Public Sector Pension Reform In Trouble?

strawb_shortcake

drummersdale said:

annabanana82 said:

I've just been reading about this, I was in premium before being moved on to Alpha. I think I'll defer my decision until I eventually retire so I can make my decision on facts rather than assumptions. 
I do suspect I'll be better off picking the 7 years to be under Premium going by the example, I also assume that the premium element can't be reduced by 5% per year should I decide to claim my pension be SPA? 
I really do need to understand my pension better though.

The more I read it the less I understand but hopefully when they come out with a few more worked examples the mist will start to clear....at least it's progress of sorts.

It did say calculators would be made available to help people make a decision.
I still can't imagine the SPA staying static to allow me to retire without a penalty. 
But glad I'm not a teacher and expected to manage a class of 30 children at 68+...

german_keeper

annabanana82 said:

I've just been reading about this, I was in premium before being moved on to Alpha. I think I'll defer my decision until I eventually retire so I can make my decision on facts rather than assumptions. 
I do suspect I'll be better off picking the 7 years to be under Premium going by the example, I also assume that the premium element can't be reduced by 5% per year should I decide to claim my pension be SPA? 
I really do need to understand my pension better though.

The key factor I suspect will be if you get promoted before you retire. As it stands, and I can't see anything in the documents to change this, any "ring fenced" (for want of a better word) Classic/Classic Plus/Premium will be calculated on your salary when you retire. Alpha is calculated on your salary each year with an annual CPI increase applied. So assuming below inflation pay rises in future Alpha probably wins for those who don't get promoted, legacy schemes for those who do.

I am actually going to be in Contingent Decisions para A43 to A47 as the uncertainty with the link to SPA in Alpha caused me to jump into Partnership. But if I wasn't I am sure I would want to wait until I retired so that I had all the info, namely my final salary, pay rises in the years to retirement and CPI during the same period. Given I am the most unambitious person in the world I would think Alpha would be better for me but why not wait till you have all the info. I will of course stand corrected if I have missed anything.  

drummersdale

german_keeper said:

I am actually going to be in Contingent Decisions para A43 to A47 as the uncertainty with the link to SPA in Alpha caused me to jump into Partnership. But if I wasn't I am sure I would want to wait until I retired so that I had all the info, namely my final salary, pay rises in the years to retirement and CPI during the same period. Given I am the most unambitious person in the world I would think Alpha would be better for me but why not wait till you have all the info. I will of course stand corrected if I have missed anything.  

I have been in Classic for 38.5 years and went onto Alpha last month - given that the main reasons (for me) to stay in Classic were the earlier NPA and the lump sum and - god willing - looking to take Partial Retirement (if agreed) in 2022 anyway, I suspect the changes won't really make a great deal of difference to me - or at least I don't think so.  Although the devil is in the detail....

strawb_shortcake

I was in classic for a short time then changed to Premium in 2002 I think. Having taken maternity leave and a 5 year career break I have 6/7 years in premium and the rest is in Alpha. 
I'm only 38 so have at least 30 years to go, I plan to apply for promotion in maybe 18 months taking me to SEO (C1), another promotion may be possible in future but I think that's likely my limit. 
Once my mortgage is paid off I'm hoping to invest a couple of years living costs so I can afford to defer my pension 

sammyjammy

drummersdale said:

• the government is today announcing that the pause of the cost control mechanism, which was implemented in 2019, will be lifted.

• When the (cost control) mechanism was established, it was agreed that it would consider ‘member costs’: i.e. costs that affect the value of schemes to members. As the proposals in the consultation published today will increase the value of schemes to members, this falls into the ‘member cost’ category. As a ‘member cost’, this will be considered as part of the completion of the cost control element of the 2016 valuations process. 

Is this part about the contributions - the 2% "extra" the PCS union reckon members have been overpaying - or have I completely misunderstood - if it is then my reading of this is "don't expect any form of refund"...
I suspect I am wildly adrift of the facts...

As said further on its not because PCS say so, it was a mechanism of the scheme that contributions would be considered alongside the affordability of the scheme.  My understanding from the statement is that they are removing that section but surely they cannot do that retrospectively,  the review should have been implemented  as of April 2019.

hyubh

sammyjammy said:

As said further on its not because PCS say so, it was a mechanism of the scheme that contributions would be considered alongside the affordability of the scheme.  My understanding from the statement is that they are removing that section but surely they cannot do that retrospectively,  the review should have been implemented  as of April 2019.

This is referring to the 'cost cap' mechanism added to the 2015 schemes. It only works against a limited number of variables, and from those, gave the conclusion that the schemes were cheaper than intended. However, a wider review led to the opposite conclusion, causing the 'discount rate' (and therefore employer contributions) to rise. So if it weren't for McCloud, we were potentially facing additional employer rate rises to pay for a faulty cost cap mechanism imposing benefit improvements and/or employee contribution rate falls.

hugheskevi

sammyjammy said:

As said further on its not because PCS say so, it was a mechanism of the scheme that contributions would be considered alongside the affordability of the scheme.  My understanding from the statement is that they are removing that section but surely they cannot do that retrospectively,  the review should have been implemented  as of April 2019.

To be clear there are a few different things going on:

• The main consultation is about how to remedy the unlawful age discrimination identified by the McCloud judgment. This will give in-scope members the choice of either their pre-2015 scheme or post 2015 scheme benefits for the period between 2015-2022. After April 2022 all future pension accrual will be in post 2015 schemes.
  
• There is also an assessment of the schemes as at 2016 under the cost cap rules. This was the basis of union statements that members were overpaying for their pension, although the outcome of the process could have been changes to member benefits or contribution rates. This process was paused in January 2019 but will now re-start. However, a key difference is that the process will now take into account the additional costs resulting from the McCloud remedy. The outcome of the cost cap 2016 process was due to be implemented from April 2019, although it is not clear whether any changes resulting from the re-started process will be back-dated or not.
  
• The Treasury are going to review the basis of the cost cap and the assumptions used for future cost cap assessments (but this will not apply to the 2016 cost cap assessment). The next cost cap assessment is due based on an 'as at' date of April 2020 and due for implementation from April 2023, and will take into account changes HM Treasury make to the cost cap process following their review.
  

Cancri

hugheskevi said:

• The main consultation is about how to remedy the unlawful age discrimination identified by the McCloud judgment. This will give in-scope members the choice of either their pre-2015 scheme or post 2015 scheme benefits for the period between 2015-2022. After April 2022 all future pension accrual will be in post 2015 schemes.

That should be interesting for the 2,500 people HMRC are currently offering Voluntary Redundancy to (before they get made compulsorily redundant if they don't take VR).

For those who were employed before 2012 (most because HMRC hasn't been recruiting to the locations closing for years if not decades) then it would seem to mean - 

• For those aged over 50 but under 55 with the last 5 years service in Alpha that they could choose to switch that to Classic and take it unreduced when they leave, using their compensation payment to buy out the reduction - but under the VR terms with HMRC as employer having to top up any difference, which is likely to be substantial.
• For those aged over 58 & 9 months who were going to have their compensation payment tapered (although Elliot may have resolved that) that they could move to Alpha (as they would have been in the 'protected' group who didn't get a choice and had to remain in Classic, etc.) and then benefit from the tapering age in Alpha being their NPA. So someone who was facing getting as little as 6 months compensation could get up to 21 months.

The result from both of those things could be pretty expensive.

spaniel101

Im confused as to whether this would effect my situation.

1995 NHS just shy of 16yrs service - came out of Pension 30/04/11 (year end March 2012) due to mat leave.
Re Joined Pension April 2018, automatically placed in 2015 section.  I was given the option of moving all my 1995 benefits, into the 2015 scheme. I elected not to do this but to sustain benefits in 1995 scheme (which is soley based on my 2012 whole-time), so have been not-linked, in 2015 scheme since April 2018.   

According to the Leaflet - "The governments proposals to remove the discrimination will apply to all pension scheme members who were in service on or before March 2012 and on or after April 2015, including those with a qualifying break in service of less than 5 years."
..."Were you in service as a member of a public service pension scheme on or before 31st March 2012 and on or after 1st April 2015 ?".   I suspect I would answer 'Yes' - but for, if you answered 'No' - then, "You are not affected (unless you held a right to return within 5 years to your previous scheme on 31st March 2012"     - which of course I would have done, had it not been for the more than 5 year ruling - relating to the now 2015 scheme ? 

Having reduced my hours to part-time after mat leave - my guess is I may be better off in the 2015 scheme anyhow, albeit my 'whole time equivalent' has of course increased since 2012  (but currently now not-linked - due to 2015 changes).

Anyone care to take a stab in the dark ?