Pensions - contract in or out
Discussion
SplatSpeed said:
she was only in the scheme 2 years
the salary the day she left is her final salary had she accepted it in 35 years!
assuming they don't change the rules.
they were constructivly dismissing her post and she was just waiting for something better to come along! (moving post 30 miles away!)
so she has 2 years contributions that will accrue for 35 yr's or take 2 years worth of benefit of her leaving salary 35 Yr's ago
so please explain to me the "Worst decision of my life!"
Final salary will be based on salary at leaving increased to retirement date by CPI (approx).the salary the day she left is her final salary had she accepted it in 35 years!
assuming they don't change the rules.
they were constructivly dismissing her post and she was just waiting for something better to come along! (moving post 30 miles away!)
so she has 2 years contributions that will accrue for 35 yr's or take 2 years worth of benefit of her leaving salary 35 Yr's ago
so please explain to me the "Worst decision of my life!"
The implication from your original post was that there was a choice between continuing to accrue benefits in a final salary scheme and putting contributions into a defined contribution scheme. I think some of the other replies made the same assumption that I did.
If I understand correctly, you are now saying that there was a choice between retaining benefits in a final salary scheme (to be taken in 35 years' time) or taking a transfer value and investing this yourself?
A slightly less 'obvious' decision, particularly as you implied that your key reason for this decision was the risk of the benefits being changed retrospectively.....
However, unless the scheme was fully funded or paying out enhanced transfer values (a key factor in the decision making process), I still think that leaving it 'as is' would probably have been the right option.
There is of course 35 years of investment risk potential, that might mean that other factors work in your favour.
Sidicks
Edited by sidicks on Tuesday 15th March 17:30
2 years is still well worth having.
Not interested in what she does or doesn't earn but it's great to have it building up and a known current value.
I've a number of final salary schemes some 2 years others up to 6 years I'll never merge any nor cash in. Reason I want to spread the risk not have all my investments in the same pot. I also have equity property bonds so I hope a nice split of risk.
Anyway you have made the choice now but hopefully this thread has highlighted pros for staying in so will be used to help others out. Only time will tell if you match or beat the final salary return i'd wager probably not but for your sake hope it works out.
Good luck but next time never switch out ever bank it every year keeps adding up for your future
Not interested in what she does or doesn't earn but it's great to have it building up and a known current value.
I've a number of final salary schemes some 2 years others up to 6 years I'll never merge any nor cash in. Reason I want to spread the risk not have all my investments in the same pot. I also have equity property bonds so I hope a nice split of risk.
Anyway you have made the choice now but hopefully this thread has highlighted pros for staying in so will be used to help others out. Only time will tell if you match or beat the final salary return i'd wager probably not but for your sake hope it works out.
Good luck but next time never switch out ever bank it every year keeps adding up for your future
The Leaper said:
OneDS,
Sorry but you are wrong. I agree that the Civil Service Pension Scheme (CSPS) is not technically an occupational pension scheme because that term usually applies to private sector pension schemes. The CSPS is a public sector pension scheme. More to the point, however, is that the CSPS does contain all the right provisions to ensure that members' accrued benefits cannot be changed retrospectively. It may be that a member has the option of doing so or can take a transfer value to some other pension arrangement such as a personal pension plan, but that decision is an individual one not one that can be imposed on members.
Benefits for future service can always be amended, whereas they cannot be changed retrospectively.
R.
No, I'm not wrong, Specifically as they can renegotiate all the benefits current future and retrospectively with the trade unions or not as the case maybe. And then if they don't get what they want they can change the law to suit.Sorry but you are wrong. I agree that the Civil Service Pension Scheme (CSPS) is not technically an occupational pension scheme because that term usually applies to private sector pension schemes. The CSPS is a public sector pension scheme. More to the point, however, is that the CSPS does contain all the right provisions to ensure that members' accrued benefits cannot be changed retrospectively. It may be that a member has the option of doing so or can take a transfer value to some other pension arrangement such as a personal pension plan, but that decision is an individual one not one that can be imposed on members.
Benefits for future service can always be amended, whereas they cannot be changed retrospectively.
R.
Edited by OneDs on Tuesday 15th March 21:46
OneDs said:
I think you'll find the govt can do what it wants if they change the law to allow them.
If you were worried about what the government 'could' do by changing the law, there would be no point in doing lots of things.The fact is that a major retrospective change to pension benefits is highly unlikely.
Sidicks
sidicks said:
If you were worried about what the government 'could' do by changing the law, there would be no point in doing lots of things.
The fact is that a major retrospective change to pension benefits is highly unlikely.
Sidicks
agreed but it's not like they're not entertaining it, they are just using the threat of it to make the Hutton suggestions look like a positive alternative.The fact is that a major retrospective change to pension benefits is highly unlikely.
Sidicks
Lord Huttons reccomendation suggests moving from final salary to career average. What that means is once that is agreed the final salary accrued to date is locked and grows inline with CPI. Going forwards it's career average so every year whatever your salary is you will earn say 1/80th of that total again all CPId.
The reason why career average is better for all employees is that mist employees do not have big promotions towards the end of their careers and as such they are subsidising those that do. So career average should be indifferent really to the average worker but less advantagous to the high flyer or let's say it's fairer. I accept it's fair even though i would have lost out. But I'd rather career average over defined contribution every day of the week.
The reason why career average is better for all employees is that mist employees do not have big promotions towards the end of their careers and as such they are subsidising those that do. So career average should be indifferent really to the average worker but less advantagous to the high flyer or let's say it's fairer. I accept it's fair even though i would have lost out. But I'd rather career average over defined contribution every day of the week.
Welshbeef said:
Lord Huttons reccomendation suggests moving from final salary to career average. What that means is once that is agreed the final salary accrued to date is locked and grows inline with CPI. Going forwards it's career average so every year whatever your salary is you will earn say 1/80th of that total again all CPId.
The reason why career average is better for all employees is that mist employees do not have big promotions towards the end of their careers and as such they are subsidising those that do. So career average should be indifferent really to the average worker but less advantagous to the high flyer or let's say it's fairer. I accept it's fair even though i would have lost out. But I'd rather career average over defined contribution every day of the week.
Some career average salary schemes revalue each salary with some inflation index - is this on the table for the public sector??The reason why career average is better for all employees is that mist employees do not have big promotions towards the end of their careers and as such they are subsidising those that do. So career average should be indifferent really to the average worker but less advantagous to the high flyer or let's say it's fairer. I accept it's fair even though i would have lost out. But I'd rather career average over defined contribution every day of the week.
Sidicks
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