Private Pensions Slaughtered Public untouched

doris540

 Im surprised nobody has cottoned on to the fact that after recent unrest in the stock market our including my Private sector DC pensions have took a hit, Whilst those in the Public sector are untouched because they are mainly FS schemes etc. Someone retiring from the Public sector within the next month are loosing nothing whilst someone retiring from the private sector have lost , I know were been told its only short term but i still cant help but feel its unfair

Gary1984

Perhaps you should apply for a job in the public sector then? Your headline salary would no doubt be much lower though. Or find a new employer with better pension provision?

Or alternatively invest your current pension in something that matches your risk profile better if stock market drops worry you. 

sg1000

Private pensions (DC) have been slaughtered (bit of an overstatement) because they are reliant on the stock market.  Public sector are untouched because they are a different vehicle.  For what it is worth, Public sector pensions have changed over the last few years from final salary to career average....not as lucrative, or certain in relation to the final payment, as they once were.

crv1963

OP I can understand your annoyance but............ as has been pointed out they are in fact different things, each has its' benefits and drawbacks, average wages are generally lower in the public sector, the average pubic sector pension is I understand between 4-7 k per year, as not everyone gets a "full pension" or puts in the years full time to reach one. Those of us who do manage to do the years in full time employment have had pay freezes, reforms, lots of unsocial hours and some unpleasant tasks to do over a career- not a whinge but an observation.
The pension has no pot so other than a survivors pension- usually half of the retired members pension there is nothing to pass on to heirs, unlike a DC pension that it is possible to pass on tax free - if the pension holder doesn't make it to 75 or at a a persons usual tax rate if you do.
It is all about choices, making them and hoping with a little luck it all works out.

Thrugelmir

Portfolios should be diversified and approaching retirement years derisked. If capital loss is an issue. The past few years have been exceptionally good for stock market returns. People have an aversion to not cashing in for fear of losing out. Rather than being content with what they've got. 

dunstonh

 Im surprised nobody has cottoned on to the fact that after recent unrest in the stock market our including my Private sector DC pensions have took a hit, Whilst those in the Public sector are untouched because they are mainly FS schemes etc.
What about those in the public sector with DC schemes or those in the private sector with DB schemes?
Periods of negativity in the markets are actually very good for DC schemes in the growth stage.   

Someone retiring from the Public sector within the next month are loosing nothing whilst someone retiring from the private sector have lost 
Why would they have lost?

1. if they were buying an annuity in the coming years, they should de-risk their investments in the lead up to it. So, they would be unaffected by this
2. If they are using drawdown for income provision then this is just another crash to see out before the next one comes along, and the one after, and the one after and so on over the next 30 or so years they will be invested.

 know were been told its only short term but i still cant help but feel its unfair
Historically, those in the public sector get paid less than the private sector.  The pension was seen as a means to reward public life.   Prior to the credit crunch, the earnings gap had closed thanks to Gordon Brown growing the public sector and boosting pay.  However, in the years that followed, the gap has increased again.
I suspect many public sector workers feel it is unfair that they get paid less than the private sector.   
If you don't like it then change your job.  

frugal90

Go and work in the public sector if you think it's all that 👍 simples!

doris540

Not forgetting of course the fact that the employer in the Public sector contribute a far higher percentage to the employees pension which us as tax payers in the private sector pay towards a thought if you took say 500 people from both the public sector and the private sector what percentage would retire at 55 from each i wouldnt mind betting it would be the public sector due to the enhanced pensions over the private sector Prime example how many Police do you see working past 55

OldMusicGuy

doris540 said:

 ISomeone retiring from the Public sector within the next month are loosing nothing whilst someone retiring from the private sector have lost , I know were been told its only short term but i still cant help but feel its unfair

If you were retiring next month with a DC pension, you should have been prepared for this. I retired 18 months ago and set up my DC pension investments to limit the impact of any downturn - I have plenty of cash available so I don't have to sell investments unless I want to, and my DC investments are in widely diversified funds with a high enough bond ratio that they have not been "slaughtered". I'm down, but only by just over 5% which isn't too bad. 

If you have a DC pension and don't know how to manage risk in this way, there's plenty of books and advice out there to help you (including the kind folks here). I learned in that way. If you don't want to educate yourself, employ an IFA. And if you don't want to do any of that, go and work in the public sector. I looked into doing that about 18 years before I retired but decided the pay cut would be too much for me to take.

Sorry if that sounds smug but this situation is not unfair. It's just the reality of life for most people now that final salary schemes are largely a thing of the past.    

bostonerimus

doris540 said:

 Im surprised nobody has cottoned on to the fact that after recent unrest in the stock market our including my Private sector DC pensions have took a hit, Whilst those in the Public sector are untouched because they are mainly FS schemes etc. Someone retiring from the Public sector within the next month are loosing nothing whilst someone retiring from the private sector have lost , I know were been told its only short term but i still cant help but feel its unfair

The greater volatility of DC pensions compared to final salary schemes is a very common subject here. Numerous times people have been advised to expect 20% or greater drops in the value of any DC pots they have. So anyone with a DC pension must plan for such reversals.

Many people have chosen to cash in their final salary schemes for large DC pots and whether that was a good decision will be determined by the stock and bond market returns and how people manage their DC pots. This is particularly important for people taking income from DC pots during a falling market.

as to whether it’s “unfair” that DC pensions have lost value compared to final salary schemes , did you feel it unfair when DC pots were increasing by 10% a year and final salary scheme payouts did not increase similarly?

kinger101

doris540 said:

 I know were been told its only short term but i still cant help but feel its unfair

Guess what?  Life isn't fair.  Get used to it.