Police Pension- Stay or Withdraw?

Universidad

SpudGunPaul said:

So having paid the best part of £2700 in the first year their pot is worth less than £380.

And if they live to be 85, they'll take out 9500 for the 2700 they paid in, and it will be revalued at or above CPI for the rest of their lives.

380 pounds in 1987 money is worth nearly 1000 pounds today, 35 years later. 

Someone might end up paying in 2700 in year one, but end up taking out 27,000 from that investment over their retirement.

And they won't even have paid tax on the 2700 that went in!!

SpudGunPaul

Silvertabby said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Getting_greyer said:

Based on pensionable pay for that year. If you earned £55300 you accrue a pension income of £1000. That is then his CPI revaluation added. Do that every year. So if did 30 years with no pay rises you have a pension of £30000 plus whatever the CPI adjustments. I think police is CPI+1.25 in acrual.

Obviously starting pay would most likely be lower but that's the mechanism.

So having paid the best part of £2700 in the first year their pot is worth less than £380.

Looking at some of the figures, if the OP has worked along side people on the 1987 scheme I can see why they’d think of leaving. After 30 years they get a third in value of that lump sum and 25% less a year. 

Classic misunderstanding of how DB pensions work.

Using your own figures, that one-off payment of £2,700 will buy an annual index linked pension of £380 (plus revaluations) for life.

Still not convinced?  Then try buying an annuity with this £2,700.  You'd be lucky to get £135 per year.

I've no need to have a full understanding of it, after 30 years they get 66% less in a lump sum and 25% less a year. An 18 year old joining today needs to work a further 12 years to get a pension without penalty than one did who joined pre April 1992.

Along with other things it's no wonder there's a retention problem with officers. 

All public sector pensions, not just the police, are now CARE schemes.  OK, the CARE schemes may have later retirement dates, but the pensions (and other benefits such as ill health enhancements and death benefits) far outweigh anything available to new entrants to private sector pension schemes.

Most in the private sector won't pay 12% from the day the start working. I'm glad I missed the CARE scheme.

SpudGunPaul

hyubh said:

SpudGunPaul said:

I've no need to have a full understanding of it, after 30 years they get 66% less in a lump sum and 25% less a year. An 18 year old joining today needs to work a further 12 years to get a pension without penalty than one did who joined pre April 1992.

Along with other things it's no wonder there's a retention problem with officers. 

Now compare the 2015 scheme with the 2006 scheme (which was still final salary). That was the bigger change for new joiners (i.e. 1992 regs to 2006 ones, not 2006 regs to 2015 regs).

Along with other things it's no wonder there's a retention problem with officers. 

To head off into the private sector where pensions are far, far worse...?

I chose to have nothing to do with the 2006 Scheme. 

hyubh

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Getting_greyer said:

Based on pensionable pay for that year. If you earned £55300 you accrue a pension income of £1000. That is then his CPI revaluation added. Do that every year. So if did 30 years with no pay rises you have a pension of £30000 plus whatever the CPI adjustments. I think police is CPI+1.25 in acrual.

Obviously starting pay would most likely be lower but that's the mechanism.

So having paid the best part of £2700 in the first year their pot is worth less than £380.

Looking at some of the figures, if the OP has worked along side people on the 1987 scheme I can see why they’d think of leaving. After 30 years they get a third in value of that lump sum and 25% less a year. 

Classic misunderstanding of how DB pensions work.

Using your own figures, that one-off payment of £2,700 will buy an annual index linked pension of £380 (plus revaluations) for life.

Still not convinced?  Then try buying an annuity with this £2,700.  You'd be lucky to get £135 per year.

I've no need to have a full understanding of it, after 30 years they get 66% less in a lump sum and 25% less a year. An 18 year old joining today needs to work a further 12 years to get a pension without penalty than one did who joined pre April 1992.

Along with other things it's no wonder there's a retention problem with officers. 

All public sector pensions, not just the police, are now CARE schemes.  OK, the CARE schemes may have later retirement dates, but the pensions (and other benefits such as ill health enhancements and death benefits) far outweigh anything available to new entrants to private sector pension schemes.

Most in the private sector won't pay 12% from the day the start working. I'm glad I missed the CARE scheme.

Now check the notional employer contribution. Compared to many other public sector pension benefit structures, the higher employee rate is effectively 'paying' for the much lower NPA.

You're not quite in the real world if you think the 2015 (and 2006) police pension scheme is 'bad', when in reality it is way out of the ordinary in being exceptionally good...

SpudGunPaul

hyubh said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Getting_greyer said:

Based on pensionable pay for that year. If you earned £55300 you accrue a pension income of £1000. That is then his CPI revaluation added. Do that every year. So if did 30 years with no pay rises you have a pension of £30000 plus whatever the CPI adjustments. I think police is CPI+1.25 in acrual.

Obviously starting pay would most likely be lower but that's the mechanism.

So having paid the best part of £2700 in the first year their pot is worth less than £380.

Looking at some of the figures, if the OP has worked along side people on the 1987 scheme I can see why they’d think of leaving. After 30 years they get a third in value of that lump sum and 25% less a year. 

Classic misunderstanding of how DB pensions work.

Using your own figures, that one-off payment of £2,700 will buy an annual index linked pension of £380 (plus revaluations) for life.

Still not convinced?  Then try buying an annuity with this £2,700.  You'd be lucky to get £135 per year.

I've no need to have a full understanding of it, after 30 years they get 66% less in a lump sum and 25% less a year. An 18 year old joining today needs to work a further 12 years to get a pension without penalty than one did who joined pre April 1992.

Along with other things it's no wonder there's a retention problem with officers. 

All public sector pensions, not just the police, are now CARE schemes.  OK, the CARE schemes may have later retirement dates, but the pensions (and other benefits such as ill health enhancements and death benefits) far outweigh anything available to new entrants to private sector pension schemes.

Most in the private sector won't pay 12% from the day the start working. I'm glad I missed the CARE scheme.

Now check the notional employer contribution. Compared to many other public sector pension benefit structures, the higher employee rate is effectively 'paying' for the much lower NPA.

You're not quite in the real world if you think the 2015 (and 2006) police pension scheme is 'bad', when in reality it is way out of the ordinary in being exceptionally good...

They're now paying 1% more to retire 12 years later. 

Silvertabby

SpudGunPaul said:

hyubh said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Getting_greyer said:

Based on pensionable pay for that year. If you earned £55300 you accrue a pension income of £1000. That is then his CPI revaluation added. Do that every year. So if did 30 years with no pay rises you have a pension of £30000 plus whatever the CPI adjustments. I think police is CPI+1.25 in acrual.

Obviously starting pay would most likely be lower but that's the mechanism.

So having paid the best part of £2700 in the first year their pot is worth less than £380.

Looking at some of the figures, if the OP has worked along side people on the 1987 scheme I can see why they’d think of leaving. After 30 years they get a third in value of that lump sum and 25% less a year. 

Classic misunderstanding of how DB pensions work.

Using your own figures, that one-off payment of £2,700 will buy an annual index linked pension of £380 (plus revaluations) for life.

Still not convinced?  Then try buying an annuity with this £2,700.  You'd be lucky to get £135 per year.

I've no need to have a full understanding of it, after 30 years they get 66% less in a lump sum and 25% less a year. An 18 year old joining today needs to work a further 12 years to get a pension without penalty than one did who joined pre April 1992.

Along with other things it's no wonder there's a retention problem with officers. 

All public sector pensions, not just the police, are now CARE schemes.  OK, the CARE schemes may have later retirement dates, but the pensions (and other benefits such as ill health enhancements and death benefits) far outweigh anything available to new entrants to private sector pension schemes.

Most in the private sector won't pay 12% from the day the start working. I'm glad I missed the CARE scheme.

Now check the notional employer contribution. Compared to many other public sector pension benefit structures, the higher employee rate is effectively 'paying' for the much lower NPA.

You're not quite in the real world if you think the 2015 (and 2006) police pension scheme is 'bad', when in reality it is way out of the ordinary in being exceptionally good...

They're now paying 1% more to retire 12 years later. 

Yes, but as hyubh says, compare that with a typical private sector DC scheme and it's still the better scheme by miles!

Mr S and I are both AFPS75 pensioners.  Yes, that scheme MAY be better than the current CARE scheme, but I very much doubt that applicants for Armed Forces service take the pension scheme into account as part of their decision.  They join for other reasons.

This discussion reminds me of the reason given by one chap for his request to opt out of the LGPS (pre CARE).  He reckoned that the LGPS was a rip off because we were charging him over £100 per month, when he could get a Stakeholder pension for just £20 per month.  

jimi_man

SpudGunPaul said:

hyubh said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Getting_greyer said:

Based on pensionable pay for that year. If you earned £55300 you accrue a pension income of £1000. That is then his CPI revaluation added. Do that every year. So if did 30 years with no pay rises you have a pension of £30000 plus whatever the CPI adjustments. I think police is CPI+1.25 in acrual.

Obviously starting pay would most likely be lower but that's the mechanism.

So having paid the best part of £2700 in the first year their pot is worth less than £380.

Looking at some of the figures, if the OP has worked along side people on the 1987 scheme I can see why they’d think of leaving. After 30 years they get a third in value of that lump sum and 25% less a year. 

Classic misunderstanding of how DB pensions work.

Using your own figures, that one-off payment of £2,700 will buy an annual index linked pension of £380 (plus revaluations) for life.

Still not convinced?  Then try buying an annuity with this £2,700.  You'd be lucky to get £135 per year.

I've no need to have a full understanding of it, after 30 years they get 66% less in a lump sum and 25% less a year. An 18 year old joining today needs to work a further 12 years to get a pension without penalty than one did who joined pre April 1992.

Along with other things it's no wonder there's a retention problem with officers. 

All public sector pensions, not just the police, are now CARE schemes.  OK, the CARE schemes may have later retirement dates, but the pensions (and other benefits such as ill health enhancements and death benefits) far outweigh anything available to new entrants to private sector pension schemes.

Most in the private sector won't pay 12% from the day the start working. I'm glad I missed the CARE scheme.

Now check the notional employer contribution. Compared to many other public sector pension benefit structures, the higher employee rate is effectively 'paying' for the much lower NPA.

You're not quite in the real world if you think the 2015 (and 2006) police pension scheme is 'bad', when in reality it is way out of the ordinary in being exceptionally good...

They're now paying 1% more to retire 12 years later. 

Couple of points:

Reference is being made in this thread to a 1992 scheme. There was no 1992 scheme. there was a 1987 scheme, then a 2006 scheme and then a 2015 scheme.

Reference has also been made to lump sums. Again there are no lump sums in the 1987 scheme or the 2015 scheme. One could exchange the 1987 pension for a lump sum however the commutation rates are poor (in relation to age - around 21:1 for a 51 year old) which renders it generally not worth doing. Especially so now with high inflation. The 2015 scheme has even worse rates - 12:1.

They can retire when they like. Someone who joins at 21 and pays into the CARE scheme and then leaves at 55 will accrue a pension of £26k a year (in todays money, ignoring inflation and taking into account actuarial reduction). That's with uncapped CPI indexing and is guaranteed and is probably worth getting on for a £1 million. I'm struggling to see how that can be considered a poor deal.

Sure it's not as good as the old pensions but then few things are. And in the main the youngsters now will benefit from taking the pension longer as they are going to live longer statistically.

Andy_L

jimi_man said:

SpudGunPaul said:

hyubh said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Getting_greyer said:

Based on pensionable pay for that year. If you earned £55300 you accrue a pension income of £1000. That is then his CPI revaluation added. Do that every year. So if did 30 years with no pay rises you have a pension of £30000 plus whatever the CPI adjustments. I think police is CPI+1.25 in acrual.

Obviously starting pay would most likely be lower but that's the mechanism.

So having paid the best part of £2700 in the first year their pot is worth less than £380.

Looking at some of the figures, if the OP has worked along side people on the 1987 scheme I can see why they’d think of leaving. After 30 years they get a third in value of that lump sum and 25% less a year. 

Classic misunderstanding of how DB pensions work.

Using your own figures, that one-off payment of £2,700 will buy an annual index linked pension of £380 (plus revaluations) for life.

Still not convinced?  Then try buying an annuity with this £2,700.  You'd be lucky to get £135 per year.

I've no need to have a full understanding of it, after 30 years they get 66% less in a lump sum and 25% less a year. An 18 year old joining today needs to work a further 12 years to get a pension without penalty than one did who joined pre April 1992.

Along with other things it's no wonder there's a retention problem with officers. 

All public sector pensions, not just the police, are now CARE schemes.  OK, the CARE schemes may have later retirement dates, but the pensions (and other benefits such as ill health enhancements and death benefits) far outweigh anything available to new entrants to private sector pension schemes.

Most in the private sector won't pay 12% from the day the start working. I'm glad I missed the CARE scheme.

Now check the notional employer contribution. Compared to many other public sector pension benefit structures, the higher employee rate is effectively 'paying' for the much lower NPA.

You're not quite in the real world if you think the 2015 (and 2006) police pension scheme is 'bad', when in reality it is way out of the ordinary in being exceptionally good...

They're now paying 1% more to retire 12 years later. 

Couple of points:

Reference is being made in this thread to a 1992 scheme. There was no 1992 scheme. there was a 1987 scheme, then a 2006 scheme and then a 2015 scheme.

Reference has also been made to lump sums. Again there are no lump sums in the 1987 scheme or the 2015 scheme. One could exchange the 1987 pension for a lump sum however the commutation rates are poor (in relation to age - around 21:1 for a 51 year old) which renders it generally not worth doing. Especially so now with high inflation. The 2015 scheme has even worse rates - 12:1.

They can retire when they like. Someone who joins at 21 and pays into the CARE scheme and then leaves at 55 will accrue a pension of £26k a year (in todays money, ignoring inflation and taking into account actuarial reduction). That's with uncapped CPI indexing and is guaranteed and is probably worth getting on for a £1 million. I'm struggling to see how that can be considered a poor deal.

Sure it's not as good as the old pensions but then few things are. And in the main the youngsters now will benefit from taking the pension longer as they are going to live longer statistically.

Depends how you look at it. It terms of how much pension you get in your back pocket not as good.
In terms of the value of that pension (IE how much it would cost to get that in the open market) probably similar considering all the factors that have made DB pensions more expensive than they used to be

SpudGunPaul

jimi_man said:

SpudGunPaul said:

hyubh said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Getting_greyer said:

Based on pensionable pay for that year. If you earned £55300 you accrue a pension income of £1000. That is then his CPI revaluation added. Do that every year. So if did 30 years with no pay rises you have a pension of £30000 plus whatever the CPI adjustments. I think police is CPI+1.25 in acrual.

Obviously starting pay would most likely be lower but that's the mechanism.

So having paid the best part of £2700 in the first year their pot is worth less than £380.

Looking at some of the figures, if the OP has worked along side people on the 1987 scheme I can see why they’d think of leaving. After 30 years they get a third in value of that lump sum and 25% less a year. 

Classic misunderstanding of how DB pensions work.

Using your own figures, that one-off payment of £2,700 will buy an annual index linked pension of £380 (plus revaluations) for life.

Still not convinced?  Then try buying an annuity with this £2,700.  You'd be lucky to get £135 per year.

I've no need to have a full understanding of it, after 30 years they get 66% less in a lump sum and 25% less a year. An 18 year old joining today needs to work a further 12 years to get a pension without penalty than one did who joined pre April 1992.

Along with other things it's no wonder there's a retention problem with officers. 

All public sector pensions, not just the police, are now CARE schemes.  OK, the CARE schemes may have later retirement dates, but the pensions (and other benefits such as ill health enhancements and death benefits) far outweigh anything available to new entrants to private sector pension schemes.

Most in the private sector won't pay 12% from the day the start working. I'm glad I missed the CARE scheme.

Now check the notional employer contribution. Compared to many other public sector pension benefit structures, the higher employee rate is effectively 'paying' for the much lower NPA.

You're not quite in the real world if you think the 2015 (and 2006) police pension scheme is 'bad', when in reality it is way out of the ordinary in being exceptionally good...

They're now paying 1% more to retire 12 years later. 

Couple of points:

Reference is being made in this thread to a 1992 scheme. There was no 1992 scheme. there was a 1987 scheme, then a 2006 scheme and then a 2015 scheme.

Reference has also been made to lump sums. Again there are no lump sums in the 1987 scheme or the 2015 scheme. One could exchange the 1987 pension for a lump sum however the commutation rates are poor (in relation to age - around 21:1 for a 51 year old) which renders it generally not worth doing. Especially so now with high inflation. The 2015 scheme has even worse rates - 12:1.

They can retire when they like. Someone who joins at 21 and pays into the CARE scheme and then leaves at 55 will accrue a pension of £26k a year (in todays money, ignoring inflation and taking into account actuarial reduction). That's with uncapped CPI indexing and is guaranteed and is probably worth getting on for a £1 million. I'm struggling to see how that can be considered a poor deal.

Sure it's not as good as the old pensions but then few things are. And in the main the youngsters now will benefit from taking the pension longer as they are going to live longer statistically.

They can't retire and take a pension until 55 and taking it at 55 will see a 20% reduction. 

jimi_man

SpudGunPaul said:

jimi_man said:

SpudGunPaul said:

hyubh said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Silvertabby said:

SpudGunPaul said:

Getting_greyer said:

Based on pensionable pay for that year. If you earned £55300 you accrue a pension income of £1000. That is then his CPI revaluation added. Do that every year. So if did 30 years with no pay rises you have a pension of £30000 plus whatever the CPI adjustments. I think police is CPI+1.25 in acrual.

Obviously starting pay would most likely be lower but that's the mechanism.

So having paid the best part of £2700 in the first year their pot is worth less than £380.

Looking at some of the figures, if the OP has worked along side people on the 1987 scheme I can see why they’d think of leaving. After 30 years they get a third in value of that lump sum and 25% less a year. 

Classic misunderstanding of how DB pensions work.

Using your own figures, that one-off payment of £2,700 will buy an annual index linked pension of £380 (plus revaluations) for life.

Still not convinced?  Then try buying an annuity with this £2,700.  You'd be lucky to get £135 per year.

I've no need to have a full understanding of it, after 30 years they get 66% less in a lump sum and 25% less a year. An 18 year old joining today needs to work a further 12 years to get a pension without penalty than one did who joined pre April 1992.

Along with other things it's no wonder there's a retention problem with officers. 

All public sector pensions, not just the police, are now CARE schemes.  OK, the CARE schemes may have later retirement dates, but the pensions (and other benefits such as ill health enhancements and death benefits) far outweigh anything available to new entrants to private sector pension schemes.

Most in the private sector won't pay 12% from the day the start working. I'm glad I missed the CARE scheme.

Now check the notional employer contribution. Compared to many other public sector pension benefit structures, the higher employee rate is effectively 'paying' for the much lower NPA.

You're not quite in the real world if you think the 2015 (and 2006) police pension scheme is 'bad', when in reality it is way out of the ordinary in being exceptionally good...

They're now paying 1% more to retire 12 years later. 

Couple of points:

Reference is being made in this thread to a 1992 scheme. There was no 1992 scheme. there was a 1987 scheme, then a 2006 scheme and then a 2015 scheme.

Reference has also been made to lump sums. Again there are no lump sums in the 1987 scheme or the 2015 scheme. One could exchange the 1987 pension for a lump sum however the commutation rates are poor (in relation to age - around 21:1 for a 51 year old) which renders it generally not worth doing. Especially so now with high inflation. The 2015 scheme has even worse rates - 12:1.

They can retire when they like. Someone who joins at 21 and pays into the CARE scheme and then leaves at 55 will accrue a pension of £26k a year (in todays money, ignoring inflation and taking into account actuarial reduction). That's with uncapped CPI indexing and is guaranteed and is probably worth getting on for a £1 million. I'm struggling to see how that can be considered a poor deal.

Sure it's not as good as the old pensions but then few things are. And in the main the youngsters now will benefit from taking the pension longer as they are going to live longer statistically.

They can't retire and take a pension until 55 and taking it at 55 will see a 20% reduction. 

I realise that which is why I said 'leaving at 55' and 'taking into account actuarial reduction'. That's £26k after the reduction.