"Final salary pensioners may have income limits halved"

hyubh

kinger101 wrote: »

I see your point, but usually it isn't usually the employer.

DB pensions in this country are premised upon the idea a sponsoring employer is there, responsible for ensuring pensions are paid. The fact there is a pension fund (if private sector or LGPS) does not negate this - the number of so-called 'zombie' schemes is tiny, and their existence controversial.

In common parlance, a DB pension isn't salary.

Referring to a DB pension as 'deferred salary' was common parlance in times past.

(a) HMRC themselves use the terminology salary sacrifice (not deferment)

Salary sacrifice has nothing to do with a DB pension in payment.

(b) The pensions themselves are based on "Final" or a "career-averaged" salary - implying pension is not salary

'Final pensionable salary' - clearly a pension payment is not itself pensionable (i.e. a payment that earns a pension as well - it is the pension).

hyubh

BobQ wrote: »

So if you put in 5% and your employer puts in 5%.your DC pot contains money your employer has given to you on condition it goes into a pension scheme which you cannot access until you draw the pension. Sounds like that 5% is deferred salary.

No, because the additional salary (payment) is immediate. In a DB scheme, in contrast, there is no immediate payment, but instead a promise to pay an amount later - the 'deferred salary'.

nigelbb

BobQ wrote: »

So if you put in 5% and your employer puts in 5%.your DC pot contains money your employer has given to you on condition it goes into a pension scheme which you cannot access until you draw the pension. Sounds like that 5% is deferred salary.

The DB pension is index-linked & guaranteed so it's literally a portion of your salary at today's value that you draw in retirement.

A DC pension is a payment out of current salary into a savings scheme with no guarantee that the value of your money will be maintained.

GunJack

BobQ wrote: »

But the change would increase the problems for the NHS with doctors and dentists restricting their hours and seriously amage recruitment and retention in teaching, etc)

A relatively modest professional pension in the public sector (say £30K )would exceed the LTA at a stroke.

Having been in the CS, there's not many that would get a £30k a year pension (far more likely in LGPS based on salaries) so I wouldn't call £30k pa "relatively modest", the majority of Civil Servants aren't on a salary even approaching £30k


However, using your figure, a 3% withdrawal rate on a DC pot of £1M would give the same income and NO LTA issues...just shows how 40x would be way too big...

Where you are correct, though, is the effect on NHS docs/dentists, and the upping of the multiplier will have an even bigger effect as it will force the LTA issues further down the salary scales than they are now, so even more docs/dentists will go earlier....

Terron

nigelbb wrote: »

The DB pension is index-linked & guaranteed so it's literally a portion of your salary at today's value that you draw in retirement.

A DC pension is a payment out of current salary into a savings scheme with no guarantee that the value of your money will be maintained.

DB pensions are not all fully index linked. The gold plated public service ones are. Private ones are until they start to be paid. They are currently required to be indexed linked up to a cap of 2.5%. That used to be 5%, and one of my DB pensios will get that Prior to 1997 the law did not require any index linking. My other DB pension has rises once in payment "entirely at the discretion of the trustees". AFter 2 takeovers the current trustees have given just two 1% rises since 2003.Part of it is a GMP which is index linked up to3% once in payment. They government used to then make up the difference but stopped in 2016, excepr for public service pensions.

kinger101

hyubh wrote: »

DB pensions in this country are premised upon the idea a sponsoring employer is there, responsible for ensuring pensions are paid. The fact there is a pension fund (if private sector or LGPS) does not negate this - the number of so-called 'zombie' schemes is tiny, and their existence controversial.



Referring to a DB pension as 'deferred salary' was common parlance in times past.



Salary sacrifice has nothing to do with a DB pension in payment.



'Final pensionable salary' - clearly a pension payment is not itself pensionable (i.e. a payment that earns a pension as well - it is the pension).

We'd agreed on deferred. I was disputing your definition of salary.

A DB pension isn't salary, no matter how you try and twist it.

We already have two perfectly good definitions in DB pension and DC pension. I don't see why you feel the need to muddy the waters.

BobQ

GunJack wrote: »

Having been in the CS, there's not many that would get a £30k a year pension (far more likely in LGPS based on salaries) so I wouldn't call £30k pa "relatively modest", the majority of Civil Servants aren't on a salary even approaching £30k

Neither would I but that is what you get if you quote me out of context. I said a typical PROFESSIONAL pension in the PUBLiC SECTOR might be £30K not an average CS pension.

Obviously it also depends on length of career. But assuming it is a long career like a doctor or dentist it would be a pension well in excess of 30K. But a pension of £30K might be earned by accountants, scientists, teachers, statisticians, actuaries,lawyers, project managers, analysts in places like MI5, planning inspectors, tax inspectors, military officers, senior police officers and senior managers.

The issue of recruiting enough doctors is not helped by LTA and potential restrictions in the future but it will affect many more in technical and specialist roles in more public service jobs that are already underpaid compared to comparable private sector jobs.

BobQ

GunJack wrote: »

However, using your figure, a 3% withdrawal rate on a DC pot of £1M would give the same income and NO LTA issues...just shows how 40x would be way too big...

Well yes, but the difference between a public sector pension and others is that whatever multiplier the Government chooses to use, the individual receiving it has no flexibility to take their "pot" and draw it down or buy an annuity. Great deal if you plan to live to 100, but not fair if you only expect to live till 75.