Fairness pension

i_was_taught_2b_cautious

I was thinking about the fairness of pension for the older and newer generations.

You have people who are between 50-65 years old receiving final salary pensions be it a large or small amount + the state pension, and the newer generation who have to save a hell of a lot in DC schemes, and are unsure if the state pension will even exist when they come to retire.

Someone with a 1/40 final salary pension on ££25,000 at retirement with 15 years of service will get £9375 a year guaranteed.

The same applies to university fees being free for the older generations, but new generations are paying over the odds to get a sometimes worthless degree. Number of degrees given out is more than actual jobs available.

I also find the same applies to redundancy as well. I heard someone working for Gillete part time In the factory getting a 30k redundancy package.
BT also gave great redundancy packages for only being there for 5 years.

i would like opinions on the fairness, and how the older generation got great benefits, but now for the younger generation everything is standardised across the UK.

hyubh

i_was_taught_2b_cautious wrote: »

i would like opinions on the fairness, and how the older generation got great benefits, but now for the younger generation everything is standardised across the UK.

Your examples/anecdotes over-egg a pudding that is already full of yolk (e.g., 1/40 final salary was never the norm). It's as if you're really arguing for the opposite view...

Southend1

There are some glaring inequalities. I was reading up on the changes currently being consulted on for SAUL. It will move to a CRB scheme for all members but with CPI increases capped at 2.5%. There will be a massive inflation risk for younger members who could find a big chunk of their pension wiped out by a couple of bad years.

dunstonh

Someone with a 1/40 final salary pension on ££25,000 at retirement with 15 years of service will get £9375 a year guaranteed.

You would be hard pushed to find many on a 40ths Scheme. 80th was by far the most common (and 60th tended to be broadly similar to 80th due to the different way the lump sum was worked out).

i would like opinions on the fairness, and how the older generation got great benefits, but now for the younger generation everything is standardised across the UK.

The current generations have never had to go to war and suffer losses and have higher living standards than previous generations.

Any shortfall in pensions or personal provision will largely be due to spending too much on consumer items and not because of the generations that have gone before.

i_was_taught_2b_cautious

I just find it difficult to understand how it has come to this. 1/40 final salary pension may not have been the norm but 1/60 and 1/80 schemes were the norm.

The Government give with one hand and take with the other.

How were RPI to CPI increases allowed to happen?

Southend1

i_was_taught_2b_cautious wrote: »

I just find it difficult to understand how it has come to this. 1/40 final salary pension may not have been the norm but 1/60 and 1/80 schemes were the norm.

The Government give with one hand and take with the other.

How were RPI to CPI increases allowed to happen?

It's partly down to regulation which is biased against DB pensions but mostly due to declining employee bargaining power as employment has become more fragmented and union membership density has declined.

dunstonh

I just find it difficult to understand how it has come to this. 1/40 final salary pension may not have been the norm but 1/60 and 1/80 schemes were the norm.

How about the fact that people are living 20 or so years longer?

Southend1

dunstonh wrote: »

How about the fact that people are living 20 or so years longer?

This isn't a factor in the decline of DB schemes. The solution would be to raise normal retirement age, increase contributions or a combination of the two.

Eta - or a reduction in benefits

regprentice

some of the older generation got great benefits and younger people in the same roles will not receive the same benefits.

I recently applied for a local authority role thinking it might have a final salary pension but it 'only' had an average salary pension. I'd still have bitten their hand off for it but some people on here would have you think the local govt pension changes are the worst thing in the world.

I think a better example is made by comparing yourself to people 20 years older in your current workplace (at a similar level)

Some of my colleagues have

- 2days extra holiday from a historic contract change.

- up to 10 years ago annual pay increases were in the range 6-7%. Ive had 4 x 0.25% pay increases in the last 8 years. Most older staff are at the absolute top of their salary bands and the 'younger' staff cant make any progress off of the bottom of the salary band.

- various weird and wonderful pay structures including guaranteed bonuses, 10% pay increase for having line managment responsibility, instead now new staff have flat 'performance' monitored bands with no 'increments' whatsoever.

- final salary pension (7% sal) vs defined benefit (expected 15% contribution...my most recent statement said i could get out less than i paid in leaving me paying twice as much for around a sixth of the pension entitlement!)

- New staff all have exactly the same generic job description so they can be moved between roles willy nilly and no job can be rejected as not being a suitable alternative. This is partcularly true for redundancy periods which is contractural for old staff but for new staff the contract simply refers to a seperate'redundancy' policy. This changed to refuce the redndancy payout the last time there were redundancies and may refuce again in future.

All you can do is get the best package on offer at any time. But it is galling to think that you can be treated significantly worse than the person sitting next to you....

Southend1

regprentice wrote: »

some of the older generation got great benefits and younger people in the same roles will not receive the same benefits.

I recently applied for a local authority role thinking it might have a final salary pension but it 'only' had an average salary pension. I'd still have bitten their hand off for it but some people on here would have you think the local govt pension changes are the worst thing in the world.

I think a better example is made by comparing yourself to people 20 years older in your current workplace (at a similar level)

Some of my colleagues have

- 2days extra holiday from a historic contract change.

- up to 10 years ago annual pay increases were in the range 6-7%. Ive had 4 x 0.25% pay increases in the last 8 years. Most older staff are at the absolute top of their salary bands and the 'younger' staff cant make any progress off of the bottom of the salary band.

- various weird and wonderful pay structures including guaranteed bonuses, 10% pay increase for having line managment responsibility, instead now new staff have flat 'performance' monitored bands with no 'increments' whatsoever.

- final salary pension (7% sal) vs defined benefit (expected 15% contribution...my most recent statement said i could get out less than i paid in leaving me paying twice as much for around a sixth of the pension entitlement!)

- New staff all have exactly the same generic job description so they can be moved between roles willy nilly and no job can be rejected as not being a suitable alternative. This is partcularly true for redundancy periods which is contractural for old staff but for new staff the contract simply refers to a seperate'redundancy' policy. This changed to refuce the redndancy payout the last time there were redundancies and may refuce again in future.

All you can do is get the best package on offer at any time. But it is galling to think that you can be treated significantly worse than the person sitting next to you....

Part of the problem is hat the older generation were willing to speak up and take action to secure and maintain their terms and conditions. Nowadays the merest mention of industrial action draws a barrage of criticism from all directions. I have colleagues who complain bitterly about their annual cost of living rises but who aren't union members or are but won't come out on strike when called to.

Drp8713

i_was_taught_2b_cautious wrote: »

I just find it difficult to understand how it has come to this. 1/40 final salary pension may not have been the norm but 1/60 and 1/80 schemes were the norm.

The Government give with one hand and take with the other

What do you mean by the government? Public Sector pensions have changed, but are still generous, I am in my twenties and pay into the LGPS with a 1/49th accrual rate.

Im accruing £750 a year of pension, which I think is more than fair for the £2700 contributions I pay a year.

As for the private sector, it wasnt the government who closed their DB schemes