To defer, or not to defer?

kidmugsy

dunroving wrote: »

I think for colleagues who have previously retired early, the university negotiated a higher pension and usually referred to it as enhancing the pension by X years. I don't know how this was achieved.

In part it was achieved by making its own contribution to driving USS into a financially dire position.

If you have a realistic hope of getting a redundancy pay-off, might it not be wise to keep shtum about the prospect of your retiring early 'under your own steam'? Why would anyone rational ... hold on: it's a university we're discussing.

hyubh

kidmugsy wrote: »

In part it was achieved by making its own contribution to driving USS into a financially dire position.

CAY in the LGPS, while arguably dubious from a concerned taxpayer point of view, was (is) cost-neutral for the pension fund because the extra pension involved was/is recharged to the employer for the duration it is paid out. Are you saying the USS equivalent worked/works differently?

kidmugsy

hyubh wrote: »

CAY in the LGPS, while arguably dubious from a concerned taxpayer point of view, was (is) cost-neutral for the pension fund because the extra pension involved was/is recharged to the employer for the duration it is paid out. Are you saying the USS equivalent worked/works differently?

I don't know how it is with USS now, but there was a period when the actuarial reduction was waived for early retirement in the managerial interest. In other words it was going to be paid for out of the fund, and so eventually would be a charge on the employee and employer contributions in general. (Members seemed to believe it would magically be paid for "out of growth"!) It did not fall onto the retiree's employer. So there was an absurd and extravagant incentive structure.

dunroving

kidmugsy wrote: »

I don't know how it is with USS now, but there was a period when the actuarial reduction was waived for early retirement in the managerial interest. In other words it was going to be paid for out of the fund, and so eventually would be a charge on the employee and employer contributions in general. (Members seemed to believe it would magically be paid for "out of growth"!) It did not fall onto the retiree's employer. So there was an absurd and extravagant incentive structure.

Yes, I got the impression from talking to colleagues who retired early in this way back in the early 2000's that it was almost a gift given by the employer, that was not theirs to give!

I would hope in my case that it would be the result of some financial calculations that if they let me go and contribute to some sort of enhancement, then hire an early career person, they'll recoup the costs in a relatively short time. If not, then I'll just hang on and make them wish I had gone early.

hyubh

kidmugsy wrote: »

I don't know how it is with USS now, but there was a period when the actuarial reduction was waived for early retirement in the managerial interest. In other words it was going to be paid for out of the fund

Googling suggests strain costs in the form of an 'Early Retirement Funding Charge' were introduced in 2006, prior to that being paid for out of the general contribution rates as you say:

http://www.ucu.org.uk/media/pdf/c/c/ucu_henews3_apr07.pdf (second paragraph)

http://lmb.bioch.ox.ac.uk/oxford/uss/qanda.html (scroll down to the end)

The setup was then tweaked again a few years later to make cancelling the actuarial reduction (and therefore accruing a strain charge) an employer discretion.

kidmugsy

hyubh wrote: »

Googling suggests strain costs in the form of an 'Early Retirement Funding Charge' were introduced in 2006, prior to that being paid for out of the general contribution rates as you say:

http://www.ucu.org.uk/media/pdf/c/c/ucu_henews3_apr07.pdf (second paragraph)

http://lmb.bioch.ox.ac.uk/oxford/uss/qanda.html (scroll down to the end)

The setup was then tweaked again a few years later to make cancelling the actuarial reduction (and therefore accruing a strain charge) an employer discretion.

What excellent finds: thank you. I knew someone who took early retirement in about '97. No wonder his employer could afford to shower him with wealth, given that it didn't have to carry the actuarial costs. Dear God, the scheme was run in a crazily extravagant way for years. Eventually there was bound to be a price to pay. Lean years, fat years.