worst pension ever

hyubh

hugheskevi wrote: »

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

Thanks - (5) and (6) sound pretty plausible in particular. I'm not so sure about a few of the others though. Re (2) 'better to have a low contribution rate and lower benefits' - I can't see how that would be relevant in a final salary scheme, given the AA calculation is done with reference to a notional increase in the value of the pension, not the amount of contributions. While I confess I don't know how the AA calc is done in a CARE scheme, I would guess it is done with reference to the actual increase in the pension's value, in which case, the contribution rate would again be irrelevant. Also with (4), OK, but the two OPSS percentages are lower than the lowest LGPS band - that's mainly why I found them so startling. Similarly (8) applies equally to public sector schemes, funded (LGPS) or otherwise (TPS).

hugheskevi

Re (2) 'better to have a low contribution rate and lower benefits' - I can't see how that would be relevant in a final salary scheme, given the AA calculation is done with reference to a notional increase in the value of the pension, not the amount of contributions.

Yes, it isn't contributions that matter, but the benefits.

So, for example, you might prefer to be in 1/70 scheme with a 3% employee contribution rather than a 1/60 scheme with an 8% employee contribution if you are running up against Annual Allowance, even if the value of the two schemes is the same.

Or perhaps more likely, you might prefer to accept indexation of the statutory minimum on future accruals, rather than increase employee contributions to maintain higher indexation levels.

While I confess I don't know how the AA calc is done in a CARE scheme

Same way - change in pension over pension input period x16, after allowing for inflation.

Thicko2

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.

Source: OPSS 2011

Thanks. so i m paying nearly 2 1/2 times the amount for same benefts.

jamesd

Not even close to the same benefits. Your scheme is hugely better than the defined contribution schemes and better than most of the closed defined benefit schemes. The reason closed defined benefit schemes matter is that there are almost no purely private sector defined benefit schemes that are left open to new joiners, with most of those remaining open being the semi-public Post Office and BBC types. Even the closed ones are a vanishing breed, being replaced by defined contribution ones which cost the employer less, and with less uncertainty for the employer.

hyubh

jamesd wrote: »

Your scheme is hugely better than the defined contribution schemes

Huh? The figures were for DB schemes.

and better than most of the closed defined benefit schemes.

How so?

jamesd

Why huh? This is one of the best pension deals around and most new joiners of companies in the private sector are going to end up with a defined contribution scheme, so that's what anyone considering leaving the job on pension grounds needs to be comparing to.

Better in terms of benefits and safety of the payouts with minimal chance of failure of the employer's business leaving the pensioners suffering.

hyubh

hugheskevi wrote: »

Or perhaps more likely, you might prefer to accept indexation of the statutory minimum on future accruals, rather than increase employee contributions to maintain higher indexation levels.

Hmm, OK. Less than 5.5% (and if I were to be honest, anything less than 10%, assuming professionals) still seems ultimately nominal to me. That's the money-for-nothing public sector for you!

Stargazer57

Thicko2 wrote: »

It will be interesting when we get to career average, does the argument for differential contribution rates based on earnings disappear? Logically it should do for future service.

Except that longevity is heavily correlated with wealth, which is in turn heavily correlated with income. To put it another way the highly paid get a better deal from most DB schemes (even the career average type) than those on lower incomes.

So currently my 12.3% goes in to the pot, my employers 14% goes into the pot. This then pays current pensioners and returns £2bn to the treasury

I'll happily offer you a deal. You can keep all the excess of contributions over benefits now as long as I (and other taxpayers) never have to pay when benefits exceed contributions.

hyubh

jamesd wrote: »

Why huh?

The context is hugheskevi's official stats for private sector DB schemes, which show employee rates to be (to me) surprisingly low.

Better in terms of benefits

You sure about that? Remember we're talking about DB, and in particular final salary schemes.

Old_Slaphead

Thicko2 wrote: »

So currently my 12.3% goes in to the pot, my employers 14% goes into the pot. This then pays current pensioners and returns £2bn to the treasury (this figure is prior to the increased contribution rates).

But it doesn't contribute anything towards the eyewateringly large future liabilities being accrued - to be paid for by future generations. One reason why the public sector will be radically reduced over the next decade or two.