Career Average Pensions

Loughton_Monkey

bristol_pilot wrote: »

It seems the changes are going to hit the high-flyers the most; CARE delivers similar pensions to final salary for people who do not make so much of their careers. This would be fine if public sector workers didn't do very much, but I don't really want most nurses, teachers etc to be recruited from the bottom cohort of the ability range.

butterfly72 wrote: »

What do you mean be this?

Bristol Pilot may have flown away for a while. But I think I understand his point.

The first bit is obvious. You start work as a street cleaner, and stay there 40 years, then you basically get the same salary all along - a bit of wage inflation - but generally a 'flat' earnings record. So under the new regime, his pension will be very little different than it would have been under the old final (literally) salary scheme.

Now what he's getting at, is that someone with such a 'flat' career path - and no promotion - might be fine all round. The street cleaner is an honest hard working chap. He does the job well. He aspires to no more other than just do his job well. Fine!

But if your child is learning science (or whatever) from a 58 year old clapped out teacher who started as a junior teacher 35 years ago, and remains a junior teacher, then there is perhaps a possibility he isn't the best teacher in the world. Same with a nurse.

jamesd

bristol_pilot wrote: »

The type of pension is still very generous compared to the private sector. I am actually in the private sector with a money purchase scheme and would not swap that for a public sector pension but roughly one third of the salary (in my case). I paid 45% of my salary into my pension pot last year, more than my gross salary would have been if I had been doing the same job at HMG.

It's not just the type that's uncommon, it's the level of employer contribution - over 20% - as well. Not impossible for a few places in the private sector to do either but it's not the usual case.

Back in 2008 I paid something around 80% of my salary into a pension. I haven't looked into what the rates are for my job in HMG. I doubt it exists there, though some similar ones undoubtedly do.

jem16

Loughton_Monkey wrote: »

But if your child is learning science (or whatever) from a 58 year old clapped out teacher who started as a junior teacher 35 years ago, and remains a junior teacher, then there is perhaps a possibility he isn't the best teacher in the world.

With teaching (at least in Scotland) the classroom teacher who wants to remain a classroom teacher has little in the way of reward. To move onto Principal Teacher, Depute Headteacher and Headteacher normally also sees a move out of the classroom and into a management role. There are many excellent class teachers who don't want to be managers - they want to teach.

Years ago Scotland had Senior Teachers (in Primary) who were class teachers - no management duties. They had a slight increase in salary but only around £3k. (at today's levels) That was replaced by Principal Teachers and the plan was that that included management duties. Many Senior Teachers chose not to accept the Principal Teacher role and opted to stay (or basically revert back to) as class teachers.

They then introduced the Chartered Teacher scale - this was a bit like the Senior Teacher. However many older teachers chose not to follow this route as it cost them around £2k (paid by themselves), took many years to achieve and all for an eventual £3k increase.

The proposed changes to teachers' pay and conditions that we are being asked to vote on now are advocating removing this increment for anyone now commencing the Chartered Teacher modules. So do all the study, pay for the privilege and get no reward!

Clapped out the 58 year old may be, but he may be the best classroom teacher having opted to stay in class.

butterfly72

jem16 wrote: »

Clapped out the 58 year old may be, but he may be the best classroom teacher having opted to stay in class.

And the same principle with the nurse. They may choose to stay in the bottom band as a move up would mean more paperwork and less patient time for not a lot more money!!

But sadly, Bristol Pilot may well end up being cared for by the 'bottom cohort of the ability range'. The NHS are moving to recruit less and less qualifiend nurses and take on more healthcare assistants who are now doing 'nursing tasks' but without the solid training, theory and understanding of the qualified nurse. I think their top wage is around the 20K mark. (Of course the choice to remain an assistant may have nothing to do with intellect but at presetn they don't have equal access to advanced training and are not regulated!)

By what I've read here hopefully I won't suffer too much. I'll have around 12 yrs FS + added years in the NHS before they change over and I'll try to get the highest paid position I can before then, hopefully Band 7. I'll start the new scheme but can't imagine I'll rise too far up the ranks. How would career average affect the pension with regards to take maternity leave and then part time work?

Another thing, I wonder what will happen to my added years. I won't need them if I have to work to 68!

dunstonh

Another thing, I wonder what will happen to my added years. I won't need them if I have to work to 68!

You wont have to work to 68 if you can afford to retire earlier and accept the penalty.

Most likely will be that the old scheme will still allow its current age requirements but the new scheme (say 2012 version - as they used the years to show previous versions) will probably have state pension age linking with a reduction if you take the pension early. So, knowing that you may want to finish earlier that state pension age means you have to save extra to achieve that. You could phase the retirement but taking the "old" pension scheme earlier without penalty but not the later one which you can defer to scheme age when no penalty would exist.

Existing added years contributions would be interesting as they work on the old scheme. Those that are paying added years by regular contributions could find they continue to benefit from the old scheme rules for those.

It's still early days and lots of speculation but it may not be as bad as it sounds.

jem16

butterfly72 wrote: »

How would career average affect the pension with regards to take maternity leave and then part time work?

Another thing, I wonder what will happen to my added years. I won't need them if I have to work to 68!

Good questions but I have no idea as to the answers.

Fortunately it will not really affect me much as I'm due to retire from teaching in 2016. With any luck they'll be looking to get rid of me before any changes.

StevieJ

A few commentators have mentioned that many of the poorer paid workers in public industry will be better off with career average, anyone explain how? (I can see how they will be maybe no worse off).

Goldenyears

StevieJ wrote: »

A few commentators have mentioned that many of the poorer paid workers in public industry will be better off with career average, anyone explain how? (I can see how they will be maybe no worse off).

That depends on the annual accrual rate and the method of inflation indexing. If it was 2.3% and RPI revaluation as it was in the Nuvos scheme of the Civil Service (up to now) they would have beeen better off with career average if the scheme retirement ages were the same as FS. If they are not the same it's not easy to compare and CPI revaluation muddies the waters further.

cvd

A few commentators have mentioned that many of the poorer paid workers in public industry will be better off with career average, anyone explain how? (I can see how they will be maybe no worse off).

See here:

http://www.actuaries.org.uk/news/press-releases/articles/actuaries-career-average-pensions-could-benefit-lower-paid-public-secto

If the CARE system uses indexation by average earnings whilst the pension is accumulating, then it is a very good scheme for lower earners. This is what has been recommended by Hutton.

The trouble with CARE schemes is that their worth is very dependent on the indexation used because the first year, for example, is indexed for over 40 years. If indexation by CPI is used whilst the pension is accumulating, then it is a poor scheme for everybody.

So all those people saying "CARE schemes are good" or "CARE schemes are poor" without qualification are all talking rubbish.

nic_santorini

There are so many comments on here, what is wrong with trying to work up the pay scale, there is not anyone at the top of my team with a degree - they have all earnt their place at the top and worked hard over 30 years to get there, it looks like we are going to be penalised for wanting to better and develop ourselves.

When will people realise, it is ONLY people that stay in the same job, at the same pay scale for their entire career that it will NOT affect. Any change in pay scale throughout a 30 (well now 35-40 years) will see a lower pension - really who are the government trying to kid. I believe the government have a duty to provide EVERY public worker with a personal projection of the loss they are causing. I know there has to be a certain change, but it should be for new employees, not existing ones.