Civil Service Career Avg Pension - contribs higher than accrual?

System

Hi

Before I retired I spoke with Hymans Robertson about the new CARE scheme within the LGPS and an opinion was, THIS IS NOT official answer/policy, but it would be unaffordable.

I think CARE schemes that are better 1/55 are unaffordable in the long term.

Also my kind of logic on 43/43 is the sorta thing newspaper articles are made of.

Predictions when the CARE scheme was thought up, did not include the BREXIT factor, and has not got it included yet. So wages and inflation predictions/expectations are likely to be taken from GAD, GaGa and Dreamland tables, circa 2012.

Come 2022 the tables will be turned on their heads and we will all be busted and bankrupt, cept those of us on Index linked LGPS incomes;~))

hyubh

Silvertabby wrote: »

In theory, if you added all of your years together then 2.32% of that total sum would be your pension without revaluation - but as the revaluation figure is likely to be different for each year then the only way to do it is on a yearly basis.

Doesn't make it any less of a 'true average' (mean) to me... The alternative would be to do the calculations only at the end, revaluing from each year end to DOR and adding the revised yearly amounts together. Wasn't that how councillor pensions were calculated in the LGPS...?

Silvertabby

“ In theory, if you added all of your years together then 2.32% of that total sum would be your pension without revaluation - but as the revaluation figure is likely to be different for each year then the only way to do it is on a yearly basis.
Originally posted by Silvertabby ”

Doesn't make it any less of a 'true average' (mean) to me... The alternative would be to do the calculations only at the end, revaluing from each year end to DOR and adding the revised yearly amounts together. Wasn't that how councillor pensions were calculated in the LGPS...? Posted by hyubh

Roughly, yes - but councillors only tended to do a few years service. When CARE was being chewed over, it was decided that the best way forward in the calculation of full career pensions (ie, 30 or 40 years) would be by 'banking' the pension accrued at the end of each year.

Plus, don't forget that the final salary link still applies for those with pre 2014 service - meaning that the old rules year end pensionable pay figures still need to be recorded on pension records,

hyubh

Silvertabby wrote: »

Roughly, yes - but councillors only tended to do a few years service. When CARE was being chewed over, it was decided that the best way forward in the calculation of full career pensions (ie, 30 or 40 years) would be by 'banking' the pension accrued at the end of each year.

I don't deny a year-on-year calculation is better, if that's what you're suggesting (and if you aren't, you should!). It's just that this isn't (as the OP claimed) less of a 'career average' calculation that doing things only at the end. Also, calculations from start to end rather than year on year were arguably seen as commonsense until relatively recently - beyond my previous examples (LGPS councillor section, S148 GMP revaluation), 'limited rate' GMP revaluation doesn't make sense without it ('limited' = S148 capped to 5% - but what the 5% is isn't known until GPA).

Plus, don't forget that the final salary link still applies for those with pre 2014 service - meaning that the old rules year end pensionable pay figures still need to be recorded on pension records,

Do they? You need it at DOL, but until then... In general, FS pensionable pay figures are only needed on an ongoing basis due to a requirement to produce ABSs, a requirement that for the unfunded public sector schemes is still relatively new (the LGPS is the weirdo in having a statutory requirement for both active and deferred ABS enacted in 2004).

Silvertabby

“ Roughly, yes - but councillors only tended to do a few years service. When CARE was being chewed over, it was decided that the best way forward in the calculation of full career pensions (ie, 30 or 40 years) would be by 'banking' the pension accrued at the end of each year.
Originally posted by Silvertabby ”

I don't deny a year-on-year calculation is better, if that's what you're suggesting (and if you aren't, you should!). It's just that this isn't (as the OP claimed) less of a 'career average' calculation that doing things only at the end. Also, calculations from start to end rather than year on year were arguably seen as commonsense until relatively recently - beyond my previous examples (LGPS councillor section, S148 GMP revaluation), 'limited rate' GMP revaluation doesn't make sense without it ('limited' = S148 capped to 5% - but what the 5% is isn't known until GPA). Posted by hyubh

Cllr pensions were a pain in the b*m to calculate. Although I was only around for the first 2 years of CARE the yearly 'bank' system is much easier (and therefore more accurate) to deal with.

“ Plus, don't forget that the final salary link still applies for those with pre 2014 service - meaning that the old rules year end pensionable pay figures still need to be recorded on pension records,
”

Do they? You need it at DOL, but until then... In general, FS pensionable pay figures are only needed on an ongoing basis due to a requirement to produce ABSs, a requirement that for the unfunded public sector schemes is still relatively new (the LGPS is the weirdo in having a statutory requirement for both active and deferred ABS enacted in 2004). Posted by hyubh

You're forgetting about the best pay regs - ie, in some cases the best pay used in the final salary calculation is the best 3 year average from the last 13. If the pensions administrator only had the final year's pensionable pay figure to look at when finalising the record then he/she would have no idea if the pay had dropped for any reason if the previous year's figures weren't there for comparison. This would mean asking the employer's payroll department for 13 years worth of figures in each and every case! I know all too well that getting old pay figures from some employer's payroll sections is like getting blood from a stone - so the more information readily available on the pension record the better.

Thrugelmir

hugheskevi wrote: »

Also earnings in the long run are expected to be 4.5% per year,

There's little sign of these levels of increase anytime soon.