MSE News: Public sector pension benefits should be cut – report

jamesd

Robert Tycelyn, I think you'll find that you'll get already accrued benefits at the date of those, still linked to your final salary if it is now. After the change you'll get benefits in the revised scheme at the full rate at its retirement age. You'd also be able to opt to take the new scheme money earlier but with an actuarial reduction. Also proposed is an option to take them later with actuarial increase and to eliminate any caps on number of years that can be accrued

I recommend reading the report before reading more of the discussion here. It's quite informative and more so if you read the intermediate ones to see some of the supporting data. Better to read it before reading protest things as well; it's nice to act on the facts of what's been proposed rather than the views of those advocating a particular reaction.

Beyond those options you also have the same options that those of us in the private sector have, including starting up your own personal pension whose benefits can be taken from age 55. Or investing via a stocks and shares ISA if you want to draw money faster than allowed with a personal pension. That's something you will probably want to do as part of the mixture if you make serious plans to retire before you're 60.

As with the private sector it'll be up to you in that case to work out when you want to retire and arrange to have sufficient money to provide the income you want for the various periods. It's not unduly hard but it does take a willingness to do the planning and commit the money to get what you want instead of using it for other things.

mjm3346

mcgsp wrote: »

It's not true that existing pension rights already built up won't be affected. My pension is to be uprated by the CPI rather than the RPI. If I live until average age I can expect my pension to be lower by at least 25%.

Existing rights already built up have not been affected. There was no right to increases at RPI but the RPI increases earned to date have been kept as they are not going back to recalculate them at CPI which would reduce the pension. Future increases will be at CPI and almost certainly smaller than RPI increases would have been but that has not affected any pension "right".

Dr_Wu

Robert_Tycelyn wrote: »

I will use the weekend to catch up with all the postings.

Just one big question from me - I am a 52 yr old teacher - will I still be able to retire when I'm 60 or will I have to go until I'm 65?

So in your case Robert, if the new scheme come in as proposed in 2015, you will be 56 or thereabouts and you will be able to take those benefits accrued up until that point and retire with them at 60. The 4 years between 56 and 60 will be under the new scheme so you will probably have the choice of taking them at a reduced rate at 60 or waiting/deferring until you hit 66 or 67 (given the raising of the normal retirement age).

Your pension at 60 will be a wee bit less than it would have been under the status quo, the amount depending on how many years you will have built up by 2015.

as always, I might wrong!!

JamesU

jamesd wrote: »

It's reasonable to say that your income after 20 years of that is lower by that much. It's not reasonable to say that you have lost 13% because:
1. After 20 years the total amount of money received is only 7% less, not 13% less.

Reworded for clarity.

For somebody with a deferred pension aged 48, in 20 years time at a retirement age 68, because of the switch from RPI to CPI the value of the pension on retirement will be reduced by 13%. So in today's terms, instead of e.g. receiving £100/wk a pension of £87/week will be received.

jamesd wrote: »

The £100 to £87 switch after 20 years is the one that someone trying to mislead with statistics would use to make the change seem worse than it is. To try to explain it properly you have to allow for the life expectancy changes.

I am not trying to mislead with statistics. In his interim report, Lord Hutton clarified similar reductions in pension value with the switch from RPI to CPI (15%-25%, but these include previous pension reforms aswell as the RPI/CPI switch) and the Pensions Policy Institute reported the same 15-25% devaluations. The calculations above are consistent with those in the reports, using a RPI/CPI difference of 0.7% i.e. the calculations above are real (#84,#92,#100), and not worse than it really is.

http://www.hm-treasury.gov.uk/d/hutton_pensionsinterim_071010.pdf
https://www.pensionspolicyinstitute.org.uk/uploadeddocuments/2010/20101123_The_future_of_the_public_sector_pensions_final_report.pdf

Furthermore, with respect, I do not think it is correct to reason and justify these reductions in pension value because of cost-benefits due to increased life expectancy or issues of affordability. As far as the retired and deferred pension members are concerned, they entered into a contract for a final salary pension on the basis that it is will be paid annually with index linking until death with no caveats attached (increased life expectancy and costs, your points 2-6, #94). It seems implausible to include retrospective changes or caveats in this instance and I am not convinced points 2-6 are relevant here. For existing employees whose contracts can be re-negotiated and either accepted or declined (with protection of accrued rights to that date) there may be a more reasonable case to discuss points such as 2-6.

JamesU

markeymark

Velcro_Hotdog wrote: »

Out of interest how many police officers, fire fighters, prison officers etc actually work in that role right up until retirement? Lots of comments on here about not being able to do the job up until age 68 but I have never meet a 60 year old fire fighter. I know a 60 year old ex fire fighter who now works a desk job for the service teaching the public. And I know a 58 year old ex police officer who now runs a secruity firm but nerver seen a 65 year old arresting people or breaking down doors to rescue people and put fires out.

Excuss my ignorance but I dont see how the changes will effect these people as much as they claim they will. Will these people not work till they are unable to do so say for agruments sake 40s then move on to another career for the rest of their working life and make other pension and savings arrangements which will run along side a FS payment at retirement?

speaking personally from experience as a prison officer ive worked with guys on the galleries who are well into their 60's! we don't have the option of going to a less demanding/stressful job normally, cant speak for police or fire brigade, but im sure fire brigade u can only have a maximum of 30 years frontline service (correct meif u know otherwise)

Le73Uq86Uv

I assume MP's will also have a career average pension?

Or do members of the public have to pay taxes to support a diamond studed gold plated MP pension?

bilbo51

Le73Uq86Uv wrote: »

I assume MP's will also have a career average pension?

Or do members of the public have to pay taxes to support a diamond studed gold plated MP pension?

Currently it's a final salary scheme.

http://www.parliament.uk/documents/commons-information-office/M05.pdf

Stargazer57

Le73Uq86Uv wrote: »

I assume MP's will also have a career average pension?

Or do members of the public have to pay taxes to support a diamond studed gold plated MP pension?

Until recently the only promotion MPs could get, that affected their pay, would be if they became a Minister (for whom their is a separate average salary scheme), so it makes little difference to an MP whether they are in a final salary scheme or and average salary scheme of the type proposed by Hutton where past accruals are revalued in line with general salary progression. I think that a few MPs can now get pay rises if they are chairmen of committees and if these are pensionable your point would be valid, but only for that handful.

If we look at the Civil Service, where a 1/43 revalued average salary scheme has replaced what would have been a 1/60 final salary scheme, I suspect there are more people who will be better off as a result of the change paid for by relatively few high flyer losers.

What's a bit of a mystery is why the Unions are happy to join the clamour saying Final Salary = good, average Salary = bad. I thought they were meant to be on the side of the downtrodden.

Butterfly_Brain

pedro_scot wrote: »

How do these people who earn less than £11000 a year as a classroom assistant are expected to live with a rise in the cost of living with their contributions expected to rise. You will find a lot of the lower earners pulling out of the pension and where will that leave the public purse in the future. Just when will we see MP's pension arrangements looked at?????????????????????????

My DH is a site agent at a lower school and his wage is less than £14,500 pa he pays a big pension contribution in comparison to his wage. How is he supposed to pay anymore in when he is on a breadline wage as it is. :mad:

susaned

Many retired public sector workers claim benefits, because the pension they get is so low. Yes, I agree that there should be a ceiling on the pensions of all those earning more than the national average wage when they retire. The lowest paid should have their pensions protected. I do not think that strike action is a good way to get the government to listen instead I am going to axe my own spending between 28 and 31 March. It won't cost me anything to make my protest against public sector cuts heard.