National Grid Final Salary DB Scheme

C_Mababejive

Let me ask something else.alongside this we have the 2016 single state pension issue. In 2016 those who have been contracted out of SERPs will no longer be able to. NI contributions for both the employer and employee will go up.

But does this mean that on retirement,someone who has been contracted out for most of their working life,will get the full SSP at that time?

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.

chainsaw wrote: »

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

So, two numbers you could have picked from that one, both wrong, and you picked the one that was most wrong.

"In 2010, average life expectancy at birth across the UK, for both men and women, rose by another four months to 78.2 and 82.3 years respectively. "

That's life expectancy for a child born today. It includes those who die in childhood and youth accidents as well as early heart disease, cancer and such that those who have made it to 60 have already survived. The worst of the choices to use for someone who is already 60.

'The latest ONS figures are based on existing mortality rates and do not include any assumptions about further improvements. ... "These life expectancies show how long people would on average live if recent mortality rates continued indefinitely. But they won't," said Matthew Fletcher of Towers Watson. ... at age 65, the average man in the UK can expect to live a further 18 years while the average woman can expect to live another 20.6 years.'

That is period life expectancy, not cohort, so is still the wrong one to use for retirement planning, though it's less bad than using life expectancy at birth.

So that's where you went wrong. At least now you know the difference.

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.

I can see you have taken a liking to me and I will have to up my game if we continue. I am not researching this before hand just working from memory. I used a figures from memory and backed it up later remembering I had read about it on the bbc,

I will accept you are right about life expectancy because you probably are and because I cannot be bothered to check as it is almost irrelevant anyway because....

This is not a surprise. As you point out it has been happening for 40 years. I and others may not have been aware of it but the people running pensions schemes should be. Thats why they get paid to do their job to take all these issues into account

Thats why in 1989 the company should not have been recommending we cease all contributions to the scheme because there was so much money there we didn't need to pay any more in. That surplus should be kept for unforeseen eventualities like people living longer or stock market crashes or even paying better benefits.

Why did they not offer us a 30/60 scheme with the money like the higher managers have instead of creaming it

Thats why the company should not have recommended reducing our contributions from 6% to 4 % and then 3% whilst reducing their contributions as well

Thats why the company should not lay people off claiming there is no work then employ the same people to do the same jobs whilst they draw there pension. 10 years longer drawing a pension, 10 years they and the company are not contributing to the pot. 10 years lost NI to the pot

Don't complain about people living too long at the end of their life drawing a pension if the company is going to let people retire 10 - 15 years early and draw their pension and we are not talking 100s of people here we are talking many1000s

So recap, more money than we will ever need in the pension scheme in 1989 Nevertheless we keep making contributions for the following 25 years and the scheme is in deficit (if you believe it) and its not been mismanaged.??????

And the company makes billions of profit every year which they could use to correct their mistakes. And this is the same company who went to court to say they should be allowed to take the surplus because they have to top it up if thee is a deficit

Is this another example of financial mismanagement? If not why not.

Like everything in modern british business all anybody is bothered about is the results whilst they are in charge for a few years before they leave with a big pay off and big pension. Those responsible are probably long gone with their 30/60th pensions

chainsaw

No point flogging a dead horse most peoples opinions are already cast in stone.
As I see it I paid what was asked and I want what was promised. its the same in all walks of life. If you buy a tin of beef you don't expect to get horse.
Fair enough a pension is a longer term purchase and I don't mind paying a bit more but I want to be clear about the reasons why I am paying and no one will convince me that the main reason in the case of NG is is due to people living longer.

jamesd

chainsaw wrote: »

more money than we will ever need in the pension scheme in 1989 Nevertheless we keep making contributions for the following 25 years and the scheme is in deficit (if you believe it) and its not been mismanaged.??????

Knowing what we know now I can easily agree with that mismanagement argument.

But I do want to be a bit more fair to those involved back in 1989. The ONS projections back then were based on 1983 data, that's available at the link I gave earlier. Back then the expectation for those retiring in 1989 at age 65 was 14 years of life. Using that same 1983 data the expectation for those reaching 65 in 2011 was 15.1 years. Using the more recent 2008-based data the expectation today for those reaching 65 in 2011 is 21.4 years.

It's really easy to see how using the best data they had available they could have been wrong about the amount of money needed and think that there was a surplus when there really wasn't.

There's been time since then to observe the changes and try to do more about it, so to the extent that didn't happen, it's easy enough to look for people to blame for getting that wrong, whether that's managements, unions, governments or whoever else who got in the way of providing sufficient money.

MoneySaverLog

National Grid have billions of pounds of scheduled debt on its books and makes an operating profit of 3.5bn a year.

The pension scheme is the 11th biggest in the country with assets of over 14billion. The 250m so called shortfall is simply an accounting mechanism to instill fear. It equals to about 30m for each year of RIIO.

C_Mababejive

So then..any further views now that the cards are on the table?

MoneySaverLog

No incentive to look at promotions anymore given the capping in my view. Got a number of years until retirement and can see the gap between final salary and the made up capped salary only growing.

Going to be worse off in retirement as a result and the union appears to have just rolled over and allowed NG to walk all over them

wakeupalarm

I've often wondered in situations like this, isn't it the company who will go belly up before the pension fund? Isn't the company required to makeup any shortfall if they are producing profits before the PPF kicks in. Wouldn't the end result be that the pension fund ends up owning the company rather than the fund collapsing.

silverwhistle

I'm rather embarassed to say that I'm one of those persons who the utilities (in my case the ESI) were so eager to pay off and give pensions from 50. Not a big one in my case - 80th not 60ths and we paid 6% - but the basics are covered. I haven't really kept an eye on the health of our pension scheme but the shares I've held on to are doing very nicely. If anyone claims a lack of money for the pensions for my company I'd point them in that direction!