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Public sector pensions - cpi instead of rpi
in Pensions, annuities & retirement planning
113 replies 29.7K views
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The new regulations only affect those who joined after 2007.
Your OH will have a pension based on age 60 retiral under the older scheme.
AFAIK AVCs are not part of the public sector pension fund but are provided by an external insunanceco/ building society etc. These are where you build up you own personal pension fund (though deductions are made via the employer) - the advantage of doing these via the employer is that fund managers charges are very low or even nil.
Usually upon retirement this fund is used to purchase an annuity. The annuity can be 'flat rate' (ie no annual increase) or index lnked (ie inflation proofed) - there may well be other variations.
The initial annual pension for the index-linked option will be significantly lower that the flat rate one for obvious reasons.
It would be worth seeing the advert you are referring to if it offers 'guaranteed' RPI indexing - and what the conditions of such an offer are.
So DC is now the norm in the Private sector, and the Public Sector will, I'm afraid, have to come to terms with a similar reduction in their benefits.
Private sector taxpayers have no reason to feel that anything else would be fair.
You are completely missing the point I am making.
I know someone in the ICI pension scheme. The company no longer exists. This is a final salary scheme indexed by RPI. It is not changing and cannot change.
However, the government is proposing to change the rules for public sector pensioners who have already retired. Incidentally, it includes all retired members of the armed forces also. Now some of these retire young - the change will mean that their pension is worth about 30% less in their final year if they live another 30 years.
A serviceman discharged now at 35 and who takes his preserved pension at 65 will receive about 70% of the pension he would have got under RPI.
PS. Although I am not an expert on the LGPS (the local government scheme), my understanding was that they offered two types of AVCs and one was provided by LGPS itself.
PPS. I am not in either of the schemes I have mentioned above.
You ought to change authority then. My district council give their employees discounts on membership of local authority-run gym & I've been told they're far from unique.
AVCs are a pure stockmartket investment so will be unaffected by this change.
Extra years, (which is probably what you mean) may, or may not be affected by the change - there's still no hard info information
I am a retired member of a scheme that was closely modelled on the ICI scheme except that ours was(until a few years ago) a non-contributory scheme. We are index (RPI) linked but are capped at 3% for early accruals and 5% for later accruals. Im assuming that the ICI scheme is capped in a similar way so not necessarily fully index linked
You may be able to retire from teaching at 60 but you won't get a full pension if you do.
You think foreign aid should be cut to pay you a fraction more?
You'll probably hardly notice the difference - and anyway was RPI indexing ever a 'right'?
We're talking about perhaps 1%pa (say 0.8% after tax) of the pension - not really a fortune given what GB has taken from private pensions, SERPs and from savers. Also some of us 50 somethings will lose another £5k state pension when the pension age is upped to 66.
Existing pensioners with very generous public pension entitlements, shouldn't be exempted from some of the pain - after all they've done well out of the Labour Govt.