Local Government Pension Scheme and Private Pension

FatherAbraham

SkyandSun wrote: »

Thanks, you've all been very helpful and I'm getting a clearer picture of how the LGPS works as well. Having it based on my final salary (multiplied by years I've been enrolled in the scheme) is a bit risky for me as I cannot say whether the year before my retirement will be the 'peak' of my career

Nothing in the LGPS is remotely as risky as having a defined-contribution pension plan, where one's retirement income depends on market developments over one's accumulation period, combined with an unforeseeable future annuity rate.

Having some defined-benefit pension in your pension portfolio is a great risk-reducer, and can offset the dangers of having DC schemes to a degree.

In any case, I believe it's moving to a career-average scheme, or has recently, rather than final-salary.

SkyandSun wrote: »

Regardless, I think it is more likely I won't spend the next 30 years working for local government.

You keep mentioning this, so let me state clearly: this is irrelevant. Even having just three years of LGPS in your lifetime pension portfolio would probably be a good thing. Unless you are a supreme investment god who can do better investing in the market (but if you were that, you would be trading securities on your own account, rather than working for a local authority).

SkyandSun wrote: »

The LGPS is changing next year, I can see. What are people's opinions of the new scheme - is it any better or worse... and still objectively very good... ?

Slightly worse for members probably, but still outrageously generous to them. As Ros Altman says, the reforms to public-sector pensions are going in the right direction, but don't go anywhere like far enough in stripping public-sector "fat cats" of their huge tax-payer-funded subsidized pensions, especially considering that the militant members will moan and strike no matter what reforms are proposed (http://www.rosaltmann.com/coalition_one_year_on_2011.htm).

You should probably stop worrying about LGPS, and start worrying about your private pension more.

Warmest regards,
FA

hyubh

In any case, I believe it's moving to a career-average scheme, or has recently, rather than final-salary.

Next year.

still outrageously generous to them. As Ros Altman says, the reforms to public-sector pensions are going in the right direction, but don't go anywhere like far enough in stripping public-sector "fat cats" of their huge tax-payer-funded subsidized pensions,

What ridiculous rhetoric. While the LGPS is the pension scheme of local authority chief execs, it is also (and in terms of the numbers, far far more) the scheme of teaching assistants and school cleaners.

especially considering that the militant members will moan and strike no matter what reforms are proposed

LGPS 2014 has been drawn up with union participation, and has full backing from the major unions involved.

hyubh

SkyandSun wrote: »

Having it based on my final salary (multiplied by years I've been enrolled in the scheme) is a bit risky for me as I cannot say whether the year before my retirement will be the 'peak' of my career

It is not 'risky' at all, given the various protections in place. Moreover, the 'salary' involved is whole time equivalent, so part time working isn't a factor, for example.

That said, the numbers won't be large anyway, given membership post-April 2014 will be towards a career average, not final salary pension. E.g., say someone started on 1 April 2013 and left 31 March 2023. In that case, the person's LGPS pension will have two elements - a final salary based one for their first year of membership, and a career average one for their final nine years.

but I can see there are flexible retirement options too?

Yes, though the employer has to agree.

Regardless, I think it is more likely I won't spend the next 30 years working for local government.

Doesn't matter.

The LGPS is changing next year, I can see. What are people's opinions of the new scheme - is it any better or worse...

For low earners, not much difference or slightly better overall, for high earners somewhat worse (though still very much worth it - it's the general pensions tax changes that such people need to be careful about), and for people in between, perhaps slightly worse but not worth worrying about.

and still objectively very good... ?

Any purely defined benefit scheme you can join is very likely to be 'objectively very good'.

jamesd

What I'd look to do in this situation is:

1. join LGPS.
2. transfer personal pension into LGPS to shed risk and pass it on to LGPS.
3. Buy more years as fast as possible while still in LGPS.

This gives you that very nice guaranteed pension pot without investment risk.

You can do a better job of handling earlier retirement than taking the LGPS pension early. Instead, when no longer eligible for making LGPS contributions, pay money into a personal pension. That can be taken at 55 and you can use the lump sum from this to temporarily boost your income while waiting for normal LGPS retirement date. You might also find it beneficial to use some S&S ISA investing because there's no limit on how fast you can draw the capital from this to subsidise income for a while.

hyubh

jamesd wrote: »

1. join LGPS.
2. transfer personal pension into LGPS to shed risk and pass it on to LGPS.
3. Buy more years as fast as possible while still in LGPS.

(1) for sure, (2) isn't necessarily a no-brainer, and (3) won't be possible - it's a choice of ARCs or AVCs instead.

FatherAbraham

hyubh wrote: »

While the LGPS is the pension scheme of local authority chief execs, it is also (and in terms of the numbers, far far more) the scheme of teaching assistants and school cleaners.

Of course it is. However, cleaners working for local authorities have wages at least as high as those working for private enterprises, and massively better pensions, and generally lower risk of job loss.

In that sense (being much better compensated for the same low-value work as employees of private enterprises are), they are "fat cats".

Warmest regards,
FA

bigadaj

FatherAbraham wrote: »

Of course it is. However, cleaners working for local authorities have wages at least as high as those working for private enterprises, and massively better pensions, and generally lower risk of job loss.

In that sense (being much better compensated for the same low-value work as employees of private enterprises are), they are "fat cats".

Warmest regards,
FA

But isn't this why some form of adjusted career average rather than final salary scheme would be better, saving money from the wealthiest rather than the low earners.

The other point about this thread is the lack of recognition of how valuable public sector pensions are. As they are eroded,which they will continue to be as we can't afford to finance them as a country, people will think they are not so good and so other alternatives are better when they are patently not.

hyubh

FatherAbraham wrote: »

However, cleaners working for local authorities have wages at least as high as those working for private enterprises

If by 'at least as high' you are implying 'higher', I'd like to see the evidence.

they are "fat cats".

That is absurd - someone on 15K WTE is not a 'fat cat'. How much do you earn, or if retired, did earn?

FatherAbraham

If by 'at least as high' you are implying 'higher', I'd like to see the evidence.

I wrote "at least as high"; I meant "at least as high".

That is absurd - someone on 15K WTE is not a 'fat cat'. How much do you earn, or if retired, did earn?

Let's see... a cleaner who retires from 40 years' service, whose salary has been £15k pa, with an LGPS pension, will get £10k from the scheme (2/3 of salary), plus £5.5k basic state pension.

In other words, the cleaner will retire on 103% of what was earned whilst working -- amazing!

You're arguing that people on low wages cannot ever be "fat cats". You're missing the point that those who work for the state are being massively overpaid, once pension rights are considered, compared to those in the private sector doing similar or identical low-value jobs. In that sense, they are "fat cats", because we are paying them way too much for what they do.

If you deeply care about improving the incomes of poor workers, the way to do it is not to create some lucky, privileged class of overpaid "public sector workers", whilst leaving the rest to hang. That makes no social sense at all.

I can't see the relevance of my earnings to this matter in any way, shape or form. The question is whether public-sector pensions are ripping the rest of us off -- I'm afraid that it looks like they are. Sorry if that enrages you, but no true socialist would support a system where a special in-group is able to enrich itself at the expense of other workers.

Warmest regards,
FA

Southend1

FatherAbraham wrote: »

I wrote "at least as high"; I meant "at least as high".



Let's see... a cleaner who retires from 40 years' service, whose salary has been £15k pa, with an LGPS pension, will get £10k from the scheme (2/3 of salary), plus £5.5k basic state pension.

In other words, the cleaner will retire on 103% of what was earned whilst working -- amazing!

You're arguing that people on low wages cannot ever be "fat cats". You're missing the point that those who work for the state are being massively overpaid, once pension rights are considered, compared to those in the private sector doing similar or identical low-value jobs. In that sense, they are "fat cats", because we are paying them way too much for what they do.

If you deeply care about improving the incomes of poor workers, the way to do it is not to create some lucky, privileged class of overpaid "public sector workers", whilst leaving the rest to hang. That makes no social sense at all.

I can't see the relevance of my earnings to this matter in any way, shape or form. The question is whether public-sector pensions are ripping the rest of us off -- I'm afraid that it looks like they are. Sorry if that enrages you, but no true socialist would support a system where a special in-group is able to enrich itself at the expense of other workers.

Warmest regards,
FA

Maybe..... The private sector cleaners are underpaid?

But then I know from your posts on other threads that you have a deep disrespect for the working class. The fact that you think someone earning £15k a year is overpaid or a "fat cat" beggars belief.

Have you tried living on £15k a year?

Have you ever worked as a cleaner for minimum wage?

These are often part time jobs where people have to work 3 or 4 jobs just to get by, rising early and getting home late.

I think people who do hard, often dirty, and undervalued work like cleaning, social care, catering etc deserve more respect. And they shouldn't be begrudged £15k a year and a pension by those who landed a bit more luck in their careers and don't even notice the office cleaner.