Public sector pensions information

Ygor

Stargazer57 wrote: »

So if the LGPS combined contribution cap is 17.3% of which the employee pays 8%, contracted out rebates provide 2.4% and the employer 6.9%, the real value of the benefits is around 26% of which the employee pays 8%, contracted out rebates are 2.4% and the employer provides the remaining 15.6% either in contributions or by underwriting the guaranteed benefits.

With a defined benefit scheme, while there's a cost in increasing employer contributions when there's a deficit, there's also a benefit in reducing employer contributions when there's a surplus.

Not yet clear if there's a cap on employer contributions (as agreed in 2007 changes for NHS, Teachers and Civil Service. It wouldn't surprise me if there was to ensure taxpayers don't pick up the bill) so pension guarantees could easily be underwritten by employees rather than employers.

Rather telling comparing the contributions to the funded LGPS and unfunded schemes if the 'cost envelope' is the same.

taktikback

Not sure about the figures posted for the LGPS. I've seen detailed figures (for an academy conversion) which put the employers contribution at around 21% - excluding the employees contribution. The standard employers contribution is around 17.5% plus an additional 3% or so, to adjust for the individual profile of the academy payroll. Even before the academy switch, the employers contribution was around 20% which assumed the national payroll profile

Ygor

taktikback wrote: »

Not sure about the figures posted for the LGPS. I've seen detailed figures (for an academy conversion) which put the employers contribution at around 21% - excluding the employees contribution. The standard employers contribution is around 17.5% plus an additional 3% or so, to adjust for the individual profile of the academy payroll. Even before the academy switch, the employers contribution was around 20% which assumed the national payroll profile

The quoted figures are for the new schemes due in 2015, not the existing schemes.

taktikback

I'm pretty sure that the cap is 17.3% on employer contributions from 2015. The article doesn't say that includes the employee contribution -It says "with" the employee contribution. The difference between 17.3% and the 21 ish % which is the current cost will be realised through an additional 3 ish % increase in employee contributions, a slight lower accrual rate and a slightly later retirement date - and career averaging from 2015

Ygor

taktikback wrote: »

I'm pretty sure that the cap is 17.3% on employer contributions from 2015. The article doesn't say that includes the employee contribution -It says "with" the employee contribution. The difference between 17.3% and the 21 ish % which is the current cost will be realised through an additional 3 ish % increase in employee contributions, a slight lower accrual rate and a slightly later retirement date - and career averaging from 2015

Ah... I took the 17.3% to be the overall standard contribution (i.e. cost of the new pension before the current scheme deficit is taken into consideration)