Could index linking of existing public service pensions be removed?

paparossco

Stargazer57 wrote: »

Really?

This site

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

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

Sorry, I thought they had stopped using the term for the new scheme. Perhaps I should have said that rather than being based on the BEST of your last three years pay, under the new scheme the pension will be calculated on the basis of the AVERAGE of the best consecutive three years pensionable pay in the 10 years before retirement. Along with no additional 'lump sum' there are significant differences between the old and new schemes.

Andy_L

TBH most (public sector) schemes tend to avoid the term "final salary" but only ever refer to pensionable pay as most have had flexibility to use other years to calculate pension.

The new one is, realistacally, as much a final salary as the old scheme, mathmatically its about a "penultimate years salary" scheme, unless you're bouncing off the top of your pay scale and it does give the flexibility to go back 10 years - a bonus for those who took a cut in pensionable pay a while before retirement). A cynic (who me?) might suggest that the coming pay restraint will mean no difference between the 2.

The lump sum's a red herring - 1/60th with 12:1 commutation is a better deal than 1/80ths with 3x lump sum as you can have the same pension & lump sum in the new scheme but you can't change the lump sum in the old scheme into the equivalent pension. The big downside was raising the retirement age to 65

Stargazer57

Andy_L wrote: »

The new one is, realistacally, as much a final salary as the old scheme, mathmatically its about a "penultimate years salary" scheme, unless you're bouncing off the top of your pay scale and it does give the flexibility to go back 10 years - a bonus for those who took a cut in pensionable pay a while before retirement). A cynic (who me?) might suggest that the coming pay restraint will mean no difference between the 2.

Actually it is better than that as pensionable salary is indexed in line with RPI before being taken into account for pension purposes.

Andy_L wrote: »

The big downside was raising the retirement age to 65

Agreed. But the new NHS scheme would still cost about 30% of pay to buy making it more valuable that almost every scheme in the private sector. It's also a lot more valuable than most public sector employees realise, meaning that much of the money is wasted (because taxpayer don't get anything for it).

Andy_L

Stargazer57 wrote: »

Actually it is better than that as pensionable salary is indexed in line with RPI before being taken into account for pension purposes

yes, perversely you could be better off pension-wise if you've left than if you stay in employment :think: