Martin Lewis Money Show - Pensions (ITV, 18/02/2021)

Pollycat

jem16 said:

He’s referring to Defined Benefit final salary pension schemes where the 2/3rds is based on your final salary on leaving or retiring. It wasn’t 2/3rds for all schemes either as many were 1/80ths scheme so it was half your final salary. Each scheme had its own way of defining final salary and could have been the best average of last 5 or 10 years. 

Final salary pensions are very rare now and almost impossible for new joiners to get. Apart from Public Sector with their CARE schemes most are now Defined Contribution with a pot of money. 

My old pension scheme - I've been (early) retired for 18 years) was a final salary 1/80th scheme but that was with a lump sum (3/80th).

The new final salary scheme was a 2/3rd scheme but without the lump sum.

Silvertabby

epm-84 said:

jem16 said:

I watched his programme last night even though I never watch it at all. Of course all the Waspi/BT60 mob have been harassing Martin all week even though it was never likely to be about the state pension. That argument is currently raging on his FB page after someone dared to criticise Martin. What I find more interesting there is the amount of people not backing them and calling out their myths.

It's a controversial issue.  On one hand a woman should not be entitled to more state pension than a man (if they both born on the same date, die on the same date and have both paid the same level of NI contributions.)  On the other hand the government didn't give them all that much notice of the change.  

If you mean the re-equalisation of State pension ages, I was born in the mid 1950s and had 25 years notice of the main increase (to 65) and 10 years notice of the 2011 increase (to 66). 

 It's not lack of notice that was the problem with some women - it was their own lack of interest.  

hyubh

epm-84 said:

jem16 said:

I watched his programme last night even though I never watch it at all. Of course all the Waspi/BT60 mob have been harassing Martin all week even though it was never likely to be about the state pension. That argument is currently raging on his FB page after someone dared to criticise Martin. What I find more interesting there is the amount of people not backing them and calling out their myths.

It's a controversial issue.  

Not on this board...
(PS - search won't help, the enormous threads 90% anti-WASPI/BT60 eventually get deleted.)

epm-84

jem16 said:

epm-84 said:

I've never got his suggestion about the amount you put into a pension relating to your age to get 2/3 of your 'normal salary' when you retire.

2/3 of what exactly?  

He’s referring to Defined Benefit final salary pension schemes where the 2/3rds is based on your final salary on leaving or retiring. It wasn’t 2/3rds for all schemes either as many were 1/80ths scheme so it was half your final salary. Each scheme had its own way of defining final salary and could have been the best average of last 5 or 10 years. 

Final salary pensions are very rare now and almost impossible for new joiners to get. Apart from Public Sector with their CARE schemes most are now Defined Contribution with a pot of money. 

I was referring to the 'rule of thumb' Martin uses for those with standard workplace pension schemes (not defined benefit schemes) where Martin recommends taking your age when you start paying into a pension, halving it and then paying in that % for your working life.  For instance, 10% for someone who first pays in aged 20 or 20% for someone who first pays in age 40.  It might be the idea his 'rule of thumb' is so those without final salary pension schemes get the same amount as someone with one of those schemes but it's not the defined benefit scheme I'm talking about.

I just found a newspaper site article which refers to his 'rule of thumb' and that says it's to get roughly 2/3 of the salary you are on when you retire but surely that presumes you aren't on a lower salary when you retire or you don't go part time and then retire.

It's also not 100% clear whether "10%" for a 20 year old means 10% of all pay or 10% of pensionable pay and whether it includes the employer contributions.  

Silvertabby

Pollycat said:

jem16 said:

He’s referring to Defined Benefit final salary pension schemes where the 2/3rds is based on your final salary on leaving or retiring. It wasn’t 2/3rds for all schemes either as many were 1/80ths scheme so it was half your final salary. Each scheme had its own way of defining final salary and could have been the best average of last 5 or 10 years. 

Final salary pensions are very rare now and almost impossible for new joiners to get. Apart from Public Sector with their CARE schemes most are now Defined Contribution with a pot of money. 

My old pension scheme - I've been (early) retired for 18 years) was a final salary 1/80th scheme but that was with a lump sum (3/80th).

The new final salary scheme was a 2/3rd scheme but without the lump sum.

Overall, there's very little difference between 1/80th plus automatic lump sum of 3/80th and 1/60th with no lump sum.  However, the latter is more flexible as it gives the pensioner the option of a higher index linked pension if they don't want/need a lump sum.

That said, the vast majority of LGPS pensioners  (and most likely other public sector pensioners as well) do opt for maximum commutation, despite the poor commutation rate of 1:12.  

epm-84

Albermarle said:

epm-84 said:

I've never got his suggestion about the amount you put into a pension relating to your age to get 2/3 of your 'normal salary' when you retire.

2/3 of what exactly?  No-one's salary is going to stay at a constant level, increasing with inflation each year.  It might be aged 60 you earn triple what you earned aged 25, even before inflation.  It might be if you work in the constructive industry you decide to move to less manual work when you're in your 50s and earn less aged 60 than you earned aged 30.  If it's 2/3 of the average over your working live then it might take into account a time when you had dependent children and a mortgage so needed a lot more than you will need in retirement.

Of course many low earners will need 100% , whilst high earners could probably manage with half . 

And of course the state pension covers a larger percentage for those on lower salaries.  For example, someone earning £8.72/hr, working 35 hours a week would get just over £1300 per month so a state pension of £175 a week would be equivalent to almost 60% of that.

However, those on high salaries who are used to a higher standard of living have more options for saving money e.g. downsizing their house or car and in the case of downsizing the house it can make extra money available, as well as saving money on utilities and maintenance. 

jem16

epm-84 said:

jem16 said:

I watched his programme last night even though I never watch it at all. Of course all the Waspi/BT60 mob have been harassing Martin all week even though it was never likely to be about the state pension. That argument is currently raging on his FB page after someone dared to criticise Martin. What I find more interesting there is the amount of people not backing them and calling out their myths.

It's a controversial issue.  On one hand a woman should not be entitled to more state pension than a man (if they both born on the same date, die on the same date and have both paid the same level of NI contributions.)  On the other hand the government didn't give them all that much notice of the change.  

I’m one of the 50s’ born women. The announcement about SPA rising came in 1993 when I was 37 years old. It gave me 23 years’ notice that my SPA would no longer be 60 but 65. Even the 2nd increase to 66 in 2011 gave me just under 10 years’ notice. The ones I feel for are those born late 53 and most of 54 who had only around 6 years’ notice of an extra 18 months increase. 

The problem with WASPI/BT60 was not a lack of notice by the Government but a lack of paying attention and being responsible for their own retirement. Unfortunately their campaigns are based on a lack of knowledge and a lot of misinformation being peddled by their so-called leaders. 

jem16

Silvertabby said:

Pollycat said:

jem16 said:

He’s referring to Defined Benefit final salary pension schemes where the 2/3rds is based on your final salary on leaving or retiring. It wasn’t 2/3rds for all schemes either as many were 1/80ths scheme so it was half your final salary. Each scheme had its own way of defining final salary and could have been the best average of last 5 or 10 years. 

Final salary pensions are very rare now and almost impossible for new joiners to get. Apart from Public Sector with their CARE schemes most are now Defined Contribution with a pot of money. 

My old pension scheme - I've been (early) retired for 18 years) was a final salary 1/80th scheme but that was with a lump sum (3/80th).

The new final salary scheme was a 2/3rd scheme but without the lump sum.

Overall, there's very little difference between 1/80th plus automatic lump sum of 3/80th and 1/60th with no lump sum.  However, the latter is more flexible as it gives the pensioner the option of a higher index linked pension if they don't want/need a lump sum.

That said, the vast majority of LGPS pensioners  (and most likely other public sector pensioners as well) do opt for maximum commutation, despite the poor commutation rate of 1:12.  

Yes I agree as far as Public Sector schemes are concerned. However both my husband and Dad were on 1/60th schemes plus lump sums. 

Pollycat

epm-84 said:

It's a controversial issue.  On one hand a woman should not be entitled to more state pension than a man (if they both born on the same date, die on the same date and have both paid the same level of NI contributions.)  On the other hand the government didn't give them all that much notice of the change.  

Let's not allow the 'W' word to cloud this thread.

Please.

It's been debated to death.

All of it.

Including the allegation of limited notice.

dunstonh

I've never got his suggestion about the amount you put into a pension relating to your age to get 2/3 of your 'normal salary' when you retire.

It isn't his.    We were using it back in the early 90s.  It was a common industry method.   It was designed to get people thinking of realistic contribution levels.  However, it was never really thought of as being accurate.   Indeed, it cannot be accurate as it was based on annuity rates of the late 80s/early 90s which are very different to drawdown rates used today.  Plus, life expectancy is different as well.

A lot of people pay in peanuts to a pension thinking they can tick if off their list as job done.    So, ballpark guides like half your age are there to try reduce that.