Can someone please help me figure out if my defined benefit pension is any good?

QrizB

swindiff said:

It will likely be career averaged not final salary. Not sure there are any final salary schemes left.

An 80ths scheme sounds much more like final salary to me.

Do you have a source for your claim that there aren't any left?

swindiff

Mine is currently only 1/85th and CARE. No definitive source hence my comment not sure.

german_keeper

FIREDreamer said:

german_keeper said:

No state pension if over £16k in savings or a pension over £25,000 per year or whatever they fancy.

No state has done this yet, but I don’t trust Labour. Never have.

Jeremy was hounded out ages ago, it's back to Tory Lite. No need for the red scare tactics any more.

Good riddance too. A very unpleasant human being. Going off topic now anyway.

Very unpleasant indeed. Honesty, decency, morals, principles, no need for things like that. Popcorn time. 

Bostonerimus1

swindiff said:

Mine is currently only 1/85th and CARE. No definitive source hence my comment not sure.

My DB was final salary and then went to average salary of final 3 years, which is better than career average, but companies are looking to reduce pensions when they can and will without employee and union push back.

SarahB16

Bostonerimus1 said:

swindiff said:

Mine is currently only 1/85th and CARE. No definitive source hence my comment not sure.

My DB was final salary and then went to average salary of final 3 years, which is better than career average, but companies are looking to reduce pensions when they can and will without employee and union push back.

If you don't mind me saying I don't think we can generalise and say that final salary is better than career average. 

For example, if somebody does not receive pay rises which exceed CPI inflation (and this is the case for the majority of people in the public sector) then career average would provide a higher pension. 

Of course, if you progress to more senior posts and receive a higher salary then yes you would be better with the final salary. 

Albermarle

Silvertabby said:

german_keeper said:

No state pension if over £16k in savings or a pension over £25,000 per year or whatever they fancy.

No state has done this yet, but I don’t trust Labour. Never have.

Jeremy was hounded out ages ago, it's back to Tory Lite. No need for the red scare tactics any more.

Are you sure about that?  My theory is that if Labour do get in, Starmer won't even have had time to unpack before being kicked out the back door by his Momentum approved replacement.

Sounds like a rather wild conspiracy theory !

Bostonerimus1

SarahB16 said:

Bostonerimus1 said:

swindiff said:

Mine is currently only 1/85th and CARE. No definitive source hence my comment not sure.

My DB was final salary and then went to average salary of final 3 years, which is better than career average, but companies are looking to reduce pensions when they can and will without employee and union push back.

If you don't mind me saying I don't think we can generalise and say that final salary is better than career average. 

For example, if somebody does not receive pay rises which exceed CPI inflation (and this is the case for the majority of people in the public sector) then career average would provide a higher pension. 

Of course, if you progress to more senior posts and receive a higher salary then yes you would be better with the final salary. 

Sure, if you always got annual pay increases less than inflation and then your pension is uprated by a bigger amount then CARE will be ok. But it says something about the way pensions and wages have been eroded if that's the case. When I worked in US government service people generally progressed up the "GS" levels with experience and so got annual inflation rises and regular job progression and associated wage increases, so "final salary" would always be better than career average, even if it was uprated for inflation.

Universidad

Bostonerimus1 said:

if you always got annual pay increases less than inflation and then your pension is uprated by a bigger amount then CARE will be ok. But it says something about the way pensions and wages have been eroded if that's the case.

I recently took a look at my own pension expectations and reality in light of this, and I wouldn't have described the CARE pension that replaced the FS pension as "ok" by comparison; it was markedly worse. However, the degree of difference is certainly masked by the years of salary supression.

Bostonerimus1

Universidad said:

Bostonerimus1 said:

if you always got annual pay increases less than inflation and then your pension is uprated by a bigger amount then CARE will be ok. But it says something about the way pensions and wages have been eroded if that's the case.

I recently took a look at my own pension expectations and reality in light of this, and I wouldn't have described the CARE pension that replaced the FS pension as "ok" by comparison; it was markedly worse. However, the degree of difference is certainly masked by the years of salary supression.

I think the reality is that a salary average that takes inflation into account is going to be worse than a FS calculation that has had both inflation increases already baked in along with those due to promotion. CARE is a way to reduce pension amounts. My scheme went from single year maximum salary to 3 year peak average in a contract negotiation to mitigate health insurance cost increases. People weren't happy, but it wasn't a big change for most people.

SarahB16

Bostonerimus1 said:

Universidad said:

Bostonerimus1 said:

if you always got annual pay increases less than inflation and then your pension is uprated by a bigger amount then CARE will be ok. But it says something about the way pensions and wages have been eroded if that's the case.

I recently took a look at my own pension expectations and reality in light of this, and I wouldn't have described the CARE pension that replaced the FS pension as "ok" by comparison; it was markedly worse. However, the degree of difference is certainly masked by the years of salary supression.

I think the reality is that a salary average that takes inflation into account is going to be worse than a FS calculation that has had both inflation increases already baked in along with those due to promotion. CARE is a way to reduce pension amounts. My scheme went from single year maximum salary to 3 year peak average in a contract negotiation to mitigate health insurance cost increases.

Final salary pension schemes would simply be based on your final salary and unfortunately for many there are no inflation increases baked in.  What they are seeing is their salary increase by less than CPI inflation which therefore means (assuming no promotions/significant salary uplift) their forecast pension being eroded in real terms as the salary they leave on is worth less in real terms and that is what their final salary pension scheme is based on.  

For many in career average pension schemes their pension benefits will have recently increased by 10.1% but their salary won't which means that for those people in career average pension schemes they are better. 

It all depends on whether your salary keeps up with inflation as to whether you are better off or not.