Could index linking of existing public service pensions be removed?

StevieJ

Debt_Free_Chick wrote: »

I very much doubt it. It certainly couldn't happen in the private sector as existing rights are protected under the governing trust deed and law.

Public Sector pensions are constituted differently, but I can't see protection for Public Sector pensions being less than that for private sector pensions.

It may be worth putting your question to your pensions office/administrator and ask them to quote the specific statute under which they're protected.

I am in a pretty good private sector pension, and they state that the basic pension is a right but index linking is not, e.g. if you were found guilty of a criminal offence they couldn't stop paying your pension but they could refuse to RPI it in the future.

Andy_L

dzug1 wrote: »

Most of the public sector no longer has 'final salary' schemes - moves to end that started 10 years ago and more.

Only the Civil Service, GPs, Ministers and IIRC, local councellors, are on career average schemes, the rest of the Public sector are still on Final Salary (and the Civil Service have a higher accrual rate to make up for the move from Final Salary to Career average).

So thats:
NHS
Local Gov
Teachers
Armed Forces
Police & Fire etc
still with final salary

jamesd

Ian W, those quotes are nice but do consider that there is already discussion of a possible plan to cut accrued pension benefits for all retirees, by delaying the date at which the state pensions are paid. Employment contracts are different things but I wouldn't make assumptions about what this government will or won't do.

Debt_Free_Chick wrote: »

Switching the public sector to DC would increase costs though - as well as paying the pensions to those retired, contributions would also have to be paid to the DC pots for current employees.

It wouldn't necessarily increase costs much. One way to do it would be to have the employer portion remain funded by future taxes and put the employee portion into DC. Costs would then go up by the amount that the current employee contributions are being used to pay those who have already retired.

Debt_Free_Chick wrote: »

Ignore all the press hype about £1 trillion deficits in public sector pensions. The pensions aren't funded so deficits are irrelevant.

That's part of the structural deficit. It's a part of why lots of public employees are likely to lose their jobs. That can be done without touching the issue of accrued benefits and then some can be hired back as private sector employees via service companies with fully DC schemes and far lower pension benefit levels.

It'll be interesting to see whether there's some attempt by public sector unions to limit costs through reduced benefits rather than by losing members to the private sector.

artha

KMK wrote: »

In view of the fast moving political events of the past week and the seeming determination to go for cuts to address the deficit, could the new government remove index linking from retirement pensions already being claimed?

I assumed that index linking for any public service pensions set up in the near future would probably be removed, but could pensions already being paid have the index linking withdrawn, given the dire economic climate?

Perhaps they may be capped like my pension from a large UK company at 3%

paparossco

Andy_L wrote: »

Only the Civil Service, GPs, Ministers and IIRC, local councellors, are on career average schemes, the rest of the Public sector are still on Final Salary (and the Civil Service have a higher accrual rate to make up for the move from Final Salary to Career average).

So thats:
NHS
Local Gov
Teachers
Armed Forces
Police & Fire etc
still with final salary

Don't know about the rest but the NHS scheme has not been 'final salary' since 2008.

Stargazer57

paparossco wrote: »

Don't know about the rest but the NHS scheme has not been 'final salary' since 2008.

Really?

This site

http://www.nhsemployers.org/PayAndContracts/NHSPensionSchemeReview/SchemeChanges/Pages/SchemeChangesApril2008.aspx

seems to say otherwise (unless you are a GP).

TREVORCOLMAN

bristol_pilot wrote: »

Very unlikely for a pension in payment. And the Conservatives gave an undertaking that pension rights accrued to date would not be reduced.

They also said they would scrap the Apr 11 NI increase but have now gone back on that promise.

TREVORCOLMAN

roysterer wrote: »

Private sector pension contributions (in my case) have doubled this year alone for reduced benefit from a final salary 1/60 scheme to career average. It is anticipated that this change will eventually be scrapped in one year or two to a DC scheme.
So you people in the public sector think I should pay increased income tax to fund your lucrative final salary schemes!!!!!!! with early retirement.

THERE IS A LOT OF ILL FEELING FROM PRIVATE SECTOR WORKERS FUNDING THE PUBLIC SECTOR. WE ARE NO LONGER GOING TO TOLERATE IT. AND THE TORIES KNOW IT. YOU SHOULD SPEAK TO PEOPLE WORKING IN INDUSTRY THERE IS A BAD FEELING REALLY BAD BAD BAD BAD FEELING TOWARDS PUBLIC PENSIONS.
LOBY YOUR NEW M.P. AND LET HIM / HER KNOW YOUR FEELINGS EVERYONE IN THE PRIVATE SECTOR.

The average Public Sector Pension is only £4k per year. But of course the Daily Wail wont tell you that.

jamesd

trevorcolman, is that after a full career in the public sector working full time throughout?

I'm asking because it's far less than the numbers I see from other sources. Things like "It would cost £427,275 to buy an annuity delivering the average public sector pension of £17,091 from an insurance firm".

Or "BUT AREN'T MANY IN THE PUBLIC SECTOR POORLY PAID PART-TIMERS WHO RECEIVE TINY PENSIONS? Another myth. The average public sector pension is £7,000 compared with the average personal pension of £5,000. "

Or "Most public sector pensions in payment are less than £5,000. In the biggest scheme, local government, the average is £4,000 and for women £2,000." Those numbers seem to include a lot of pensions paid to people who weren't working in the public sector for long.

Given the wide variation it'd be nice to know the characteristics of the people getting the pensions, like how long they did the work.

Andy_L

jamesd wrote: »

trevorcolman, is that after a full career in the public sector working full time throughout?

I'm asking because it's far less than the numbers I see from other sources. Things like "It would cost £427,275 to buy an annuity delivering the average public sector pension of £17,091 from an insurance firm".

Or "BUT AREN'T MANY IN THE PUBLIC SECTOR POORLY PAID PART-TIMERS WHO RECEIVE TINY PENSIONS? Another myth. The average public sector pension is £7,000 compared with the average personal pension of £5,000. "

Or "Most public sector pensions in payment are less than £5,000. In the biggest scheme, local government, the average is £4,000 and for women £2,000." Those numbers seem to include a lot of pensions paid to people who weren't working in the public sector for long.

Given the wide variation it'd be nice to know the characteristics of the people getting the pensions, like how long they did the work.

Your right, the 4k includes those who just work for a few years & thus have a deferred pension worth very little.

No idea where the £17k figure comes from - its very close to 2/3rds of the average £25k salary mentioned in the same article: I suspect the've just assumed that the average worker serves 40 years & thus gets the full 40/60ths pension: obviously not the case