Company want to end local government pension scheme

hyubh

pandora205 wrote: »

The lump sum was frozen in 2008, so it is likely that the person in this example has commuted some of their pension to get such a large one. (My LGPS pension after a similar period is predicted to be around twice this amount but the lump sum is about half).

'Frozen' isn't really the word, since the final salary used to calculate it is your actual final WTE pensionable pay not your WTE pensionable pay in 2008.

Membership up to March 2008 earns 1/80 pension and 3/80 lump sum, membership April 2008 - March 2014 (and potentially later given the 'underpin' protections) earns 1/60 pension and no automatic lump sum. If you want more lump sum you can commute your combined pension, whatever the proportion of pre- and post-2008 elements it has. In the case of the OP's colleague, 40 years membership and retiring soon implies about 36 years membership in the 1/80 scheme; add into the mix post-commutation figures of around 13K pension and 100K lump sum, and assuming maximum commutation it looks like around half the 100K came from standard 1/80 scheme lump sum and the rest from commuting.

gadgetmind

Dionysusjones wrote: »

Last month my contribution to the pension was £125.22 with the employer putting in £351.97.

That 2.8x of your contribution by employer is way higher than most get in the private sector. A 1x or perhaps 1.5x contribution tends to be the max and 0x not at all uncommon!

Dionysusjones

Yes, it is a good scheme. The ex council tradesmen who work for the company are on between 25,000 to 30,000 basic with overtime now included in the pension calculation. They pay 6.5% into the pension with the company paying about 2.7 x more.
The new starts are on 21,000 with a pension of 6% with the company matching it.
The company in 10-15yrs will have a workforce on a lot less money with fewer benefits but unlike the time served old workforce the new ones are mostly Jack of all trades and master of none types . Nine of the new ones have left since October with only three leaving in twenty years previously.

gadgetmind

Recruiting and retaining is hard, and pensions can be an important part of this, but not really for younger folk as they just aren't engaged.

Thrugelmir

Dionysusjones wrote: »

The new starts are coming and going all the time unlike the ex council workers who tend to stay because of the pension and the like.

There's no harm in this. Employees simply staying because the package is so attractive. Does nothing for the financial performance nor the productivity of the organisation. Also organisations become incestuous with jobs for mates etc. All a cozy club. Many that leave may struggle to be accepted by others.

(I make this observations based on personal experience after years of working across a broad range of sectors).

gadgetmind

Thrugelmir wrote: »

Employees simply staying because the package is so attractive. Does nothing for the financial performance nor the productivity of the organisation.

We have a little of this where I work. The few plodders we have simply can't match new recruits regards energy, creativity, and productivity, but they won't clear off elsewhere as we're very inclusive regards our share awards.

As they haven't kept their skills up to date (despite our best efforts) finding things they can tackle gets harder with every passing year.

Dionysusjones

Pay peanuts you get monkeys, I am in the office so get to hear about complaints and productivity levels and have the results of a recent staff survey.
There are far more tenant complaints from the new workforce due to poor workmanship and they earn less for the company than their older and better paid counterparts.
Comments from the staff survey conclude they resent being on less pay and poorer conditions than the older workers and so after the initial few months are not motivated to pull out all the stops.

pandora205

hyubh wrote: »

'Frozen' isn't really the word, since the final salary used to calculate it is your actual final WTE pensionable pay not your WTE pensionable pay in 2008.

Membership up to March 2008 earns 1/80 pension and 3/80 lump sum, membership April 2008 - March 2014 (and potentially later given the 'underpin' protections) earns 1/60 pension and no automatic lump sum. If you want more lump sum you can commute your combined pension, whatever the proportion of pre- and post-2008 elements it has. In the case of the OP's colleague, 40 years membership and retiring soon implies about 36 years membership in the 1/80 scheme; add into the mix post-commutation figures of around 13K pension and 100K lump sum, and assuming maximum commutation it looks like around half the 100K came from standard 1/80 scheme lump sum and the rest from commuting.

Are you sure this is correct? My salary has risen annually but the automatic lump sum has been the same for many years (I think). It certainly hasn't risen with salaries.

PS I'm talking about the old automatic lump sum without any commutation.

hyubh

pandora205 wrote: »

Are you sure this is correct? My salary has risen annually but the automatic lump sum has been the same for many years (I think). It certainly hasn't risen with salaries.

PS I'm talking about the old automatic lump sum without any commutation.

The 3/80 automatic lump sum for pre-April 2008 membership increases in step with whatever the 1/80 pension for pre-April 2008 membership increases by. Why do you 'certainly' think otherwise?

pandora205

Sorry you are right - I've checked back. It's just such a small increase annually I'd not noticed! That's good news.