How big should my pension pot be ?

marklv

"There has never been a bigger demand for places on PGCE courses due to the hordes of private sector workers (many of whom were made redundant) trying to become teachers. This was not due to the fabulous final salary pension scheme it was due to the perceived safety of public sector jobs."

How do you know that the pension is not a factor taken into consideration? If the pension was 5% I doubt that the rush into PGCE courses would last long. It probably won't last long anyway, given that this interest has only been caused by the recession. And while teaching might not be vulnerable to redundancy it is certainly not 'safe' - you are constantly appraised and if you fail to perform, you're out.

"I think you'll find that many of the jobs you have listed are vocations not occupations to many people and that they would do the job regardless of whether they had a gilt edged final salary pension or not. People value job security, job satisfaction and the opportunity to help people far higher than they value a pension, certainly this is the case at the start of their career, though I dare say that the ones who are at the end of the public sector career put more emphasis on their pension...."

Balderdash. Even people in vocations need to pay the bills, and you can't do that with 'job satisfaction'. If this was the case there wouldn't be a need for unions in the public sector and everyone would work happily for a pound a day. Dream on!

Harry_Powell

marklv wrote: »

"There has never been a bigger demand for places on PGCE courses due to the hordes of private sector workers (many of whom were made redundant) trying to become teachers. This was not due to the fabulous final salary pension scheme it was due to the perceived safety of public sector jobs."

How do you know that the pension is not a factor taken into consideration? If the pension was 5% I doubt that the rush into PGCE courses would last long. It probably won't last long anyway, given that this interest has only been caused by the recession. And while teaching might not be vulnerable to redundancy it is certainly not 'safe' - you are constantly appraised and if you fail to perform, you're out.!

Make your mind up, first you're saying that people could be attracted to teaching due to the pensions, then you're admitting many will have been attracted due to job security in a recession.

You're right though, I have no real proof that a gilt-edged pension was not the major attraction for such an increase in PCGE applications, though the fact that it occurred in a major recession tends to lend credence to the fact that job security was the overring attraction.

To be fair though, by the same token, you cannot prove that the pension scheme is a major attractor into the public sector, nor can you prove that removal of said pensions scheme and replacement with a money purchase scheme would result in an exodus, especially if a sweetener consisting of an increase in basic pay was included as part of the package.

marklv wrote: »

"I think you'll find that many of the jobs you have listed are vocations not occupations to many people and that they would do the job regardless of whether they had a gilt edged final salary pension or not. People value job security, job satisfaction and the opportunity to help people far higher than they value a pension, certainly this is the case at the start of their career, though I dare say that the ones who are at the end of the public sector career put more emphasis on their pension...."

Balderdash. Even people in vocations need to pay the bills, and you can't do that with 'job satisfaction'. If this was the case there wouldn't be a need for unions in the public sector and everyone would work happily for a pound a day. Dream on!

"Pay the Bills" - are we talking about income or pensions now?

Old_Slaphead

marklv wrote: »

You statement that PWC calculates public sector pensions being worth 37% of salary is intriguing - I would like to know how they have come up with this figure and what schemes they have used for their study. Most analysts estimate the typical public sector scheme as being worth around 20% of salary.

Lower economic growth rates and increasing longevity are dramatically affecting these schemes. Your observation on "analysts estimates" is way out of date.

Of the funded schemes (ie LGPS) most employers contribute in the region of 15-20%. At the next scheme review (March 2010), unless the stockmarket takes off in the next 6 months (ie somewhere north of 6000) then these schemes will show significant further underfunding.

I reckon that going forward, amendments will be made like....
a) Move to average salary
b) Increase in retirement age or decrease in accrual rate
c) Increased employee contributions

The latter will occur pretty soon after 2010 as unions have committed employees to sharing increased shortfall (which will be huge).

marklv

bendix wrote: »

All this discussion is interesting marklv, but you better get used to the fact that your pensions are gonna be cut, and cut severely, whether you like it or not.

Normally, I wouldnt celebrate that, but if your completely one-sided (we deserve it cos we're special) argument is typical of all public sector employees, then I shall be raising a glass to the first political party that does it.

Time to learn how to save, like the rest of us.

Good luck.

Well, if (and it's a very big 'if') my pension rights were brutalised by some idiotic government, then I would go back to the private sector faster than you can say 'David Cameron'. The only reason I stomach my 100 minute commute each-way into central London is because of the attractive pension.

marklv

Old_Slaphead wrote: »

Lower economic growth rates and increasing longevity are dramatically affecting these schemes. Your observation on "analysts estimates" is way out of date.

Of the funded schemes (ie LGPS) most employers contribute in the region of 15-20%. At the next scheme review (March 2010), unless the stockmarket takes off in the next 6 months (ie somewhere north of 6000) then these schemes will show significant further underfunding.

I reckon that going forward, amendments will be made like....
a) Move to average salary
b) Increase in retirement age or decrease in accrual rate
c) Increased employee contributions

The latter will occur pretty soon after 2010 as unions have committed employees to sharing increased shortfall (which will be huge).

Lots of assumptions here. Of the options you have outlined, they have all already been implemented to a certain extent; the old civil service scheme was scrapped a few years ago in favour of Nuvos, which is an average salary scheme, and the retirement age raised to 65. From what I've been told by others 'in the know' local government and NHS workers are now paying higher contributions than before. I work for none of these, but for a quango which is fairly autonomous and independent. In any case my scheme has already been hit by a ban on buying added years of pensionable service and a deduction of the lower earnings limit from total pay in order to calculate pensionable pay.

Harry_Powell

marklv wrote: »

Well, if (and it's a very big 'if') my pension rights were brutalised by some idiotic government, then I would go back to the private sector faster than you can say 'David Cameron'. The only reason I stomach my 100 minute commute each-way into central London is because of the attractive pension.

Hence your stance on maintaining the status quo with public sector pensions, but not everyone is the same and not everyone will stay in (or be attracted to) a job just because of a pension.

If the government did what most companies have done and close their final salary scheme to new employees and set up a money purchase scheme instead, I doubt that there would be much impact on recruitment levels. As I am very well aware from my peers and from contributors to the pensions board, young people are not terribly interested in pension schemes and give a higher priority to income, job satisfaction, promotional prospects, etc. It's only when they get into their mid 30's that they start thinking about how they will fund retirement. We've got enough on our plates in our twenties and early thirties trying to pay off student loans, build up housing deposits and climb the career greasy pole to worry about pension schemes.

Old_Slaphead

marklv wrote: »

Lots of assumptions here. Of the options you have outlined, they have all already been implemented to a certain extent; the old civil service scheme was scrapped a few years ago in favour of Nuvos, which is an average salary scheme, and the retirement age raised to 65. From what I've been told by others 'in the know' local government and NHS workers are now paying higher contributions than before. I work for none of these, but for a quango which is fairly autonomous and independent. In any case my scheme has already been hit by a ban on buying added years of pensionable service and a deduction of the lower earnings limit from total pay in order to calculate pensionable pay.

That's what pension schemes are - lots of assumptions.

The changes made so far (some of which will not come into play for another 35 years) are simply "tinkering at the edges". Big changes are already in the pipeline.

nb - reducing pension benefits will not lead to a mass exodus from public service....there's no jobs available in private sector !

marklv

"We've got enough on our plates in our twenties and early thirties trying to pay off student loans, build up housing deposits and climb the career greasy pole to worry about pension schemes."

Seen all that, done it and bought the T-shirt. I'm 42 years old.

marklv

"nb - reducing pension benefits will not lead to a mass exodus from public service....there's no jobs available in private sector !"

I really don't think that any new government will want to crush the pensions of existing public sector workers - the hassle is more than it's worth and would cause widespread strikes for long periods and considerable anger and bitterness. For new joiners there may be more changes in pensions - this is the most likely option, although still not as drastic as what many posters in this thread believe. I don't believe that even Cameron would remove the link between salary and pension.

Old_Slaphead

marklv wrote: »

I don't believe that even Cameron would remove the link between salary and pension.

I agree but the benefits will continue to be diluted....if not, headcount will need to be slashed by more than the 10%+ currently being cited.