Fire service pension. Defer or transfer??

Uglymug

Coq_Au_Vin wrote: »

Thanks for the help.

The old scheme will cease and I can either transfer to the new scheme or defer. The new scheme(which was the only one I would consider transferring to) is career average, which is still good but the problem is I don't think I will be able to complete a total of 40 years and in the small print of the new scheme if I left after 36 years the monthly payments are reduced by 40% so there won't be many people getting the full pension.

Why do you think a 40% reduction in pension is unfair if you retire 4 years early? You will have saved 4 years worth of contributions and will receive a pension for 4 years longer. If you look at the maths that sounds about right.
Are you upset because the early retirement gravy train is being stopped in the public sector?

Piratipper

Say a public service pension was worth about £18,000 at retirement.

If one was to not join the scheme, and go it alone instead, in the private sector. A very, very rough back of an envelope estimate I reckon you would need to save around in excess of £450,000 by yourself to cover that sort of annuity (from age 65). And I think I'm erring on the side of optimism there.

Leaving the scheme is the worst decision you'll ever make, you may regret it when you come back to these forums in years to come searching for ways to make your meagre ends meet.

But by all means do it and save the taxpayers like myself a fortune.

dunstonh

A very, very rough back of an envelope estimate I reckon you would need to save around in excess of £450,000 by yourself to cover that sort of annuity (from age 65).

Actually, it would be closer to £650,000 as the occupational pension increases annually and includes spouse/dependents pension.

There is also the death in service benefit as well which I havent costed in and many occupational schemes factor in illness benefits in some way with the pension as well.

rpc

Bashing in the numbers to the HL pensions calculator, to receive £18k per yaer in today's terms needs a pot of ~£420k (50% spouse pension, 3% escalation, 5 year guarantee, 7% growth assumed).

For me (31, male), that would require just over £560 per month gross starting from scratch.

To reach the figure dunstonh gave would take me £890 per month gross.

I previously worked out that to get the same benefits my own pension gives me would cost slightly over double my current contributions (and that's ignoring life insurance and own-occupation critical illness cover). That's a private sector scheme which is not as generous as most public sector schemes.

dunstonh

Bashing in the numbers to the HL pensions calculator, to receive £18k per yaer in today's terms needs a pot of ~£420k (50% spouse pension, 3% escalation, 5 year guarantee, 7% growth assumed).

Bash it through with RPI escalation and 5% p.a. growth which would be more realistic. Don't forget to account for tax free cash differences. I suspect the difference will be quite staggering.

rpc

The difference (i.e. cost of self-funded pension vs cost of employer pension) is already staggering enough

jackyann

howee wrote: »

Oh dear public sector workers still don't get it.

Real world = dire pension or putting in the equivalent of 25-30% of your wage to get the same pension as you are already in. Pity the unions didn't explain the pension situation better to it's members instead of just telling them how bad a deal they are getting.

Not helpful - maybe you are smart-a*se who, 43 years ago, on Alevel results day, told me how stupid I was to become a nurse because I would never earn any "real" money. I keep wondering whether he begrudges me my final salary (£32k pa) pension.

Piratipper

jackyann wrote: »

Not helpful - maybe you are smart-a*se who, 43 years ago, on Alevel results day, told me how stupid I was to become a nurse because I would never earn any "real" money. I keep wondering whether he begrudges me my final salary (£32k pa) pension.

That's a fair point, people may feel they sacrificed higher private sector pay for a pension.

Although actually private sector wages are falling in real terms, and are currently lower than public sector wages in median terms. Some envious private sector workers seem to be happy in encouraging a 'race to the bottom' for all of us through envy and bashing of public sector workers.

But the most worrying thing is when people are misinformed to the point where they think they are better outside the pension.

dunstonh

Historically, working in the public sector meant you were lower paid. In return you got high quality pension benefits. The perception was that you were rewarded for a life of public service.

Problem came during the last Labour Government when public sector pay increased at a rate about the private sector and the differential was no longer so great (or even non existent or higher in the public sector). So, the gold plated pensions no longer seem fair in the marketplace.

Some envious private sector workers seem to be happy in encouraging a 'race to the bottom' for all of us through envy and bashing of public sector workers.

I believe it is the way the unions misrepresent the information and shove out false information to their members. That then creates the friction which escalates.

For example, the Unions make a big thing about the average NHS pension being just £4000. A good headline in isolation. However, it fails to mention that includes all the people that only worked for a couple of years or more as well as part timers.

I remember on the news one public sector worker complaining that we was only getting just over £3000 as a pension and it was disgraceful. He let it slip he had only got 10 years service. It is things like that which irritate the private sector.

jackyann

Sorry - I know I'm hijacking this thread, but I do feel a bit fed-up. There are a lot of people with skills & abilities that could work in either the public or private sectors.
But there is a huge section of public sector workers whose skills & abilities are very much about public service (including the fire-fighter who began the thread) Even in a profession like nursing it is very difficult to equate across the sectors because the kind of nursing done in the private sector is, for the most part, rather different.
So market forces don't really apply - it is what the public think we are worth. I always assumed that I was worth my salary + 10-15% (pension + sick pay etc.) That probably equates to the unpaid overtime.
I haven't a clue what my drinking partner on that long-ago night earns now - or what his pension is!