National Grid Final Salary DB Scheme

elantan

Can anyone explain how these changes will affect individuals that are members of the pension scheme but no longer contribute ( due to change if job/ redundancy etc)

MoneySaverLog

The changes whatever they may end up being will only affect future benefits and how they accrue for contributing members. I believe deferred pensions increase with inflation.

elantan

Thanks, will let mr el know

chainsaw

C_Mababejive wrote: »

http://www.publications.parliament.uk/pa/ld200001/ldjudgmt/jd010404/ngrid-1.htm

Clearly it seems that once upon a time you paid 6%,then there was a surplus,your contribution rate was cut and now its going up again..but to what?

What you have to keep in mind is that the pension has been chopped and changed over the years as the various companies have been split up and merged,
Back in the late 80s early 90s British Gas was telling its workers they didn't need to pay anything it to the scheme ever again because it had so much money. BG said the workers could have the 6% they contribute back as a pay rise!!! (A pay rise with their own money, the cheek of it!) A vote was held and the members decided to carry on paying into the scheme. Which meant BG had to as well. So the surplus remained and grew.
BG started encouraging people to take redundancy / retirement early at 50 with enhanced packages. This meant these people were drawing on the pension scheme 10 years early and neither they nor British Gas and its later incarnations were paying into the scheme for the following 10 years. Whilst this was happening the members were asked to vote on a reduction in contributions eventually to 3%. Who can blame them for saying Yes? This meant the company could also reduce its contributions to 3%.
I don't recall exactly when this happened, lets say 15 years go since the contributions were reduced, that's a 6% loss for the last 15 years! And 1000s of pensioners drawing a pension early.

Was this the best way to deal with a pension surplus and in light of events was there even a surplus anyway?

hyubh

chainsaw wrote: »

What you have to keep in mind is that the pension has been chopped and changed over the years as the various companies have been split up and merged,

That shouldn't really make a difference to the funding level though.

in light of events was there even a surplus anyway?

Simply put: given the various tax reliefs to do with pensions, central government considered over-funded pension funds a tax dodge, or potential one. However, the way pension liabilities were accounted for (and therefore, the principles by which a fund was deemed overfunded or not) changed significantly as part of a general tightening up of pension fund governance following events like the Maxwell scandal. So the short answer to your question is: possibly not by current standards, though it would have been by standards at the time.

racing_blue

C_Mababejive wrote: »

Gas workers are not noted for their longevity as can be seen from the "with regret" monthly lists published on NG pensions own website.

Brilliant!

jamesd

chainsaw wrote: »

I think The Office for National Statistics say the average age men lives to is 78 some way short of the 26 years you mentioned.

Where does the ONS say that. Given that I gave you numbers from the ONS, and a link to that official source of them, what it probably means is that you're picking a wrong or obsolete number from somewhere. Like maybe life expectancy at birth, instead of when at retirement age. If we know where you got the number we can explain why it's the wrong one to use.

chainsaw wrote: »

I am not denying people are living longer but I don't agree with the spin from companies and governments who have raid the pensions time and again that people living a few years longer is the cause of all pensions problems.

It's not all, but have a look at the life expectancy from age 65 ages I gave. Compare 40 years ago to today. 12.9 to 21.6 years. Not quite twice as long to pay out, but still 67% longer, so 67% more money to pay out. Or retirement age can be later to reduce the cost. Or some combination.

chainsaw wrote: »

Contributions have continued all this time for almost a quarter of a century after we were told we didn't need to pay another penny. Where has the money gone??

Look at those cohort life expectancy numbers again. It's gone to provide for paying out pensions for longer. If National Grid retirees volunteered to die at the same rates as 25 years ago, no problem. But who's going to do that?

chainsaw wrote: »

Redundancy payments? Pension Holidays? Reduced contributions? Poor management of the scheme?

Not really responsble for the really big issues, though all potential factors. Blame successive governments for improving NHS care and medical researchers for providing the advances that led to longer life expectancy. Then blame reduced inflation and lower inflation variability for reducing investment returns, hence making it more expensive to buy the required income.

rpc

chainsaw wrote: »

I think it depends whose figures you look at, how they are calculated and who is telling the story. I think The Office for National Statistics say the average age men lives to is 78 some way short of the 26 years you mentioned.

Can you provide a reference for that?

The figure I use is from the ONS tables. The UK principal projection using 2010 tables says that a man aged 60 in 2013 can expect to live for another 26 years.

If instead you use the high life expectancy projection, it is 28 years and the low projection gives 24 years. i.e. A man who is 60 years old this year is expected to live to 84-88.

Are you using period projections or life expectancy at birth? Neither of them are the proper measure in this case.

jamesd wrote: »

Blame successive governments for improving NHS care and medical researchers for providing the advances that led to longer life expectancy.

Damned governments - always meddling and moving the goalposts! Why couldn't they just leave us all to die young...

chainsaw

jamesd wrote: »

Where does the ONS say that. Given that I gave you numbers from the ONS, and a link to that official source of them, what it probably means is that you're picking a wrong or obsolete number from somewhere. Like maybe life expectancy at birth, instead of when at retirement age. If we know where you got the number we can explain why it's the wrong one to use.

It's not all, but have a look at the life expectancy from age 65 ages I gave. Compare 40 years ago to today. 12.9 to 21.6 years. Not quite twice as long to pay out, but still 67% longer, so 67% more money to pay out. Or retirement age can be later to reduce the cost. Or some combination.

Look at those cohort life expectancy numbers again. It's gone to provide for paying out pensions for longer. If National Grid retirees volunteered to die at the same rates as 25 years ago, no problem. But who's going to do that?

Not really responsble for the really big issues, though all potential factors. Blame successive governments for improving NHS care and medical researchers for providing the advances that led to longer life expectancy. Then blame reduced inflation and lower inflation variability for reducing investment returns, hence making it more expensive to buy the required income.

OK I own up I didn't actually check the ONS, I took the BBC's word for it. http://www.bbc.co.uk/news/business-15372869

I think the main point is your average not so well educated manual worker and the arguably (but not necessarily) better educated staff member have no idea about pensions, cohort life expectancy etc. We pay our money to the "experts" who make a good living and we want the returns promised at the end. If something needs changing on route lets us know.

For these experts to rock up at 30+ years later when its too late for us plebs to make other arrangements saying its all gone tits up and its not their fault is not good enough especially when they dazzle us with accountancy.

In the case of NG they say they need to make up 250 million over 8 years yet their profits for this year are 3.7 billion and I believe that they will announce that the pension fund valuation increased by a billion this year.

BTW manual workers are taking a pay cut of several thousand pounds this year and are expected to contribute another £1500 to their pension each year. A pay cut by another name

MoneySaverLog

chainsaw wrote: »

In the case of NG they say they need to make up 250 million over 8 years yet their profits for this year are 3.7 billion and I believe that they will announce that the pension fund valuation increased by a billion this year.

BTW manual workers are taking a pay cut of several thousand pounds this year and are expected to contribute another £1500 to their pension each year. A pay cut by another name

And now I'm hearing noises they want to triple employee contributions AND limit future pensionable salary increases to 2-3% so anyone looking at promotion is hit in their pension when they retire as the gap between final salary and final pensionable pay increases over the years. :mad: