updates on FBU, Civil service pensions

Bravepants

I was in Premium with an NRA of 60.



I will get 0.543 (54.3%) of Alpha pension from 55. I also buy Added Pension.



I won't be taking any lump sums.

german_keeper

sammyjammy wrote: »

Its not just about the pension figure though is it? You have to factor in the lack of lump sum which is equivalent to 3 yrs pension and the fact that you either take it 7 years later or have it reduced by circa 35% forever.


Hopefully they will provide calculators to help people decide but its not as simple as looking at the numbers peoples circumstances will need to be factored in.


Given the misinterpretation of our latest 4 year pay deal which was entwined in a change of contract terms and conditions I'm not hopeful many people will be able to make an informed decision if they are required to.

I did factor the lump sum and AR of Alpha into my calcs. I think the lump sum was about 7 or 8 times the extra pension on Alpha so with average life expectancy Alpha was better.

What I didn't try to do was predict what my final salary will be or work out the CPI increases to Alpha accrual. But given the combination of my complete lack of ambition and my pay rises being way below CPI for many years and my expectation of that continuing Alpha seems much better for me. Obviously for others a couple of promotions would put a big tick in the Classic/Premium box.

Thicko2

I think the working thar people have done are closely matching mine in an earlier post.

If you have had austerity minimal payrises the new schemes are probably advantageous. If you have had pay rise circa twice the above, sticking to predecessor schemes may well be beneficial.

If you have significant time to go to retirement a choice will be a gamble on future payrises versus accual at cpi plus 1.5% of whatever your 2015 scheme offers.

Your preferred retirement age and then the differences in actuarial reductions then come into play.

sammyjammy

german_keeper wrote: »

I did factor the lump sum and AR of Alpha into my calcs. I think the lump sum was about 7 or 8 times the extra pension on Alpha so with average life expectancy Alpha was better.

What I didn't try to do was predict what my final salary will be or work out the CPI increases to Alpha accrual. But given the combination of my complete lack of ambition and my pay rises being way below CPI for many years and my expectation of that continuing Alpha seems much better for me. Obviously for others a couple of promotions would put a big tick in the Classic/Premium box.

Ha ha same for me, just worked it out on current salary

hyubh

nigelbb wrote: »

Reasonable pensions for public sector workers are partly a tradition

Typical pension arrangements in the public sector are now fundamentally more generous that typical pension arrangements in the private sector. This isn't 'tradition', as it's only arisen since DB has been discovered too costly in the private sector.

Private sector DB had more variety, but was fundamentally the same 'thing' as public sector DB, both for good or ill (e.g. discrimination against part time workers was common to both until covering pensions legislation forced final salary schemes to be opened up).

& an incentive for them to accept low salaries

The way this very thread has had public sector workers struggling to understand the true value of their pension arrangements is, dare I suggest it, evidence to the contrary...

they are also a way for the government to defer salary payment for up to 40 years. They pay a lower salary today & then pay the balance during retirement.

The pension promises made still need to be paid for, whether by the taxpayer of today or tomorrow. Paying higher headline salaries now would arguably be more honest.

hyubh

german_keeper wrote: »

Those who begrudge civil servants their pensions can console themselves with the fact that when it changed from non contributory to contributory with a NPA linked to SPA rather than 60 no increase in salary was received in compensation. The contribution went from 1.5% (widows and orphans) to a minimum of 5.45%. So that in itself was a minimum 3.95% pay cut, not real terms but an actual pay cut. No idea how to work out the value of the change in NPA. See what your civil servants go through on your behalf.

These are the 2 detrimental changes. Personally I wouldn't include the change from final salary to career average as detrimental, to me that's swings and roundabouts with winners and losers.

Not saying private sector pensions haven't been hit, just trying to add a bit of balance.

These are tiny changes in comparison. Upping employee contributions by 5% and NRAs for future service by a couple of years was exactly what (e.g.) Tesco did for a few years before closing their DB scheme completely for DC. Tesco now does 4.5%-7.5% matching - so, the best that Tesco gives is worse than the 'worst' that Partnership gives and merely half the 'best' that Partnership gives (Partnership employer rates are banded by age to mirror how the DB offering is actuarially more valuable for older employees).

JoeCrystal

sammyjammy wrote: »

I was just chatting to a girl in the office today, intelligent girl but I was shocked to find out she opted out and continues to opt out of the Alpha/NUVOS pension, she has 14 years service and a potential 34 to go. I gave her the bare facts and she just said I don't want to....

That is depressing. I may rail on about how extremely generous the unfunded pension schemes are, but it is still sad to see that some staffs again do not take advantage of such schemes.

I am always aware of just how much it takes in term of contributions to get an expected income and never get there since the contributions to do so is too high. Most people can't afford to contribute a quarter to a third of their salary to get an equivalent benefit.

nigelbb

hyubh wrote: »

Typical pension arrangements in the public sector are now fundamentally more generous that typical pension arrangements in the private sector. This isn't 'tradition', as it's only arisen since DB has been discovered too costly in the private sector.

DB schemes are not unaffordable it's just that private companies have been able to get away with closing them to increase the profits for shareholders. This is due to the weakening of union power & the low wage insecure job market in the UK preventing employees from resisting.

german_keeper

sammyjammy wrote: »

I was just chatting to a girl in the office today, intelligent girl but I was shocked to find out she opted out and continues to opt out of the Alpha/NUVOS pension, she has 14 years service and a potential 34 to go. I gave her the bare facts and she just said I don't want to....

How odd. Is it that for some reason she just doesn't want a pension at all? If it's that she doesn't want to pay contributions she could join the Partnership scheme and at least get the free employer contribution even if she doesn't get the matched one.

hyubh

nigelbb wrote: »

DB schemes are not unaffordable it's just that private companies have been able to get away with closing them to increase the profits for shareholders. This is due to the weakening of union power & the low wage insecure job market in the UK preventing employees from resisting.

Statutory revaluation and minimum increases in payment, proper accounting for liabilities, rising life expectancies, a framework that means a company going bust does not, in fact, mean the end of former employees' pensions... these are all costly things. And final salary pensions in their 'heyday' had nowhere near the coverage of AE today.