worst pension ever

hugheskevi

If there are any lucky private sector posters left on here with a final salary scheme i would be interested to know your contribution rates?

The average member contribution rate to open private sector defined benefit schemes was 5.1 per cent in 2011.

The average member contribution rate to closed private sector defined benefit schemes was 4.9 per cent in 2011.

Source: OPSS 2011

bigfreddiel

this thread is going on far too long

"worst pension ever"

if you don't like your pension scheme leave it and find a better one

simples

fj

hyubh

hugheskevi wrote: »

The average member contribution rate to open private sector defined benefit schemes was 5.1 per cent in 2011.

The average member contribution rate to closed private sector defined benefit schemes was 4.9 per cent in 2011.

Blimey - any suggestions/links as to why so low? With rates like that, it's not surprising schemes are rapidly closing for future accural, let alone new members.

rob404uk

Blimey, this went on a bit. The title was a bit of an attention seeker, of course I know as it stands it is still a good pension. My main point was that I am further away from retiring than when I started and for that I have been asked to pay more. Also that in another 20 years, the government might decide that retirement age might need to go up another 10 years.

Thanks for your replies though, even the public sector bashers. You have helped me to quickly gain knowledge on this matter and if we all believed the same thing it would be a pretty boring place.

taktikback

I for one, have immensely enjoyed this thread -thanks to the OP for posting. I love the bit about "thanking the public sector bashers" - it's the clinical denial that there is anything remotely eccentric about being so unaware of a privileged position that I particularly like...

"the worst pension ever" -it's a bit like -"I can't believe they've run out of caviar on this cruise"...

"I've been asked to pay more" -imagine that

brilliant...

mania112

When you (finally) retire and you're enjoying your pension while others are struggling having not had the benefit of a Final Salary pension, this setback will be a long distant memory.

GillyR-J

jem16 wrote: »

They shouldn't be. Anyone who was 50 or over in April 2012 will stay on the current final salary scheme with a normal retirement date of 60.

Only for their teachers pension...don't forget that many women have taken career breaks to have children. I took ten years out with mine but paid back into TPS what I was allowed to and covered the rest with AVCs.
I am 57 years but won't reach the age for basic pension until I am 66 years old.
Many former colleagues are still paying mortgages or for kids going through Uni and feel they need to continue working until they reach pensionable age.

taktikback

GillyR-J wrote: »

Many former colleagues are still paying mortgages or for kids going through Uni and feel they need to continue working until they reach pensionable age.

Well, there's a lot of us in that boat - just be thankful that the TPS still pays the jackpot at 60...for anyone before 2007, and it's still 65 for 2007 to 2015 joiners -and with an accrual rate of 1/57...not too shabby going forward really...

hugheskevi

Blimey - any suggestions/links as to why so low? With rates like that, it's not surprising schemes are rapidly closing for future accural, let alone new members.

Not aware of any surveys, but my thoughts would be...

1. With fewer members (as most schemes have been closed to new members for some time) the impact on funding of higher member contributions is small. Many of those remaining in the scheme will be senior so either making the decisions or employees you don't want to annoy.
2. With a low Annual Allowance, higher paid members don't want to put high employee contributions into the pension as they won't get tax relief, better to have a low contribution rate and lower benefits and use the money for non-pension purposes.
3. Pensions are part of remuneration, and in a competitive market remuneration will adjust. High employee contributions mean something somewhere else in the reward package is higher than it would be if employee contributions were lower.
4. High employee contributions are offset elsewhere in remuneration, but may cause members, especially lower paid members, to opt-out and make very sub-optimal decisions. In some ways it is quite cruel to put temptation in front of those that you know may well do something foolish. A paternalistic employer may prefer not to put that temptation in front of their staff.
5. Employee contributions attract NI, better that they are made through employer (or salary sacrifice) contributions
6. I'm always suspicious about how surveys capture salary sacrifice contributions when making employer/employee distinctions - can't recall if OPSS is robust on that or not
7. Employers often only want to ensure members pay something so that they appreciate the pension, rather than than the contribution being an integral part of funding
8. As most schemes are contracted-out, members effectively contribute a bit more that way (3.4% rebate to employer) but it doesn't show up in the employee contribution figures.
9. The figures are for all Defined Benefit schemes, so include more modern CARE or cash balance schemes such as those offered by Tesco, Barclays or Morrisons. Those schemes are far less generous than the final-salary schemes that are commonly associated with DB pensions.

bigfreddiel

bigfreddiel wrote: »

this thread is going on far too long

"worst pension ever"

if you don't like your pension scheme leave it and find a better one

simples

fj

bad form i know to reply to one's own comment, but i gues there's no takers on leaving the "worst pension ever" then?

fj