local Authority DB frozen in 1996

dunstonh

Also I cannot see why this local authority pension is seen as so sacrosanct with regard to investment return

Ok, lets focus on that. What investment return (known as the critical yield) is required to beat the benefits of the occupational pension?

I am starting to wonder if there is a political perspective linked to the resistance to capital moving out of these funds

No, its because the transaction you propose is statistically only suitable for around 1 in 10 people. You could be that 1 in 10. However, nothing you have said so far suggests that you are.

PeacefulWaters

nicknack321 wrote: »

I am starting to wonder if there is a political perspective linked to the resistance to capital moving out of these funds

If everybody exercised their "right" to switch out of these schemes I'd expect a big tax cut within a few years.

nicknack321

PeacefulWaters wrote: »

If everybody exercised their "right" to switch out of these schemes I'd expect a big tax cut within a few years.

Why do you say that?

PeacefulWaters

nicknack321 wrote: »

Why do you say that?

Because the index linked guarantees and spousal benefits will cost the taxpayer more over time than just giving everybody the transfer values as cash.

nicknack321

dunstonh wrote: »

Ok, lets focus on that. What investment return (known as the critical yield) is required to beat the benefits of the occupational pension?



No, its because the transaction you propose is statistically only suitable for around 1 in 10 people. You could be that 1 in 10. However, nothing you have said so far suggests that you are.

OK Im just turned 56 and my latest statement gives an index linked pension of approx. £5800. If this grows at say 2% a year then suppose by the time I'm 65 its around £8500. That don't sound like much to me. Please excuse if I seem ignorant as on this subject I am

nicknack321

PeacefulWaters wrote: »

Because the index linked guarantees and spousal benefits will cost the taxpayer more over time than just giving everybody the transfer values as cash.

Surely all benefits paid out must come from returns generated by the communal pension pot of investments, which originally came from my wages and my employers contribution which was in essence part of my wages too. Are you saying that pension payouts are topped up from general taxation

PeacefulWaters

nicknack321 wrote: »

Surely all benefits paid out must come from returns generated by the communal pension pot of investments, which originally came from my wages and my employers contribution which was in essence part of my wages too. Are you saying that pension payouts are topped up from general taxation

I believe there was a 25% shortfall in funding at the time of the last election.

jem16

nicknack321 wrote: »

OK Im just turned 56 and my latest statement gives an index linked pension of approx. £5800. If this grows at say 2% a year then suppose by the time I'm 65 its around £8500. That don't sound like much to me. Please excuse if I seem ignorant as on this subject I am

£8500pa index-linked with family benefits after your death sounds like a good deal to me. It would require a pot of around £284,000 to get similar benefits via a SIPP. Do you know what the transfer value is?

How long were you in the LGPS?

nicknack321 wrote: »

Surely all benefits paid out must come from returns generated by the communal pension pot of investments, which originally came from my wages and my employers contribution which was in essence part of my wages too. Are you saying that pension payouts are topped up from general taxation

As the LGPS is funded then it's the fund which supports the payout. This is why you are allowed to transfer. However it was in deficit back in 2007.

hyubh

nicknack321 wrote: »

Are you saying that pension payouts are topped up from general taxation

They are not, however they are 'topped up' by a sizeable fraction of current employer contributions. E.g., a 'typical' council might be paying a rate of 20% of pensionable pay, with over a third of that representing a 'past service rate' that seeks to help make up the historical deficit.

Given the benefit promises of decades past are guaranteed, the fact people are living longer (for example) has to be borne by the employer and (if only indirectly) current employees (less money available for pay rises). Since 'the employer' generally means the local council, that implies a proportion of everyone's council tax.

nicknack321

jem16 wrote: »

£8500pa index-linked with family benefits after your death sounds like a good deal to me. It would require a pot of around £284,000 to get similar benefits via a SIPP. Do you know what the transfer value is?

How long were you in the LGPS?



As the LGPS is funded then it's the fund which supports the payout. This is why you are allowed to transfer. However it was in deficit back in 2007.

I was in for 16 years. possibly £8500 is overestimating. The transfer value is £116000 approx. The last statement said my current pension was £5600 (I'm just 56) and it would not normally be payable until I'm 60. Survivors pension currently £2800. Retirement grant of £16800.


Also actuarial valuation states fund is 70% funded?


It is on or slightly above benchmark performance for Local Authority Fund