Career Average Pensions

EMPIRE2001

The Hutton Report has indicated that the CARE (Career Average Pensions) are set to come in.

I can not find anywhere that when he proposes that this should come in and would it be for new contribriutors or would it for all.

Thanks

edinburgher

You can find the report here:

Hutton Report into public service pensions

He doesn't suggest a date because to the best of my understanding this would go beyond the scope of the Independent Public Service Pensions Commission. Still, the report does suggest that people be moved onto career average schemes as soon as possible, an article on Reuters this morning suggested within the life of this Parliament (by 2015).

All would move onto these schemes, including current civil servants etc. and all future staff. Current pensions would be preserved (i.e. if you'd been in a final salary scheme for 15 years you'd still get the value of the final salary scheme for the 15 years, but would be moved onto the less generous career average scheme as and when they decide to move you). For those of us already in career average schemes, hopefully the changes won't be as dramatic, although we can still 'look forward' to increased contributions

Hope this helps?

Loughton_Monkey

There will be no details in the report either of the exact terms of a 'career average' scheme, nor the surrounding terms or contribution levels. This is all for the Government to work out.

It will get a bit 'messy' since existing rights and new rights will have to be administered together for a long time, and it could get a bit complicated.

kidmugsy

Look on the bright side: you've got four years notice that you might want to find a new job - which is always a suitable response if you no longer like the pay and conditions of your present job. Most people get less notice and more radical changes.

dunstonh

Despite many people being against CARE, the majority of people will not actually notice that much difference. Its really those that start off on low income and end up on high income or build a pension entitlement on part time money and then go full time just before they retire. If you spend your working life earning much the same apart from inflation then there isnt much in it. (the early income years are indexed)

jrawle

I find it surprising that the media reports fail to mention that the Civil Service scheme is already an average-salary scheme for all new entrants since mid-2007, when the current "Nuvos" scheme replaced the "Premium" scheme. It's swings and roundabouts as they say: Nuvos pays 1/43 of the salary earned in each year, whereas Premium only pays 1/60 of the final salary for each year of service, so Nuvos builds up much more quickly and is actually more generous for those who remain in lower or mid-range salary jobs. However, if I remember rightly, there is no index-linking of early years (until you retire or leave the scheme). With final salary schemes such as Premium, the fact that it's based on your final salary encompasses index-linking as the salary will have risen with inflation. I believe this is the reason the accrual rate is greater for Nuvos.

Anyway, who's to say any new scheme will be as generous as Nuvos? The government might even ignore many of Hutton's recommendations, just as they did with Browne's tuition fees report.

edinburgher

However, if I remember rightly, there is no index-linking of early years (until you retire or leave the scheme

Actually, pensions are uprated in line with inflation from day one. Still, this is now CPI, not RPI, so they've already reduced the value. Pay freeze, 3% increase in contributions, later retirement age and possible future watering down of these reduced benefits. I know we civil servants aren't popular, but it feels a bit like they're taking the !!!! at the moment.

Look on the bright side: you've got four years notice that you might want to find a new job - which is always a suitable response if you no longer like the pay and conditions of your present job. Most people get less notice and more radical changes.

Yup, and I think there's every chance I'll be voting with my feet. I left the private sector two years ago to try and gain a degree of job stability in the teeth of the recession - it's worked so far, but I'll be damned if I'm taking what's in essence a 9% paycut in the space of a year lying down (pay freeze despite inflation, loss of a (tiny) bonus and increased pension contributions). I have a professional qualification, a specialised skillset and spent 5 years in university to get where I am - we're not all the much villified imagined man in a grey suit who sits at a desk with his head down 'til he dies!

dunstonh

I know we civil servants aren't popular, but it feels a bit like they're taking the !!!! at the moment.

Its not really though as for most it wont make much difference. Plus, its still better than a money purchase scheme. Maybe they should give people choice. Money purchase or career average.

edinburgher

Its not really though as for most it wont make much difference

Well the 3% increase starting next year is already confirmed and the report makes it clear that the pension age will be changed again in future in line with the pension ages for the state pension. My current (Nuvos) retirement age is 65, but I'll be 68 (or older) by the time I can claim a state pension.

3% of earnings and delaying retirement by 3 years is a pretty big difference to me, not to mention the effect of the switch from RPI to CPI. I know it's better than a money purchase scheme, but your glib dismissal of real concerns (and effects) comes across as a bit patronising.

bristol_pilot

edinburgher wrote: »

Yup, and I think there's every chance I'll be voting with my feet. I left the private sector two years ago to try and gain a degree of job stability in the teeth of the recession - it's worked so far, but I'll be damned if I'm taking what's in essence a 9% paycut in the space of a year lying down (pay freeze despite inflation, loss of a (tiny) bonus and increased pension contributions). I have a professional qualification, a specialised skillset and spent 5 years in university to get where I am - we're not all the much villified imagined man in a grey suit who sits at a desk with his head down 'til he dies!

I tend to agree. The best people in the public sector will move to the private sector as and when they can, especially as job prospects generally improve and then we will be left with the dross running public services. Why anyone with a good degree in, say, science would go into teaching now is beyond me. People can already earn twice as much in industry, even more in finance, pensions were the only attractive feature of the public sector.

Loughton_Monkey

I wonder if Hutton should have used the words "Average Career Pensions" instead?