Nurse..shall I retire now whilst I still have a pension

dunstonh

"The change would mean a nurse with a final salary of £40,000 could see their pension slashed from £20,000 a year after 30 years' service to £6,000."

On an 80ths scheme, a final pensionable salary of £40k after 30 years would equate to 30/80ths. 3/8ths of 40,000 is £15,000. Not £20,000

Teachers retiring on a final salary of £50,000, who would normally receive a pension of £25,000, would see this whittled down to little more than £7,000.

The teacher earning £50,000 to get £25,000 would have to worked 40 years to get that. Yet no mention of timescale in the article.

The article seems to totally ignore the fact that the issue is not past entitlement but future entitlement on new schemes that have to be put in place (with career average basis). So, there is absolutely no way a nurse with 30 years service or a teacher with 40 years would see their pensions cut like that.

paparossco

Agreed, at least it can be seen that these stories are not all down to 'mischievous' individuals working for the NHS or their 'alarmist' unions. I'll be glad when the Hutton report is published tomorrow as hopefully all will become clear.

StephenM_2

jamesd wrote: »

But better still, switch them all to the same money purchase basis as private sector pensions, to maximise mobility of labour and minimise the penalties for changing careers or jobs.

That should say most private sector pensions. My private sector pension is still final salary.

JamesU

jamesd wrote: »

I'd have thought that with all the fuss about increasing state pension age due to longer lives it'd be obvious that there's an increase in pension benefits going on that has to be addressed in some way. One of those ways is to reduce the amount paid or the inflation rate to compensate for the money being paid out for longer.

Jamesd, Agree with your analysis of Hutton’s interim report and the further points in post #19. But most of what you discuss starts with the premis the Government has the right to rebalance the books by shifting the current financial liability and responsibility onto those who are (or will be) in receipt of the pension benefit. As mentioned previously, to ensure affordability this may be a reasonable compromise to make going forwards with existing employees who can either accept such prospective changes to their employment terms or move on (leaving in place their existing accrued benefits to date). But the retired and previous employees with deferred pensions are in receipt of their past contractual entitlements for services already undertaken, and I cannot see any justification as to why it is acceptable for the Government to degrade the real term value of their pensions. This has been forced through under the pretext that CPI is a more satisfactory measure of a pensioner’s inflationary experience. But obviously in reality the switch from RPI to CPI is just a cost cutting exercise (by indexation and revaluation according to CPI) which is easily quantifiable from independent analysis.

On your second post #20, although inventive ways to reign in costs and compromise, I doubt these are feasible solutions to implement on pensions for the retired and deferred pensions members.

JamesU

jamesd

JamesU wrote: »

But the retired and previous employees with deferred pensions are in receipt of their past contractual entitlements for services already undertaken, and I cannot see any justification as to why it is acceptable for the Government to degrade the real term value of their pensions.

The government is not degrading the real term value of their pensions - the net present value of them. It's been increasing them and throwing in more years of life as part of the deal.

How many years did they contract to pay the pensions for under life expectancy assumptions at the time of the start of employment? Anything greater than that is an increase, not a decrease.

Governments have already delivered a great boon in the form of more years of life. No need to punish the government and tax payers by also making them pay more in pensions as a result of that boon.

I'm completely happy for public sector workers to get exactly the same net present value of benefits as those they signed up for.

Money purchase pensions would be a great thing for the public sector: government could deliver better health care and longer life without also ending up paying out more in pension benefits as a result of the good work.

Talking in terms of money amounts and ignoring how many years the money will be paid out for might work with people who don't know what's happened to life expectancy over the years but it's not so likely to work with those who do know about it.

StephenM, congratulations on being one of the few.

DavidHayton

jamesd wrote: »

How many years did they contract to pay the pensions for under life expectancy assumptions at the time of the start of employment? Anything greater than that is an increase, not a decrease.

Governments have already delivered a great boon in the form of more years of life. No need to punish the government and tax payers by also making them pay more in pensions as a result of that boon.

I'm completely happy for public sector workers to get exactly the same net present value of benefits as those they signed up for.

The terms were a pension for life rising in line with the government's preferred rate of inflation.

Well they have changed their preferred rate of inflation. Maybe next they will change my life in retirement. Why all this talk of discouraging cigarette smoking? They should make it compulsory!;)

I am a public sector worker myself but my main grumble is that it is yet another transfer of wealth from the younger generation to the older generation. The younger you are the more that these changes will cost you. I might start advising intelligent, well qualified, highly trained young people to move overseas as soon as they graduate. Or, if they must stay, at least not to pay into poorer-value schemes in order to pay much better benefits to old folk.

Best wishes to all
David

Le73Uq86Uv

If this is retrospective watch the mass exodus of Nurses and other public sector workers, no need to strike they will leave full time.

Hope you private sector people have good private sector health insurance.

Stargazer57

jamesd wrote: »

How many years did they contract to pay the pensions for under life expectancy assumptions at the time of the start of employment? Anything greater than that is an increase, not a decrease.

You are quite right, but life expectancy growth is only one of the factors which have led to an increase in the value of the pension, and it is not the largest one. Long-term real interest rates, which govern the cost of providing in advance for an index-linked stream of income (which is the essence of the pension promise), had been roughly constant from the early 1980s, when index linked gilts started, until the mid 1990s. They then halved in the 18 months to end 1998, and have halved again since.

This factor alone has roughly doubled the value of public sector pensions. Life expectancy changes, which have been more gradual, but relentless, would be on top.

So when people complain that the value of their public sector pension is being cut they may be correct, but only if they are measuring from the highest value they reached. Almost every public sector worker is getting a pension of higher value than they expected when they started work. In most cases it is of much higher value.

Le73Uq86Uv

Recommendation 4: The Government must honour in full the pension promises that have been accrued by scheme members: their accrued rights. In doing so, the Commission recommends maintaining the final salary link for past service for current members.

professionalpensions.com - hutton-report

ohboy13

dunstonh wrote: »

I think you have some mischievous individuals working for the NHS who just love to cause trouble and create false rumour. Many of the rubbish myths that have been posted to this board in recent months have come from those that work in the NHS.

Thats because they have just asked those at the age of 50 to retire with a pension cut. if you dont then they are going to decide very soon letters have been sent.