Omg 18%

JoeCrystal

Moby said:

The market has been deciding wages for years. That's exactly why we have underpaid staff in the public sector. My index linked pension, (providing it is not capped) is the only reason I worked there for 35 years. 
https://www.ft.com/content/d819ba3b-d886-42dd-9be9-511134fc69d2

But considering the total remuneration, including the pension, the public sector pay is still much better than the private sector pay. Unfortunately, there are a lot of public sector workers that do not take into account of the generosity of their pension scheme. If I remember correctly, it is 7% overall with 20% premium among low-skilled public sector workers against the private sector workers.

penners324

sgx2000 said:

Penners   i would love it if  your comment turns out to be right..

But, with the greatest respect,  No chance!

Are you an economist making predictions?

NedS

QrizB said:

sgx2000 said:

So there are now inflation predictions of 18%....
How the hell can anyone make rational financial descisions for pensions in this current climate?

In theory, equity returns should be inflation-neutral. In practice, I guess we're about to find out.

Over the longer term, yes, but it can be a bumpy ride in the short term. We have had a bumper 10 years of equity returns so I'd expect the next 10 years to be a tough ride to average things out.

Boy am I glad I have a CARE DB scheme, not a final salary scheme, when inflation is >10% and pay rises are <2%  Those with final salary schemes and low/no pay rises will be hit hard.

LHW99

sgx2000 said:

Whats next?  The Russians turning all the gas off to europe?

I believe Gazprom will be turning off gas to Germany etc because of "unsceduled maintenance"

bostonerimus

daveshep26 said:

bostonerimus said:

dunstonh said:

How the hell can anyone make rational financial descisions for pensions in this current climate?

Nothing has changed in your planning.    Financial crises happen on average every 7 years.   Energy crisis happen less frequently in recent times but one would be expected in a typical retirement period.   Inflation and boom/bust would be expected as well.  So, as long as you have a sensible draw rate, you should be fine.   If you are pushing it then expect things to get rough.

This is all true, but many people won't be able take any comfort in your observations. I was pretty diligent in stress testing my retirement plan, but even in my worst inflation runs I only had it at just over 10% for a few years thanks to the influence of the 1970s. So I imagine many people are freaking out. If I was doing drawdown I think I'd find it difficult to increase it by inflation of 18%, doubly so when the stock market is down and I'd be taking a lot more from a smaller pot. So my strategy would be to go to my budget and cut where I could. If people don't have a detailed budget, now is the time to write one down so they can cut out Netflix and Starbucks for example and forget about holidays...at least I would.

When things go haywire, I think you still need that personal responsibility / discipline if you want to come out in reasonably good shape - I emphatically agree with this, cut your costs to stay as close to where you're aiming,

I personally have always had a budget planner and the contingency line was probably the critical one, this used to be for trips/ bigger holidays/ (extra) cycling stuff/ gadgets and (OFC) when things went out of kilter .....  Essentially previous version's contingency is now wiped out with several thousands extra energy costs and I'll have to attack the budget again to get to contingency v2.0 (but the overall strategy remains in place including some travel/ core holidays)

Stick to the strategy -but do take serious action!!   

Of course the strategy we are advocating assumes that you have things to cut. More and more people have already economized and when costs go up and there's nothing left to cut personal responsibility has diminishing returns. I suppose we could take another job, but it's also when Government intervention needs to be part of the solution

Silvertabby

jimi_man said:

Moby said:

I wonder whether we'll get matching increases in our ndex linked LGPS pensions this Sept. Wouldn't be surprised if the Govmt capped them!
I reckon I'll still get a larger increase than the pay increase I'd have got if I'd continued working though. 

Public sector pension increases are linked to State Pension increases, so if that increases then so will they. They could cap the SP though I don't imagine that would be popular. 

No they're not.  Public sector pensions (in payment or deferred) will increase by CPI.  State pensions will increase by triple lock.  Yes, next April both will increase by CPI as that will be the higher of the triple lock figures - but the April 2021 increases were 0.5% CPI for public sector pensions, and 2.5 % triple lock for State pensions.

handful

I started a thread here just over a year ago https://forums.moneysavingexpert.com/discussion/6278701/investment-choices-for-an-inflation-pessimist/p1 where I was seeing some major inflationary pressures in the sector I work in. Apart from the unknown energy increases, I've been feeling those pressures a little less so my gut feel is that it won't go as high as the prediction at the top of this thread but that's in no way certain and will be largely dictated by wage increases. It could get very bumpy if the "strikers" get their way in my opinion.

sevenhills

JoeCrystal said:

But considering the total remuneration, including the pension, the public sector pay is still much better than the private sector pay. Unfortunately, there are a lot of public sector workers that do not take into account of the generosity of their pension scheme. If I remember correctly, it is 7% overall with 20% premium among low-skilled public sector workers against the private sector workers.

Research shows that total remuneration in the public sector is comparable to other large organisations.
Large organisations tend to pay more.

hugheskevi

Silvertabby said:

jimi_man said:

Moby said:

I wonder whether we'll get matching increases in our ndex linked LGPS pensions this Sept. Wouldn't be surprised if the Govmt capped them!
I reckon I'll still get a larger increase than the pay increase I'd have got if I'd continued working though. 

Public sector pension increases are linked to State Pension increases, so if that increases then so will they. They could cap the SP though I don't imagine that would be popular. 

No they're not.  Public sector pensions (in payment or deferred) will increase by CPI.  State pensions will increase by triple lock.  Yes, next April both will increase by CPI as that will be the higher of the triple lock figures - but the April 2021 increases were 0.5% CPI for public sector pensions, and 2.5 % triple lock for State pensions.

It is sort of correct (although I agree most would read a reference to State Pension as either Basic State Pension or new State Pension) - the underlying legislation requires that (reference here):

There is a statutory requirement to increase public service pensions in payment each year by the same rate as the additional State Pension i.e. in line with prices, now measured according to the annual increase in the Consumer Prices Index to September of the previous year (Pensions Increase Act 1971 and Social Security Pensions Act 1975 ss59-59A).

daz378

Surely they will cap prices  of energy at 2k a year....or will wreck the economy   believe 2 year cap  would cost 100 billion...together with rising interest rates    cost of living crisis could effect  upper working/middle class families...