My DB pension: the promise, the reality, and the influence of wage suppression

SouthCoastBoy

MattMattMattUK said:

2nd_time_buyer said:

My experience of people working into the 70s and 80s at University is they do it because they want to rather than they need to.

It is a strange juxtaposition for an academic. Within their field they can be very well known, respected, and by definition they are an expert. They are doing a mentally stimulating job around interesting people. On retirement they can lose a large chunk of their identity. We have academics still coming in full time despite being retired and not been paid 

I also think that many people recognise that most people deteriorate fairly quickly if they stop using their mental abilities because of no longer working and do not stimulate themselves in other equally demanding ways. The majority of the over 70s I know all do something that stimulates them, some lecture, some volunteer, some mentor, some help out in schools etc. to help keep themselves busy, I know four people who did degrees in their seventies and one of them went on to do a masters and is now doing a PhD.

All the research that keeping mentally and physically active is the best way to stave off many of the effects of aging and that mental capacity can drop significantly and fairly quickly for those who stop using their minds on a regular basis. 

I do agree with the identity side of things, I think that is true of a lot of people, not just those in academia though, anyone who has had a career tends to struggle with a partial loss of identity and routine when leaving work. 

I think that is quite a generalisation, "..most people deteriorate fairly quickly if they stop using their mental abilities..", both my grandmothers lived well into their 90s and neither of them had much day to day mental stimulation as far as I am aware, my father in law is 91 and nor does he, he retired at 60, and while keeping physically active , as did my grand parents I don't think there is/was much mental stimulation other than reading a newspaper or watching tv.

Some people are just luckier than others when it comes down to it, look at all the footballers that have dementia, I doubt any amount of mental stimulation would offset that. My mum suffered from dementia, which was caused by a blood clot in the brain, again not sure mental stimulation would have stopped the blood clot.

OldScientist

Universidad said:

SouthCoastBoy said:

Still not bad for 15 years service when compared to a dc scheme.

Quite hard to say I think. I've often wondered, but there are too many variables to consider - including that I would have not chosen that career if the pension wasn't up to snuff - and if you doubt me on this, consider that I eventually left it for that reason, despite the "incumbent" advantage.   There was always a vaunted promise in the University sector which was "you'll never be rich, but you'll be comfortable in retirement".That promise has been broken. Admittedly I wasn't as tuned in back then, but it was still relevant.

Outside the sector I would have had a higher salary (indeed now that I'm outside it again, I do have a higher salary, despite working in the public sector.) 

I've seen some younger folks attempted analysis of the current USS scheme vs just sticking their 10% into a SIPP, and honestly it's a lot tighter than you'd expect - but of course, these are the early career years where the DC pot is invested for the longest.

While it isn't specifically about USS (with its rather unusual inflation capping), a comparison of UK based DC and DB pensions can be found at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4473093

While there are a lot of dependencies (e.g. critically on annuity rates/ safe withdrawal rates at retirement), essentially income from DC pensions can often exceed that from DB pensions when the latter are inflation capped at 2.5%, at 5% cap the case for either is more marginal. The income from fully index linked DB pensions is unlikely to be exceeded by that of a DC pension with reasonable contribution rates.