Public sector wellcome to the real world

toshy

jem16 wrote: »

Public sector pension contributions are paid from gross salary before you are taxed - this means that you get automatic tax relief as your tax is then calculated on the lower amount. There is no need to change the tax code.


So that is no benefit either way to the vast numbers of public sector workers whose salary is insufficient to qualify for paying tax in the first place, yet when they get a reasonable pension in the end when compared to their working salary, suddenly that's wrong??

jem16

toshy wrote: »

whereas AVC's were only introduced recently as an option during the last reform

AVCs have been around for at least 20 years and probably a lot longer.

which took away most of my lump sum entitlement which was originally part of the T&C of my contract with the government which to me made up for the low salary I accepted in the public sector.

Where on earth are you getting your info from?

Membership before April 2008 still has the automatic lump sum of 3 times your annual pension based on an 1/80ths scheme.

Membership from April 2008 is based on a 1/60ths scheme and the llump sum comes from commuting part of the pension. If you do choose to commute it is exactly the same as the 1/80ths scheme.

jem16

toshy wrote: »

So that is no benefit either way to the vast numbers of public sector workers whose salary is insufficient to qualify for paying tax in the first place,

So you are saying that the vast majority of public sector workers are earning less than £7475?

yet when they get a reasonable pension in the end when compared to their working salary, suddenly that's wrong??

I haven't said anything is wrong. I simply answered your question about how tax relief is gained as you don't seem to know.

toshy

jem16 wrote: »

AVCs have been around for at least 20 years and probably a lot longer.



Where on earth are you getting your info from?

Membership before April 2008 still has the automatic lump sum of 3 times your annual pension based on an 1/80ths scheme.

Membership from April 2008 is based on a 1/60ths scheme and the llump sum comes from commuting part of the pension. If you do choose to commute it is exactly the same as the 1/80ths scheme.

If AVC's were around before then then we were not made aware of them until the LEA offered to bring in financial advisors to help us minimise the outcome of the changes in 2008.
If you had read my previous posts you will see that my initial contributions were made when I worked for the NHS. I commuted my pension when I moved to the education sector, but my lump sum was not preserved in the LGPS changes.
Yes it was my choice to move and I accept that. But I always have and always will pay my share to contribute towards my pension, I don't think I or any-one else in the public sector should be slammed for that.

toshy

jem16 wrote: »

So you are saying that the vast majority of public sector workers are earning less than £7475?



I haven't said anything is wrong. I simply answered your question about how tax relief is gained as you don't seem to know.

Yes I didn't know, because it has never been explained.
And yes many support staff hours have been reduced in order to preserve techer posts so many now work less than 20 hrs a week for only 38 weeks per year. If a full time wage on 52 weeks is £12,000 per year, then this brings them below the tax threshold. In my school out of 116 support staff 87 fall into that category.
Maybe it is different where you work? I cannot comment on that. But thanks for the info.

toshy

toshy wrote: »

Yes I didn't know, because it has never been explained.
And yes many support staff hours have been reduced in order to preserve techer posts so many now work less than 20 hrs a week for only 38 weeks per year. If a full time wage on 52 weeks is £12,000 per year, then this brings them below the tax threshold. In my school out of 116 support staff 87 fall into that category.
Maybe it is different where you work? I cannot comment on that. But thanks for the info.

And as our school is a PFI school, all cleaning and site staff are employed privately, I would imagine in other schools not managed by PFI the proportion would possibly be even higher.

toshy

Paying into the LGPS pension scheme is not compulsary for staff on very low incomes but the vast majority still choose to do that, as they are encouraged to do so by their employer. I'm not convinced that this is the best deal for them as it automatically opts them out from SERPS. I'd suggest that it would be far more beneficial to all if all the facts and effects on pensions were clearly given to staff from the start and regular up-dates sent out. That way it would be a much more transparent system and workers would know exactly what their options were and where they stand.
(Just a thought if any-one up there is reading this!!)

toshy

erdd2 wrote: »

So, as expected no desire to search for self or proffer courtesy, get off my case and search a case, Court website databases hold thousands of decisions regards persons so and so v such an such public body, patientopinion web illustrates many aggrieved persons..

Oh I'm sure there are many aggrieved persons! I'm afraid that is what happens when front-line staff levels are cut to balance government spending. Judging by many comments on this thread, public sector staff are really not worth having in the first place anyway, so I guess the situation can only get worse.
If I were you I'd start paying into BUPA pretty quickly because soon you will have no NHS to lean on. But don't blame the workers who just want to do an honest days work for an honest day's pay.

jem16

toshy wrote: »

If AVC's were around before then then we were not made aware of them until the LEA offered to bring in financial advisors to help us minimise the outcome of the changes in 2008.

Do you know what effect those changes had on you?

Most of the changes were minimal in the LGPS;

1. Retirement age remained at 65.

2. It changed from an 1/80ths scheme to a 1/60ths scheme. So if you had 40 years full service in the old scheme you had a 1/2 final salary pension plus lump sum of 3 x pension. In the new scheme that would be 2/3 final salary pension and the ability to commute part of the pension to take a lump sum. That works out exactly the same - new scheme is actually slightly better if you take the full 25% tax free lump sum.

3. Death in Service benefits were increased from 2x salary to 3x salary.

4. Contributions rates for anyone earning under £19k in 2008 actually decreased - so this would be the "vast" majority that you talk about.

5. AVCs always existed so no change. Buying Added Years was discontinued (although those already paying could continue) and was replaced with Additional Pension. Added Years was a much better option but not so many people chose this because of its high cost relative to using the AVC option.

Other public serrvice schemes saw no change for existing members (other than the removal of Added Years) but new members had their retirement age increased from age 60 to age 65. Now I agree that's not so good as it affected teachers and NHS staff who will find it difficult to continue after age 60.

However all in all, for the LGPS there hasn't been much change so far.

If you had read my previous posts you will see that my initial contributions were made when I worked for the NHS. I commuted my pension when I moved to the education sector, but my lump sum was not preserved in the LGPS changes.

Could you explain what you mean by "commuting" your pension when you left the NHS? Commuting means giving up some of your pension to take more lump sum and can only happen when you actually retire.

Do you mean that you left your NHS pension where it is and became a deferred member or do you mean you trasnferred your NHS pension to the LGPS?

As to the lump sum - you have lost nothing on this as I have already explained above.

Yes it was my choice to move and I accept that. But I always have and always will pay my share to contribute towards my pension, I don't think I or any-one else in the public sector should be slammed for that.

No I fully agree with you on that.

However a lot of your gripe seems to be because you don't fully understand your pension scheme and the changes to it in 2008.

toshy wrote: »

If a full time wage on 52 weeks is £12,000 per year, then this brings them below the tax threshold. In my school out of 116 support staff 87 fall into that category.

It's swings and roundabouts really. If you don't earn enough to get tax relief, it is unlikely that you will have enough pension to pay tax on .

However I still don't think it's fair to say that the "vast majority" of public sector workers earn less than £7475.

toshy wrote: »

Paying into the LGPS pension scheme is not compulsary for staff on very low incomes but the vast majority still choose to do that, as they are encouraged to do so by their employer.

It's not compulsory for anyone on any income to pay into it. However they would be pretty stupid not to.

I'm not convinced that this is the best deal for them as it automatically opts them out from SERPS.

The benefits received in place of SERPS in a final salary scheme far outweigh what you would get by remaining in SERPS/S2P.

I'd suggest that it would be far more beneficial to all if all the facts and effects on pensions were clearly given to staff from the start and regular up-dates sent out. That way it would be a much more transparent system and workers would know exactly what their options were and where they stand.

I agree people should know more about their pension scheme. However scheme booklets are available for anyone to read and regular updates have been sent to establishments and put on the websites. Problem is - how many actually read and understand them? I'm not sure that you do.

The changes to the public sector have to take place - they are simply not sustainable in their present form.

Most of the changes so far proposed by Hutton will make little difference to the majority, except for the increased contributions of approx 6% to 9% for some ( not sure how this affects the LGPS). A CARE scheme will affect higher earners rather than the average to low earner.

The increase in the retirement age will have a big effect but again it's probably necessary.

At the moment all benefits already built up will be preserved - rightly so.

Indexation changing from RPI to CPI with no consultation - then yes that's a gripe.

toshy

jem16 wrote: »

Do you know what effect those changes had on you?

Most of the changes were minimal in the LGPS;

1. Retirement age remained at 65.

2. It changed from an 1/80ths scheme to a 1/60ths scheme. So if you had 40 years full service in the old scheme you had a 1/2 final salary pension plus lump sum of 3 x pension. In the new scheme that would be 2/3 final salary pension and the ability to commute part of the pension to take a lump sum. That works out exactly the same - new scheme is actually slightly better if you take the full 25% tax free lump sum.

3. Death in Service benefits were increased from 2x salary to 3x salary.

4. Contributions rates for anyone earning under £19k in 2008 actually decreased - so this would be the "vast" majority that you talk about.

5. AVCs always existed so no change. Buying Added Years was discontinued (although those already paying could continue) and was replaced with Additional Pension. Added Years was a much better option but not so many people chose this because of its high cost relative to using the AVC option.

Other public serrvice schemes saw no change for existing members (other than the removal of Added Years) but new members had their retirement age increased from age 60 to age 65. Now I agree that's not so good as it affected teachers and NHS staff who will find it difficult to continue after age 60.

However all in all, for the LGPS there hasn't been much change so far.

Could you explain what you mean by "commuting" your pension when you left the NHS? Commuting means giving up some of your pension to take more lump sum and can only happen when you actually retire.

Do you mean that you left your NHS pension where it is and became a deferred member or do you mean you trasnferred your NHS pension to the LGPS?

As to the lump sum - you have lost nothing on this as I have already explained above.

No I fully agree with you on that.

However a lot of your gripe seems to be because you don't fully understand your pension scheme and the changes to it in 2008.



It's swings and roundabouts really. If you don't earn enough to get tax relief, it is unlikely that you will have enough pension to pay tax on .

However I still don't think it's fair to say that the "vast majority" of public sector workers earn less than £7475.



It's not compulsory for anyone on any income to pay into it. However they would be pretty stupid not to.

The benefits received in place of SERPS in a final salary scheme far outweigh what you would get by remaining in SERPS/S2P.



I agree people should know more about their pension scheme. However scheme booklets are available for anyone to read and regular updates have been sent to establishments and put on the websites. Problem is - how many actually read and understand them? I'm not sure that you do.

The changes to the public sector have to take place - they are simply not sustainable in their present form.

Most of the changes so far proposed by Hutton will make little difference to the majority, except for the increased contributions of approx 6% to 9% for some ( not sure how this affects the LGPS). A CARE scheme will affect higher earners rather than the average to low earner.

The increase in the retirement age will have a big effect but again it's probably necessary.

At the moment all benefits already built up will be preserved - rightly so.

Indexation changing from RPI to CPI with no consultation - then yes that's a gripe.

I totally agree that people in the public sector should know more about their pension scheme. Sadly this is usually onlt available upon request rather than sent out automatically.

If you were to look at the total work-force within the public sector, prior to the move to more PFI initiatives, you would find many public sector workers in the support areas earned less than the minimum level to pay tax. Many of them have now been removed from that bracket when services were privatised, so swinging the balance somewhat.
My NHS pension was transferred to the LGPS in 1999.
As far as my lump sum goes, I can only base this on the pension notifications sent out to me anually by the LEA for whom I work. It clearly now has reduced by £3,000 (from £10,000) although I can chose to reduce my current £7,800 a year pension back into it in order to take it as a lump sum rather than an annual pension.
I am 61 and have just started to claim my government pension of £109 per week which I believe is the basic rate.
Luckily, now, with the loss of NI contributions I am now earning more than I ever did when I actually worked.
I hope to work for a further 10 years to bring my pension back up to the level that it previously was by paying for the AVC's I took out.
If the final pension scheme was scrapped in favour of an average salary scheme, I'd personally be more than happy as I've recently had to take a salary cut rather than be made redundant, however many in the public sector may not feel the same way and I perfectly understand why they may not.
I have an hons degree in science and spent may years in the field of medical research producing and testing viral vaccines, only to change my job in order to care for my family without either myself or them needing to rely on state benefits.
I have private medical insurance and I'm paying into a scheme to pay for my provision in old age when I will probably need a care home. I do not own a car and I have not had any holidays abroad except for one in 1989. But that has been my choice, it also is every-one else's choice.
Regardless, I still defend the workers in the public sector, and those who slam them really need to consider where they would be if it didn't exist.