NHS Pension

Thicko2

Well supposition is fine but i can so no evidence of a union telling its members to leave their pension schemes. No poster here on the subject appears to be saying my union is telling me this. Indeed i think they would be doing a disservice to their members except possibly for GPs and the BMA.

They are doing a good job on telling members of the impact of the proposed changes upon them and the evidence base behind these proposals. A couple of examples.

http://www.unison.org.uk/acrobat/19833.pdf

http://www.pulsetoday.co.uk/main-content/-/article_display_list/12580797/we-must-unite-against-the-pensions-reforms

The basic message from the unions is pay more, get less, and recieve your pension later is the heart of their campaign. A pretty factual position.

So we have no campaign or published union information which says leave schemes now or in the future. The acid test would be the response to a member if they went to a union representative to say i am thinking of leaving the pension scheme what should i do?

Based on the fact that the unions understand the benefits i cannot see how they could/would advise this course of action.

jackyann

As an NHS pensioner, I have posted on some of the other threads, so glad I signed on the dotted line back in 1969.....
None of us knows what is going to happen in 30+ years' time, so you have to speculate, and i suggest you consider:

1. The sheer size of the NHS & the number of people affected by changes. Any government has to think carefully about this (I'm sure some MSE will correct me if I'm wrong in saying: largest employer in Europe & 3rd in the world)
2. All changes are signalled well in advance, and usually with a choice about staying in the scheme you signed on for.
3. Although the unfairness of just being lifted out of the poverty trap is a common one for many pensioners of all kinds, we don't know how that will work in the future. We certainly can't guarantee the level of help offered to anyone in poverty.
4. The ideas that NHS pensions are not too good was being peddled about 10-15 years ago, and a number of doctors opted out, and are now making claims based on the mis-selling of their private pensions.


Myself, I would gamble (and I do make a small profit on the horses!) on the NHS being best in the long run. Good luck with your decision, and you career.

Zelazny

Looking at the LGPS leaflet, there's not a lot of useful information there. Points 1 and 2 are trivia. Point 3:

The LGPS has a positive cash flow, with income from investments and contributions exceeding expenditure on benefits by £4-5billion every year.

Doesn't actually tell you anything about it's funding position. Private sector schemes are required to hold enough assets to be able to pay benefits that have been promised to all members if the scheme were to suddenly stop, or if they don't have sufficient assets they have to arrange with the pensions regulator a timetable over which they will increase assets to this position. From what I can see on a quick google (http://www.hymans.co.uk/PublicSector/Exclusive/Documents/110630%20Navigator%20Results%20Paper.pdf and http://www.cipfa.org.uk/panels/pensions/download/2007_LGPS_Valuation_Survey_Results.pdf) the LGPS was underfunded in 2007 (approx 83.5%), and underfunded in 2010 and 2011 (approx 77% funded in 2011). This tells us that the while the scheme may have positive cashflow, it can't afford to pay out all the benefits that it owes. How can this be fixed? Increase contributions, decrease benefits or both.

Point 4 means little without something to compare it against. Point 5 makes it clear that the LGPS is cheaper than the average private sector equivalent. Point 6 says that in future contributions you make will be matched by your employer, rather than your employer paying 3 times as much as you. Oh noes! That's still not a bad deal. The fact that 40% of people are likely to opt out just highlights the lack of forethought and understanding they possess (and surely this would be a good place to point that out - it's still free money!)

Point 7 is saying employees will have to pay more (which is presumably how they plan to correct the funding position). Point 8 then claims that this is instead a tax on pension saving (which after a little thought could mean that the employer contributions decrease by as much as the employee contributions increase - but that would be stupid and won't correct the fact that the scheme is underfunded... I guess it's at least backed by the government though)

Point 9 is trivia. Point 10 is highly misleading. Most pensions in payment will have been on the old regime. If the average salary is £24,000 (just a guess) and the average pension in payment is £4,200 per year then the average person has about 14 years service in the scheme. They'll have contributed (even at the new higher rate) 6.6% x 24k x 14 (ignoring inflation and the like for this simple calc) = £22,176. When they retired they will have received a lump sum of £12,600, so their net contributions are more like £10k. To purchase an annuity of £4,200 on the open market would cost you somewhere in the region of £84,000, so they've made gains of ~£74k over 14 years of service. This is more than £5k per year, or 22% of their salary. Bear in mind also that if the average overall is £4,200 and the average for women is £2,870, then the average for men must be higher. More women are going to work part time, and this is likely the cause of the women's figure being lower.

jamesd

Thicko2 wrote: »

Well supposition is fine but i can so no evidence of a union telling its members to leave their pension schemes. No poster here on the subject appears to be saying my union is telling me this.

It's certainly supposition. We simply observe the change in postings.

Thicko2 wrote: »

Indeed i think they would be doing a disservice to their members except possibly for GPs and the BMA.

I agree.

Thicko2 wrote: »

They are doing a good job on telling members of the impact of the proposed changes upon them and the evidence base behind these proposals. A couple of examples. http://www.unison.org.uk/acrobat/19833.pdf

That's the sort of biased and misrepresenative positioning that I think is causing members to think that their pensions are a bad deal. But I don't expect anything other than that from a union trying to encourage its members to be willing to take industrial action. Such things are expected and here we try to pick up the pieces and point them back on the right track.

It's pretty dismal that the LGPS has only a 75% take-up rate when it's paying such generous benefits compared to private sector schemes. My previous private scheme paid a good deal less and yet had over 98% participation rate. Seems that Unison has some serious campaigning to do if it's interested in trying to improve the long term position of at least 25% of its member by getting them into the pension scheme.

jamesd

Zelazny wrote: »

Point 5 makes it clear that the LGPS is cheaper than the average private sector equivalent.

That's actually one of the more significant biases in the document. It's presumably comparing to schemes that are no longer available to new or job changing private sector employees: defined benefit schemes. Private sector employees get more like 6% employer match into a pension these days, except for those lucky enough to be in legacy defined contributions schemes. Even those are increasingly being closed. And the members take all the investment and longevity risk in modern private sector pensions.

But it's to be expected that a union trying to encourage industrial action will make outdated comparisons to try to distort the picture. That's just how large scale public sector disputes go.

Old_Slaphead

Zelazny wrote: »

Point 5 makes it clear that the LGPS is cheaper than the average private sector equivalent.

All LGPS publish accounts which show employer contribution rates. The samples I've looked at all show around 16-22%, I've not seen one as low as 12.2% (maybe this statistic was taken from a few years ago).

As for a 15% private sector employer contribution - I'd be interested to see where that figure came from. (Maybe on like-for-like schemes but now they are virtually obsolete in prvate sector).


Your comments on point 9 are spot on (I'd calculated a 12 year FTE average employment period). To show averages that include short service & part timers in is grossly misleading.

Thicko2

Jamesd - you do not simply observe. You draw a conclusion that unions are telling their members to leave their pension schemes. There are no facts for this. Most unions encourage members to take up the schemes for the benefits.

I dont know what your old company was, was the pension scheme contributory or free. Many of the poorly paid workers despite the obvious benefits choose the cash in the pocket now approach.

the unions are trying to protect their members terms and conditions, thats their job and role. Explaining how their benefits are impacted is important to this.

Agree on point 5, they are clearly comparing defined benefit vrs defined benefit. But is it best to compare apples and apples?

How can a fact be misleading?

I am not geared up on latest policy on LGPS as i do believe the government said they would look at this further. The issue of point 8 at the time was despite the plan to raise employees contributions to the scheme, this was not leading to extra investment in the scheme but was being used for defecit reduction rather than funding the scheme.

Old_Slaphead

Thicko2 wrote: »

The issue of point 8 at the time was despite the plan to raise employees contributions to the scheme, this was not leading to extra investment in the scheme but was being used for defecit reduction rather than funding the scheme.

In the LGPS which is a funded (albeit underfunded) scheme - you've absolutely no evidence to support this assertion.

I suspect that their comment is wrong. How will payroll differentiate between pre & post increase when making payts to the pension fund ?

Thicko2

http://www.direct.gov.uk/prod_consum_dg/groups/dg_digitalassets/@dg/documents/digitalasset/dg_196165.pdf

They banked the extra contributions in the 2011 budget going forward from 2012/13 onwards. Page 49 i think.

Now to be fair they are currently reviewing this.

Page 50 is good as well slaphead. The savings accruing from RPI to CPI - you'll like those:rotfl:

Thicko2

No Extra Funding for the Scheme

The £1bn member contribution increase is not being used to improve the funding of
the scheme. The central government grant to councils and devolved institutions is
being reduced by the same amount as the contribution increase is intended to
generate. The result is that local authorities will reduce their employer contributions

UNISON Protect Our Pensions LGPS campaign 1 5

to the LGPS by 3.2%, so the net effect on the scheme’s funding level would be zero.

However there is every reason to believe that authorities will be left worse off.

This is how Unison intepreted the proposals back in April when the were proposed.