Incensed again

Backbiter

The_Angry_Jock wrote: »

In order for me to have 20% pension contributions I'd have to put in 14% of my salary as maximum employer contributions are capped at 6%.

Employer contributions are part of your overall salary package - they are deferred pay. It is normal for the packages to be different between employers. 14% just happens to be the part of the teachers' package that they don't see until they retire. Other employers offer other benefits like cars, or private health cover, that they do see while they work, not just in retirement.

To go back to the pensions calculator I used above, I entered two things wrongly. The Government plans to put up teachers' contributions by 50% to 9.6%, and make them work to 68, not 65 as I put in.So the true figures, to compare the actual value of the teachers' pension with what is being proposed, would be:

ANNUAL PENSION AT 68: £38, 175.

The 'reformed' teachers' scheme would pay 40/60ths of £37,000, giving an annual pension of £24,440.

Doesn't look like a fair deal to me.

EDIT: I've just read the BBC report on the Government's offer, which states: "the government says that a teacher with a final salary of £37,800 would receive a pension of £25,200 each year, up from the £19,100 they would earn under their current scheme, whilst a nurse, with a final salary of £34,200, would get an annual pension of £22,800 rather than the £17,300 they would have been entitled to under the old scheme."
http://www.bbc.co.uk/news/uk-politics-15553202

The fact is, of course, that it will no longer be a final salary scheme, but a career average scheme. Obviously, for the purposes of a comparison, the Government figures and those I inputted assume that the final salary is a career average. In reality, teachers' starting salaries - and therefore their contributions - are far lower in the first few years.

MoreOn

Backbiter wrote: »

The fact is, of course, that it will no longer be a final salary scheme, but a career average scheme. Obviously, for the purposes of a comparison, the Government figures and those I inputted assume that the final salary is a career average. In reality, teachers' starting salaries - and therefore their contributions - are far lower in the first few years.

and does £37,000 exist on every teachers/public sector salary scale, how long does it take to get to £37,000 and what are the mechanisms that prevent reaching £37,000...

dshart

paulrn wrote: »

I would like to throw my hat in the ring here, I cannot go into vast amounts of figures but can give some insight into how I and my other half feel about the pensions. As my tag suggests I was in the RN I joined and did 37 years and I am now on pension. When I joined I did not think about the pension but as time progressed it became the major fact for me staying, It was part of the package and promised to me by the various governments of the day. My friends in the 80's / 90's and 00's were on better equivilant pay and raved about their pension pots they made their choices I made mine. My partner is a Civil Servant still working and made the same choices we would work and in many cases do the jobs that others would not do and put up with conditions others would not.
It takes a certain type of person to be shot at, deal with angry violent customers in Job Centres and tax offices and to put up with violent drunks in emergency and casualty wards. In the main they do not moan and get on with it expecting promises to be upheld.
It is fair in the present climate that contributions be raised but not at the same time as reducing the amount paid out and the age it is collected, it is also fair to change the rules for those joining now as they will be able to make an informed decision.
The Government and press have whipped this up into a frenzy which give people who are struggling a target to become emotional about, we keep hearing its not fair, never once did anybody say to me when they were collecting good wages and bonuses and their pension pots were growing at silly rates fueled by the stock market, would you have offered to give up some of that.
Remove the emotion the country has made a commitment and there is little point in becoming vitriolic about this put the mail and express to one side and move on.

You feel it is unfair for changes to be made to your pension scheme as you made decisions based on what you were told at the time and that it is okay to change it for new members, but what about the people in private sector pensions? You seem to think that they all had gold plated pensions that they boasted about, well that is incorrect. Majority like myself have never had access to a final salary pension scheme, majority of the time it was up to the individual employer to decide if they wished to make contributions and only relatively recently has there been more statutory requirements for employers to make contributions.

So like many others I had to start a pension myself with no employers contributions. As you mention when you are young you don't really think about pensions so if your employer is not making contributions then many people are not likely to save. Its only as people get older that they start to think about retirement and pensions. You were lucky and already had these contributions made for you even when you didn't think much about pensions. When I started my pension saving all I was given were some estimates of what I would need to save to build a pension pot to retire on, but these figures were based on the known figures at the time, as I mentioned in another thread, at the time I was told as a rough figure work on £100k pension pot buying an annuity of £10k. Now £100k will only get you about £3.3k. So how can you say people made informed decisions, especially as along the way there have been many changes to private pensions and raids on the funds by governments. Was I able to protest these changes? well the only way was through the ballot box but as has been mentioned before chancellors from both main parties have raided private pensions. Private pensions have just had to adjust to new requirements and make the most of it unlike public sector pensions where you have always known roughly what you were likely to get as it is a final salary scheme.

Uglymug

So basically:

In the public sector, paying 7.5K a year for 40 years gives a guaranteed pension of about 25K a year.

In the private sector, paying 7.5K a year for 40 years gives a “vast” pension pot of about £300,000 which, if you’re lucky, will buy an annuity paying about 10K a year. (Assuming annuities don’t keep going down and not too much is lost due to stock market crashes, pension fees, etc. etc.).

Shouldn’t the private and not the public sector be the ones on strike?

hugheskevi

Shouldn’t the private and not the public sector be the ones on strike?

Their first priority should be to find a fund manager who can give them something better than 0% return over 40 years.

Uglymug

hugheskevi wrote: »

Their first priority should be to find a fund manager who can give them something better than 0% return over 40 years.

You're lucky if you find one that returns all of what has been put in.

The stock market has done nothing for 10 years.

Most of my yearly statements show negative growth.

Bigsmak

jem16 wrote: »

Thanks for getting back to us.

However what you are now saying is a little different to what you first said.



You implied that the "Union" rep had left propoganda which now seems not to be the case.



As I said it was much more likely to be a rep from the Prudential pushing AVCs. Each school has its own rep and wouldn't normally be preaching to the masses on a stage.

Hey

Most of the literature she got is found here

http://www.unisoneastern.org.uk/campaigns/pensions/

To clarify, My lass, who is a teacher and doesn't know about lots about finance etc, said that the impression she got from the presenter (not the school rep but one who came specifically to talk with them) was that she would be better off having a private pension rather than the school one.

The info she was given doesn't say this and I think all of it is from the above website.

I just want to make sure I am coming across factually correct as I don't want to mislead anyone.

dshart

Moby wrote: »

No problem with any of this and I did already know it but the question is how you decide who pays the costs ie how you spread the misery! Many of us fear that those who hold the levers of power make the decisions in such a way that their own interests are protected. The system itself needs radical reform....starting with a Robin Hood tax!

I see Francis Maude now says we can have a little strike for 15 mins without losing any pay........another cynical attempt to divide and rule and it just shows where they are coming from....exploiting dissension to weaken resolve....a cynical Govmt lacking principle!

I can agree that the whole system needs a radical reform and yes which ever side is in power seem to make decisions that protect their own interests, but at the end of the day everyone has to share in the misery and public sector pensions being part of the problem need to be reviewed. The new proposals actually penalise public sector workers on higher salaries more than those on lower ones, so this should already be more acceptable to your way of thinking than remaining on the current system. Remember which sector will be hardest hit if the country goes bust. At a basic level not counting how both sectors rely on each other, if the country goes bust public sector wages and pensions including state pensions will go unpaid, whilst the private sector workers will only lose their state pensions. I know this is over simplistic and the country going bust will have dire consequences for all sectors, but it shows at a base level who has more vested interest in the country finances remaining viable.

I do not agree with a Robin Hood tax as this is always proposed as a solution to government finances. It is always easy to pick out an executive that is earning £300k and justify how they should be able to afford to pay more, but the reality of it is higher band tax increases affect more people who are on middle incomes who although better off than those on lower incomes still struggle, whilst the super rich can afford to move elsewhere and live under cheaper tax regimes. I also find higher rate tax bands a disincentive to people to achieve more. Having previously been in a higher tax bracket I know the feeling when you do additional work and you know 40% is going to the tax man.

As I said in the other thread the 15 minute strike gives the union members a chance to allow negotiations carry on without major disruption. If they do not carry out some form of action now then the unions would have to call another ballot for strike action at a later date. People just choose to see it as cynical rather than an effort from the government to pave the way for negotiations to continue. But I don't think the unions want to take this route, they want disruptions, they want to flex their muscles. They say the government is not willing to negotiate yet within the space of a few weeks they have watered down their proposals and given the unions a way to carry on negotiating without having to re-ballot members. What have the unions brought to the table?

jem16

Bigsmak wrote: »

Hey

Most of the literature she got is found here

http://www.unisoneastern.org.uk/campaigns/pensions/

Even more odd.

Unison isn't a teachers' union. It does cater for non teaching staff etc in a school but not teachers. So why would your teacher girlfriend be attending a meeting which is not her union?

I just want to make sure I am coming across factually correct as I don't want to mislead anyone.

Thank you.

It does all seem a bit odd though.

Zelazny

dshart wrote: »

Having previously been in a higher tax bracket I know the feeling when you do additional work and you know 40% is going to the tax man.

Just as a minor pedantic point, if you're on the basic rate of tax then about 40% of what you earn goes to the tax man.

The actual marginal rates (factoring in Income tax and both forms of NI) are:

Earnings (approx):
7.5k - 50k: 40%
50k-110k: 47%
110k-130k: 65%
130k-170k: 47%
170k+: 56%

(this assumes that I've understood the bandings correctly - which isn't guaranteed. The ranges may be a little out, but the percentages should be right, although rounded)

Sounds unbelievable? Consider a company that exists solely to pay it's workers - that is to say 100% of what the company takes in is paid out, and it's paid out to whoever brought the money in.

If you earned the company an extra £100, how much could they pay you (assuming you're already earning enough to put you in the basic rate band)

The first thing to take off is employer's NI, which is 13.8% of what you get paid, but it is not included in that pay. So if the company were to pay you £100, they'd have to pay a further £13.80 to the government. They only have £100 in this case, so they can only pay you £87.87.

Then from this is taken off Income Tax (20%) and Employee's NI (12%). This leaves £59.75, which is what you receive in your pocket. In other words, for every £100 you earn the company, the government takes £40.25.

So the actual basic tax rate is 40.25/100 = 40.25%