how are all these final salary pensions going to be funded?

bodgerx

Andy_L wrote: »

So an employers contribution of 3-5 times the employees contribution isn't lucrative?

I don't think that there is any sensible scenario I know of where you would get that kind of contribution rate. Maybe if you got aggressively promoted in the final stages of your career; but even then it's a career graded average, so that's unlikely.

Reading from the actual fund report for my council it states the rate at about 12% of pay. So at 6.75%, I make that 1.77 times the rate.

bodgerx

CLAPTON wrote: »

That's a absolutely fantastic deal ... 25% benefit for 6.75% (well 5.4% after tax relief) ... and you can retire at 60 or even 55 maybe

work out your total contributions over your working live... work out the likely payout out in retirement and see the huge difference

Retiring between 55 and 60 now presents a huge impact on your final valuation under the new rules. For me, this would be pretty much out of the window, especially since my state pension retirement age is now 67.

CLAPTON

bodgerx wrote: »

Retiring between 55 and 60 now presents a huge impact on your final valuation under the new rules. For me, this would be pretty much out of the window, especially since my state pension retirement age is now 67.

since you are able to quote from your scheme maybe you could quote the employers contribution to the scheme?

how big is the 'huge' .. normal schemes reduce by 4-5% per year the pension is taken early

the rule of 85 was an amazing rule that basically allowed people to retire at 53 on a non - actuarially reduce pension... an amazing benefit

And you haven't given any facts that indicate that a stateholder pension is comparable with your gold plated one

bodgerx

CLAPTON wrote: »

And you haven't given any facts that indicate that a stateholder pension is comparable with your gold plated one

It all depends on the performance levels of the investments in the stakeholder. I have a stakeholder from my old job, and it given the 'average' to 'good' performance levels from the investment predictions, it wouldn't have been that far away...

bodgerx

CLAPTON wrote: »

since you are able to quote from your scheme maybe you could quote the employers contribution to the scheme?

See my post above in response to Andy L.

Old_Slaphead

bodgerx wrote: »

Where is your evidence for that? The council I work for does publish its accounts for the fund - that is statutory requirement.

I picked on North Yorks as a completely random sample - currently employer pays 17.5% (which is 2.7x average employee contrib). The scheme in the last accounts was UNDERFUNDED by 65%, ie had assets of around 1/3rd of accrued liabilities.

This was as at March 2009 - the stockmarket recovery over the past year has probably brought the underfunding down to around 30-40%.

Clearly employer/employee contributions will have to rise to recover this significant shortfall. I suspect that taxpayer's share will reach 20%+ in near future.

Old_Slaphead

bodgerx wrote: »

It all depends on the performance levels of the investments in the stakeholder. I have a stakeholder from my old job, and it given the 'average' to 'good' performance levels from the investment predictions, it wouldn't have been that far away...

Investments predictions - humbug!

The last decade has been one of the stockmarkets worst - general returns have been lousy.

Any stakeholder achieving an average return (as indicated in the projections)would have done pretty well. Even with such increases in fund values, total annuity payouts per £000 have slumped more than ofsetting such fund growth.

Tell us how your stakeholder has moved in value over past 10 years and how much annual pension the fund value will give now as compared to a few years ago (nb annuity rates have also crashed over the past decade but the figures should be available on your annual statement). For example, I have a Prudential pension plan the had a fund value of £27000 in 2004 which gave an estimated pension at 60 of £1570pa. Now that plan's done reasonably well and the fund vale in 2010 is £43000 - but projected pension is now 1510pa. So, even with decent growth I'm still worse off, even before inflation !!

vivatifosi

Old_Slaphead wrote: »

This was as at March 2009 - the stockmarket recovery over the past year has probably brought the underfunding down to around 30-40%.

Clearly employer/employee contributions will have to rise to recover this significant shortfall. I suspect that taxpayer's share will reach 20%+ in near future.

My former private sector final salary had to put in 12% instead of the 7% the company was supposed to put in, so that doesn't surprise me. It annoys me as a trustee of a private scheme actually. If we have shortfalls, we have to show plans as to how we are going to make them good (even when some of them stem from f*wits like Brown taxing them) while paying punitive amounts into the PPF levy. Meanwhile what does the public sector have to do? Oh yes, tax us.

Old_Slaphead

bodgerx wrote: »

I can PM you with the name - I'd rather not reveal it here.

No sign of that PM yet bodgerx - I'm looking forward to seeing which LA scheme has a 'healthy balance fund and zero losses'

Harry_Powell

Old_Slaphead wrote: »

No sign of that PM yet bodgerx - I'm looking forward to seeing which scheme has a 'healthy balance fund and zero losses'

I would be interested to see how 'Employer Contributions' from a public sector company don't equate to taxation. Most of our council tax seems to be used to feather the nest of public sector employees and pensioners. No wonder the roads are falling apart.