69 years of age, retired primary school headteacher and a retired police inspector, big house and big car - both retired on individual platinum public service pensions larger than the average annual salary of £28,000 - in retirement!
Nice enough folks - but wow!
In this programme, people discuss their pensions and lives in their sixties and beyond.
9 minutes in - a couple, 72 and 69 years of age, retired primary school headteacher and a retired police inspector, big house and big car - both retired on individual platinum public service pensions larger than the average annual salary of £28,000 - in retirement!
Nice enough folks - but wow!
Lucas CAV said:
Just curious as to what your point is?
Surely every person on the planet knows about public sector pensions - it has been discussed to death on here.
I used to think surely everybody knows how to make a Blue Peter Christmas mobile - they've been doing it for years - but they kept showing us.Surely every person on the planet knows about public sector pensions - it has been discussed to death on here.
Not everybody knows everything at the same time - some people may never know everything - poor devils!
Some media reports are particularly good at illustrating issues with pensions - the newspaper article and radio report brought home to me now, the immediate unaffordabilty of the cost of young pensioners' incomes right now.
98elise said:
s3fella said:
The only people I know who have done or are planning "early" retirement, ie in their 50's are public sector workers, and all are couples where both work in public sector. Now that is not to say that all the public sector people I know take early retirement or are planning to.
I'm planning to retire at 55 and the only public sector work I've done is a stint in the forces with only 6 years qualifying for pension (so very small).I've invested and worked towards it as a goal.
Someone I work with is retiring at 40, but to be fair he is moving to a very cheap country where is money will go very far.
The DI and headteacher mentioned at the beginning of the thread on pensions of more than £28k each can only achieve these incomes through the contributions of others.
So often, people defend 'taking' by saying 'well, I paid in my whole life'
But they don't accept that they didn't pay in but a fraction of what they're taking out and that there may be an element of injustice in that.
The headteacher (primary) was 72, so I'm guessing retired (female so at least) 7 years on more than £28k.
Life span for a woman could easily hit the late 80s or more with free NHS care and prescriptions and winter heating allowance and old age pension ont top.
Let's be wildly speculative, and giver her 20 more years + 7 already lived on £28k and the same again for her partner, although he'll possible have a shorter lifespan but may have retired earlier.
The headteacher may have worked the full 40 years but not all as a headteacher and a lot on less than £28k.
How many years to police have to work before retirement on full whack?
There's no way either of them contributed anything like what they are taking out and there's no way they could have contributed enough to get those incomes.
That's a lot of other people's money.
Derek Smith said:
Retired in his early 50s did he? From the police?
It is odd that on PH, where the cry of jealousy is oft heard, we don't hear it when people complain about someone with a better pension than theirs.
When I joined the police, if I'd had another child I could have claimed supplementary benefit. But I still paid 11.5% of gross into a pension. In fact it was much more than that and the figure is merely base.
Wages were cut because of a good pension, by 5% or so. In other words the contributions were 15.5%. But that was not all. The pay cut went for overtime as well, so all the extra hours I worked, and for years I was working all but three days a month, I took an additional cut in pay, the majority of my income in fact, to pay for my pension being so good.
I was headhunted once and my pension contributions explained to me in a simple way. The figure they used was around 18%.
I would have got a better pension if I'd gone with them and been promoted once. I'd also have share options, bonuses and more. But I chose to stick with the police because of the pension, not because it was better - it was worse that what I was offered - but because of the way the pension was run. It ensured that if I'd left the police at that time, all I'd get back would be my contributions: no interest. The pension was designed to stop police officers leaving at 5-8 years, where there was a 50% wastage.
A good pension, but one that cost. If you wanted to work for low wages for years, to be stuck in a job financially, and then moaned at by the use of way off the mark stats, then it was open to you. But you chose another job, and now want to moan.
I'm ex police. I retired in 2005 and since then have been working in my own little business. I also wish houses were cheaper in Cornwall. As for his house being paid for, he no doubt took out a 25-year mortgage that most of us were limited to back in those days. If he's got a full pension then he's worked for more than 25 years. So what's the problem with it being paid for?
It's interesting to get those percentages - very informative and helps with context but more useful if you know what the actual income is.It is odd that on PH, where the cry of jealousy is oft heard, we don't hear it when people complain about someone with a better pension than theirs.
When I joined the police, if I'd had another child I could have claimed supplementary benefit. But I still paid 11.5% of gross into a pension. In fact it was much more than that and the figure is merely base.
Wages were cut because of a good pension, by 5% or so. In other words the contributions were 15.5%. But that was not all. The pay cut went for overtime as well, so all the extra hours I worked, and for years I was working all but three days a month, I took an additional cut in pay, the majority of my income in fact, to pay for my pension being so good.
I was headhunted once and my pension contributions explained to me in a simple way. The figure they used was around 18%.
I would have got a better pension if I'd gone with them and been promoted once. I'd also have share options, bonuses and more. But I chose to stick with the police because of the pension, not because it was better - it was worse that what I was offered - but because of the way the pension was run. It ensured that if I'd left the police at that time, all I'd get back would be my contributions: no interest. The pension was designed to stop police officers leaving at 5-8 years, where there was a 50% wastage.
A good pension, but one that cost. If you wanted to work for low wages for years, to be stuck in a job financially, and then moaned at by the use of way off the mark stats, then it was open to you. But you chose another job, and now want to moan.
I'm ex police. I retired in 2005 and since then have been working in my own little business. I also wish houses were cheaper in Cornwall. As for his house being paid for, he no doubt took out a 25-year mortgage that most of us were limited to back in those days. If he's got a full pension then he's worked for more than 25 years. So what's the problem with it being paid for?
When I worked in the NHS in the 80s, I was on under £5000 for the first 3 years so £400 ish a month - pension contributions were compulsory - no idea what they were but 15% would have been hard although - what's that? £60? sounds like nothing.
I bought a house that cost £14,500 on that salary. The house was in a s
t area but over £100k today so someone with no deposit like me would need nearly £30k to buy it today - you don't get that starting in the NHS today.Derek Smith said:
sidicks said:
You've been corrected on some of these claims previously. Please don't repeat the same claims which are directly contradicted by the publicly available scheme documentation...
The conceit!You know so much. You also know that government figures can be trusted implicitly.;
I've pointed out how my pension contributions were calculated, all available in the documentation of the enquiries. But you've read someone something that suits your point of view and you will continue to spout it.
I've been corrected by someone who doesn't want to know.
All my figures are correct as far as they go. But they are, in fact, worse as I haven't included everything.
Sorry to upset you, but I am right.
If so, would you consider that a return that reflects your contributions + investment return or do you consider that your pension income is additionally being topped up by the contributions of others?
If no, ignore the above.
Sheepshanks said:
Few people in the private sector make anything like the level of pension contribution that police officers and teachers do. My late dad retired from the fire brigade 30yrs ago and I remember when he was working he was paying 11% from a salary that didn't have a lot of spare in it. I think they pay around 15% now.
Interestingly, on the Radio 4 programme I keep banging on about http://www.bbc.co.uk/programmes/b07pd34kthey had a pensions 'expert' who said someone on average annual pay in their 20s would now need to be contributing 15% to get an income of £1000 pa in retirement.
Someone in their 30s or 40s would need to invest 30% of an average annual salary to get £1000pa in retirement.
Isn't one of the major 'injustices' of current pension payouts tied up in the final salary schemes and their demise for future generations.
As Derek says 15% of a starting income at say 20 years of age represents a lot of cash. For me in the 1980s it represented £60 out of a monthly income of £400.
But when you think about the retirees in the Radio 4 show http://www.bbc.co.uk/programmes/b07pd34k
on £28k per annum you might say that's a pretty good return for £60 a month.
I was exceedingly stupid about pensions at that age - probably still am, but I remember a mentor describing what was fairly common practice in the NHS (and other public services) with final salary pension schemes.
For the less-informed (like me) it worked on the basis that you notionally worked for 40 years towards a retirement age of 60 - work two thirds/66% of your life to be rewarded with two thirds/66% of your final annual salary.
Of course not everyone rises through the ranks, so 66% of final salary might not be that great but if you manage to get promoted in the last few years of your career, the 66% could suddenly become something quite considerable in relation to the amount of contributions you'd made.
You spend the bulk of your working life contributing 15% of £30k only to spend the rest of your retired life on a pension of 66% of say £45k because of a timely promotion at the end.
Of course not everyone in the public sector benefits from this but I believe it to have been a well-known and widespread practice.
As Derek says 15% of a starting income at say 20 years of age represents a lot of cash. For me in the 1980s it represented £60 out of a monthly income of £400.
But when you think about the retirees in the Radio 4 show http://www.bbc.co.uk/programmes/b07pd34k
on £28k per annum you might say that's a pretty good return for £60 a month.
I was exceedingly stupid about pensions at that age - probably still am, but I remember a mentor describing what was fairly common practice in the NHS (and other public services) with final salary pension schemes.
For the less-informed (like me) it worked on the basis that you notionally worked for 40 years towards a retirement age of 60 - work two thirds/66% of your life to be rewarded with two thirds/66% of your final annual salary.
Of course not everyone rises through the ranks, so 66% of final salary might not be that great but if you manage to get promoted in the last few years of your career, the 66% could suddenly become something quite considerable in relation to the amount of contributions you'd made.
You spend the bulk of your working life contributing 15% of £30k only to spend the rest of your retired life on a pension of 66% of say £45k because of a timely promotion at the end.
Of course not everyone in the public sector benefits from this but I believe it to have been a well-known and widespread practice.
Edited by footnote on Thursday 25th August 15:37
Welshbeef said:
A close relative had that exact situation - more or less a lifetime in the company and all but the last 5 or so years he was a pretty normal salary but then through redundancies good luck chance etc his salary DOUBLED. He was offered to carry on part time when the time came or take a lesser role.... Clearly he declined and took 66% of that great ending position.
Career average takes that issue away which is good.
Is "career average" a new thing? Or recent?Career average takes that issue away which is good.
I'm just thinking that a lot of the people retiring on big pensions now must have signed up when it was based on simple 'final salary'.
Derek Smith said:
Elroy Blue said:
The Oolice are starting to recruit again. Anybody who wants a 'gold plated' pension are more than welcome to apply.
There was a singular lack of a queue for the service in 1975. But then 50% of very little was worth less than half of very little. I joined for the variation in work, and the job delivered on that. The pension was a factor as I had my workplace pension embezzled when in the print. The fact that there was no fund as such was significant I felt. I didn't realise the downsides until later.
Anyone see that Rookies show earlier in the week.
Like the army and the fire brigade, the police attracts applicants for many reasons that have little to do with the money - there's no shortage of people who really want to do those jobs.
So, I'm still amazed that a retired DI and primary headteacher can be on pensions that are more than the average annual salary in today's money, having made contributions which are only a fraction of that in annual terms.
Given an average annual salary of £28,000 and supposing that most public servants don't start on that amount - imagine any young person entering the job market today being told that they will get a pension which will be more than they are currently earning per year?
That's what's happened to the teacher and policeman in the example.
How does that work? It is what it is, eh?
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