Public Sector Pension Reform In Trouble?

BoGoF

I can assure it's on people's radar where I work, especially those who just missed out on the Classic scheme cut off. It will take a lot more than £1000 to 'buy people off'

JoeCrystal

Golactico wrote: »

It would significantly mitigate the Government’s problem both financially and administratively.

The only real solution to mitigate this kind of problem in full is to close all pay as you go DB pension schemes and take on all the future risk. It would undoubtedly be cheaper in the long run!

crv1963

Golactico wrote: »

This is a horrendously complex mess that the Government have got themselves into. It’s hard to see how any kind of ‘one size fits all’ remedy can be applied that accounts for not only all of the different public sector pension schemes but also the varying circumstances of members within those schemes.

I think that an offer to ‘buy off’ scheme members’ right to a formal legal remedy is the sensible solution. I strongly suspect that a large proportion of public sector workers will be unaware/uninterested in these legal proceedings – it certainly doesn’t seem to be on anyone’s radar where I work. Present affected members with the broad facts of the case, then transparently offer them say, £1K each to waive their rights to a formal legal remedy, with an assurance that their current pension arrangements will remain the same. An awful lot of people will gladly take this and view it as a surprise windfall out of thin air. Using worst case scenario figures, If 5 million public sector workers took up such an offer (much fewer will actually be affected), the problem would go away for a one-time cost of £5 billion, rather than an (alleged) £4 billion ongoing annual cost. Even if only half settled in this way, it would significantly mitigate the Government’s problem both financially and administratively.

It is horrendously complex, not only do scheme members on the whole not understand how it all works and the implications it would appear that those responsible for the changes didn't understand what they were doing either.

I suspect more reform will be called for rather than a one off payment to scheme members, thereby kicking the can down the road for the next Government. The ability to force through any significant changes to anything is compromised by the divisions within both parties making them almost unable to get any laws through without sorting Brexit first.

That is even if post brexit (or not) the reformed parties can get themselves elected.

Thicko2

I suspect that for new entrants post 2015, there is no issue. That is their scheme, no age discrimination as the scheme will apply to all equally.

It affects people like me in post prior to 1st April 2015 who were not offered the protected transitional arrangements. The transitional arrangements had a maximum endpoint of circa 10 years to retirement age at 31st march 2015, and some protection for people within another 3.5 years I recall.

I think the government is very keen not to go back from the new 2015 scheme arrangements. Hence i believe the likely recourse will have to be costing the protection offered to those affected. This will have to be agreed with the relevant unions and offered.

Hard to do the big picture maths but I would like to understand how the government has come to a £4bn annual figure. Gut feel this is too high.

sammyjammy

Golactico wrote: »

This is a horrendously complex mess that the Government have got themselves into. It’s hard to see how any kind of ‘one size fits all’ remedy can be applied that accounts for not only all of the different public sector pension schemes but also the varying circumstances of members within those schemes.

I think that an offer to ‘buy off’ scheme members’ right to a formal legal remedy is the sensible solution. I strongly suspect that a large proportion of public sector workers will be unaware/uninterested in these legal proceedings – it certainly doesn’t seem to be on anyone’s radar where I work. Present affected members with the broad facts of the case, then transparently offer them say, £1K each to waive their rights to a formal legal remedy, with an assurance that their current pension arrangements will remain the same. An awful lot of people will gladly take this and view it as a surprise windfall out of thin air. Using worst case scenario figures, If 5 million public sector workers took up such an offer (much fewer will actually be affected), the problem would go away for a one-time cost of £5 billion, rather than an (alleged) £4 billion ongoing annual cost. Even if only half settled in this way, it would significantly mitigate the Government’s problem both financially and administratively.

Absolutely agree, where I am (CS) the vast majority of staff I work with don't have a clue on how their pension is worked out, in fact a number wouldn't even know if their pay were wrong. I recently helped a younger colleague work out his payrise and told him hard luck you'll start paying back your student loan, he informed me he had been paying it back since starting three years ago. Turns out the SLC had informed our employer he was on a different plan and they'd taken deductions of over £1200 incorrectly and he'd not even bothered to check what he should be paying.

Given the pay erosion that has taken place over the last ten years or so in CS I think you're right that people would snap up whatever is offered.

CruisingSaver

I work for the NHS and was too far away from retirement to be offered transitional protection.


I've worked through my numbers and the 2008 section of the scheme would be the most beneficial for me and had I been offered a choice I would have remained in that section rather than be dumped in the 2015 section.


It'll be interesting to see how this pans out but any buy off would have to be a darn sight more than £1k!!

Durban

I am paying into the LGPS scheme and my retirement date under the old scheme was 65. Under the CARE system it is 67.

Does this mean that I may get to retire at 65 without penalty?

GunJack

Durban wrote: »

I am paying into the LGPS scheme and my retirement date under the old scheme was 65. Under the CARE system it is 67.

Does this mean that I may get to retire at 65 without penalty?

Until the govt work out how they intend to rectify the situation, and whether that's accepted, no-one knows yet....keep watching this space.

Dazed_and_confused

I am paying into the LGPS scheme and my retirement date under the old scheme was 65. Under the CARE system it is 67.

Does this mean that I may get to retire at 65 without penalty?

As GunJack says no one knows yet but whatever happens "without penalty" may be open to interpretation.

Some CARE schemes have the ability to build up more pension but with downsides like normal pension age 67 instead of 65 and no automatic lump sum.

If you were able to take your pension at 65 instead of 67 that might be coupled with the pension being based on the previous system rather than what you have been accruing recently under the CARE scheme rules.

But it's all guesswork really at the moment.

Silvertabby

“ I am paying into the LGPS scheme and my retirement date under the old scheme was 65. Under the CARE system it is 67.

Does this mean that I may get to retire at 65 without penalty?

Dazed_and_confused wrote: »

As GunJack says no one knows yet but whatever happens "without penalty" may be open to interpretation.

Some CARE schemes have the ability to build up more pension but with downsides like normal pension age 67 instead of 65 and no automatic lump sum.

If you were able to take your pension at 65 instead of 67 that might be coupled with the pension being based on the previous system rather than what you have been accruing recently under the CARE scheme rules.

But it's all guesswork really at the moment.

Exactly. However, be careful what you wish for.

Pre 2014 Final salary. 1/60th accrual rate with no automatic lump sum. Pensionable pay used in calculation is basic salary - no non-contractual extras/overtime.

Post 2014 CARE. 1/49th accrual (again, no automatic lump sum) plus CPI annual revaluation. Pensionable pay used is everything - including non-contractual overtime etc etc.

Someone with a lot of extras/non contractual overtime may well find that the CARE pension taken at 65 (with a 2 year early payment reduction) will still be more than a final salary pension taken at 65 with no reductions.