Public sector wellcome to the real world

MoneySaverLog

Just saw a programme on ITV 1 about a guy who paid into his pension for 40 years only for the company to go bust and ending up with nothing in retirement and this got me thinking.

How safe is the National Grid Defined Benefit (Final Salary) pension scheme? I've been in it since I was 30, I'm now 41 should I be investing more than the standard 3% in a pension. Would this be best as AVC's money purchase or added years. Or should I have a second private pension outside the company.

I got the impression I should be investing 15% from when I was 30 and now I should be investing 20% at 40. Am I investing enough?

dunstonh

Just saw a programme on ITV 1 about a guy who paid into his pension for 40 years only for the company to go bust and ending up with nothing in retirement and this got me thinking.

That sort of event is extremely rare and largely historical. The pension protection scheme put an end to most of the worries there.

I got the impression I should be investing 15% from when I was 30 and now I should be investing 20% at 40. Am I investing enough?

No. That is not how it works. Its a rough guide to an indication of how much you should pay in the first you start contributing. After that, its just indexation for inflation/earnings. However, it is only meant a guide to make sure you realise the realistic level of contribution you should be making.

You wouldnt believe the number of people that have been paying £30pm for 30 years who then complain that their pensions are useless as they though that they would get £1500pm in retirement from their £30pm contribution. They then blame the pension rather than their unrealistic contribution.

MoneySaverLog

dunstonh wrote: »

You wouldnt believe the number of people that have been paying £30pm for 30 years who then complain that their pensions are useless as they though that they would get £1500pm in retirement from their £30pm contribution. They then blame the pension rather than their unrealistic contribution.

At the moment I'm paying in £72 per month (3%), and now I wonder if this is enough.

JoeCrystal

MoneySaverLog wrote: »

At the moment I'm paying in £72 per month (3%), and now I wonder if this is enough.

Just one thing to clear up... You pay into National Grid Defined Benefit Scheme right? In this case, the National Grid take on all the investment risks and costs onto themselves to provide you a defined benefit (based on how many years you pay into). If this is a case indeed, then it would be employer that be paying in vast amount of money in comparison to your contribution.

It is often mentioned that to get something like good final salary pension scheme (40/60) requires 25% of your incomes through your entire working life.

EDIT: I went to the National Grid DB Section website.

It mentioned that it requires 3% of your salary (£28,800). Which sound right. It also said that the formula is 1/60 of pensionable salary for each year and day of pensionable service. So since you been paying 11 years worth, it is now 18% (£5,184) so far. Your Employers’ Contribution btw is 29.4% of your salary (on the whole of pension scheme). So basically, you pay £72 per month into it, your employer on other hand is paying £705.60 per month into it (more if your salary keep going up over next twenty four years).

It may worth reading more about your pension scheme that you are paying in.

There is a reason why Final Salary Defined Benefit Scheme are like gold dust these days. Your employer closed it to new members after April 2008.

dreavi

I think I'm paying enough into a pension, I have a public sector pension thats still pretty good (final salary) I doubt it will last until I hit 65 though but the longer I last in it the better right?

atush

dreavi wrote: »

I think I'm paying enough into a pension, I have a public sector pension thats still pretty good (final salary) I doubt it will last until I hit 65 though but the longer I last in it the better right?

Right.

Enjoy it

ljjratcliffe

I'm late to this...too long to read all so might repeat.

I'm a public sector employee and did join local government mainly because I wanted to work in social care and partly because of the terms and conditions, the same as anybody could if they so wished.


Firstly I'd like to say that only something like a 3rd of private employees pay into a private pension, which means the tax payer...me and you pay for their extra pension credit, as well as any other benefits, like housing etc. Why not all be responsible and save for their future, like those private and public sector pension savers, thus saving us all money in the long run. I will get less tax payers money paid into my preportion of my public pension money (as I can't retire until 67) than someoby with no pension and therefore dependent on the state. If people opt out of public pensions or don't get enough, they too will need your money to pay for their benefits in retirement....a much more expensive option.

In terms of the local authority pension and the extra money the condems want us to pay, that money is not going into what is a cash rich scheme, it's going straight to paying off the deficit (therefore an extra tax on public workers....so we're not all in it together)......taking all public pension types into account (there are 200 plus different schemes) our extra 3-6% will be millions if not billions. Now if the cost of pensions becomes too much for us to pay, people may opt out. If only 20% of people opt out, the pensions will collapse. Public pension money accounts for 17% of all the money invested in the stock market...........mmmmm, not so good if that money dissapears then.

Why can't people see that we all deserve decent pensions. Ours are the worst in Europe. Why do you want everybody in the same state of poverty, rather than fighting for better pensions for all. Sounds kind of crazy to me....do you value yourself so little that you think you and all other hard working people, deserve a retirement of cold winters, little food and a pitiful scramble to death.

The goverments main aim, is to make us pay more money into a scheme and make us work longer. Retire at 68, die at 70......and hey presto....a bonus for the goverment because only 2 years of pension (rather than the average 16 years quoted in the Hatton report). I don't actually think I will make 67 (my current pension age, 68 is for the younger ones) + 16 = 83 years old....I'll be so lucky!

I'm a social worker with older adults, helping to find care homes, set up care at home, etc etc (which by the way, if the condems get there way you will have no entitlement to given local authorities are in the process of trying to relieve their duty to provide these services) so if I'm still working at 67, I could perhaps set up my own care whilst I'm at it!

The_Angry_Jock

ljjratcliffe wrote: »

The goverments main aim, is to make us pay more money into a scheme and make us work longer. Retire at 68, die at 70......and hey presto....a bonus for the goverment because only 2 years of pension (rather than the average 16 years quoted in the Hatton report). I don't actually think I will make 67 (my current pension age, 68 is for the younger ones) + 16 = 83 years old....I'll be so lucky!

Where did 70 years old come from? According to the NHS website average life expectancy is over 80 and rising:

* I can't post a link, being a n00b.

ljjratcliffe

I smoke, i'm fat, I don't excercise, in short, i'm doing you a favour, I don't expect to live until im 80+.

Whilst this could be true, it's not. But I have smoked for a long time (not now) and i'm not particulary health concious, though not a complete couch potato. My expectation is however, given my history of smoking, that I won't live to see the average age (of death).

The_Angry_Jock

So why waste your time paying into a pension if your so sure it's a waste of money?