MSE News: Schools to teach teenagers about pension planning

hyubh

Credit-Crunched wrote: »

It is not a race to the bottom, it is merely adding equality

What kind of doublespeak is that... Assuming the new CARE scheme does what it's supposed to, reducing the value (and therefore cost) of teachers' pensions is by definition making them worse for teachers of the future compared to teachers of the past, whether you think this a sensible development or not.

Credit-Crunched

hyubh wrote: »

What kind of doublespeak is that... Assuming the new CARE scheme does what it's supposed to, reducing the value (and therefore cost) of teachers' pensions is by definition making them worse for teachers of the future compared to teachers of the past, whether you think this a sensible development or not.

It is not double speak, you need to start looking outside the bubble of teachers pensions.

Sadly, the renumeration in jobs is not immune from changes due to macro and micro economic conditions. Teachers do not have the given right to retain the same level of pension throughout their whole career.

Many industries have two tier pension schemes with people doing the same jobs. I work with people who are on 80ths final salary pension scheme and people on a non contributory defined contribution pension scheme, doing the same job? Is that fair? Or are the DB people just grateful that they had those benefits due to the timing of their employment.

My point was that the revised pension for teachers is far from the bottom of the pit pension provision, and as such they should not see it as such.

What they need to see, and from what I can see, they still do not, is that what teachers have is still a comparatively good pension plan.

The contributions are a fair input considering the output.

If they do not feel that the pension scheme is suitable or fair, they are more than able to 'opt out' and pay into their own DC personal pension plan.

However, I doubt many would do that, as they know the returns would be a fraction of that of the teachers pension.

redux

Someone I know has a widow's pension from Teachers' Pensions.

A third of the amount it was when her husband was alive.

Why isn't it half? Two financial advisers have been astonished that it isn't half.

Maybe the government could start its own education with thinking up an answer to this question.

Credit-Crunched

redux wrote: »

Someone I know has a widow's pension from Teachers' Pensions.

A third of the amount it was when her husband was alive.

Why isn't it half? Two financial advisers have been astonished that it isn't half.

Maybe the government could start its own education with thinking up an answer to this question.

I'd seek a new financial adviser

The widow's pension is half of the pension if all of the member’s reckonable service counts for family benefits.

If all of the service was not covered then the pension will be a smaller proportion of the member’s pension based on the number of years counting towards family benefits, so it appears that there were gaps in contributions.

gadgetmind

Credit-Crunched wrote: »

If they do not feel that the pension scheme is suitable or fair, they are more than able to 'opt out' and pay into their own DC personal pension plan.

Yes, that would be a shock to the system! They reckon you'd need to put about 25% of your salary in from day one to match these kinds of DB schemes, and you have to take on stock market risk yourself.

ViolaLass

gadgetmind wrote: »

Yes, that would be a shock to the system! They reckon you'd need to put about 25% of your salary in from day one to match these kinds of DB schemes, and you have to take on stock market risk yourself.

Or they can strike in the hopes of getting the old system back. Their actions are hardly illogical.

redux

Credit-Crunched wrote: »

I'd seek a new financial adviser

The widow's pension is half of the pension if all of the member’s reckonable service counts for family benefits.

If all of the service was not covered then the pension will be a smaller proportion of the member’s pension based on the number of years counting towards family benefits, so it appears that there were gaps in contributions.

Thank you. That could be it.

There was a compensatory scheme for a mixture of redundancy and early retirement, which may have been fairly generous, but maybe the enhancements didn't carry across to a prospective widow's pension later.

Credit-Crunched

ViolaLass wrote: »

Or they can strike in the hopes of getting the old system back. Their actions are hardly illogical.

Not illogical, but possible greedy or oblivious to the state of the public sectors purses.

If the numbers do not stack up, then it needs to change, do you think it is fair that the public foot the bill for a premium pension policy, allowing retirement 10 years before most people can even consider it.

I know it is a bitter pill to swallow, but most private sector companies abandoned DB schemes to new starters, and also stopped existing ones. So, the public sector is now catching up, the only difference is the bill is being footed by ALL, not the select few.

ViolaLass

Credit-Crunched wrote: »

Not illogical, but possible greedy or oblivious to the state of the public sectors purses.

If the numbers do not stack up, then it needs to change, do you think it is fair that the public foot the bill for a premium pension policy, allowing retirement 10 years before most people can even consider it.

I know it is a bitter pill to swallow, but most private sector companies abandoned DB schemes to new starters, and also stopped existing ones. So, the public sector is now catching up, the only difference is the bill is being footed by ALL, not the select few.

I don't entirely disagree but I think it's more complicated than that. There are many reasons why not enough people are attracted to teaching and the pension changes may be one, for some people at least.

waspsandjam

They reckon you'd need to put about 25% of your salary in from day one to match these kinds of DB schemes, and you have to take on stock market risk yourself.

I dont know who "they" are, but they could be maths students being asked:

A) They have been in the scheme for 30 years and their final salary is £30,000. If an employees final salary pension is calculated as y/80 * x, where y is number of years and x is their final salary. What is their annual pension? Their lump sum is three times this pension. what is their lump sum?

Given your answer to A) what pension pot would they need to get the same benefits from i)a current annuity offer ii)a 4% draw down.

C) If they invested 25% of their salary (assuming the employer doesn't contribute) for 30 years, what average investment return would they need to get the pot sizes from answers i) and ii).

I'd hope that my average investment return over 30 years is better than the approx 2.1% return i'd need on 25% of this salary to match the DB pot using the 4% draw down.

£11,250 a year? Gold plated? Perhaps not so much....

The security of not being exposed to unpredictable investment returns, so knowing what you'll get is by far the best thing about a defined benefit scheme.

Compound investment returns massively benefit from an early start, so start early!

No one cares more about your money than you.

Ignore sensationalist short term financial news and look at the best long term result for you.

These are some of the things people should be taught early.