The Chancellor's Occupational Pension Surplus Thingy

King_Drax_I

I understand that the Chancellor, Ms. Reeves, is going to be accessing pension funds surpluses in order to fund new investment.

What effect is that going to have on the stability of the pension funds and, importantly, how much more or less individual pensioners will receive per month from their occupational pensions?

In my case, I am a retired NHS medical professional and I am in receipt of the pension that I have contributed my own money towards for my entire career. Is that going to be at risk, or affected, in any way? How can the Chancellor get away with raiding/stealing my money, and that of other colleagues who have also been contributing for decades? Or is that not what is actually happening?

Marcon

King_Drax_I said:

I understand that the Chancellor, Ms. Reeves, is going to be accessing pension funds surpluses in order to fund new investment.

What effect is that going to have on the stability of the pension funds and, importantly, how much more or less individual pensioners will receive per month from their occupational pensions?

In my case, I am a retired NHS medical professional and I am in receipt of the pension that I have contributed my own money towards for my entire career. Is that going to be at risk, or affected, in any way? How can the Chancellor get away with raiding/stealing my money, and that of other colleagues who have also been contributing for decades? Or is that not what is actually happening?

The NHS scheme is unfunded so never had either a deficit or surplus - it's funded (effectively) by the lucky old taxpayer.

Absolutely zero impact on you or your NHS colleagues. You continue to have the best security available - and for the record, the proposals worrying you do not involve 'raiding or stealing' pension money from any schemes.

Moonwolf

The NHS pension doesn't have a fund, it is paid for out of current payments into the pension and/or current taxation.

The NHS pension has a government backing so unless the country collapses you will continue to get your pension whatever happens.  The benefits are also defined so will not change.

eskbanker

King_Drax_I said:

I understand that the Chancellor, Ms. Reeves, is going to be accessing pension funds surpluses in order to fund new investment.

What effect is that going to have on the stability of the pension funds and, importantly, how much more or less individual pensioners will receive per month from their occupational pensions?

In my case, I am a retired NHS medical professional and I am in receipt of the pension that I have contributed my own money towards for my entire career. Is that going to be at risk, or affected, in any way? How can the Chancellor get away with raiding/stealing my money, and that of other colleagues who have also been contributing for decades? Or is that not what is actually happening?

I'd prescribe obtaining your news from more reliable sources than the likes of the Daily Mail!

dunstonh

In my case, I am a retired NHS medical professional and I am in receipt of the pension that I have contributed my own money towards for my entire career.

To be fair, the taxpayer funded the majority of it.  You only paid a very small contribution towards it.

As the NHS is unfunded, none of the waffle (as that is all it is at this stage) applies to it.

How can the Chancellor get away with raiding/stealing my money, and that of other colleagues who have also been contributing for decades?

<cheeky mode on>
Well, you have been getting away with raiding the taxpayer for decades
<cheeky mode off>

As I have said before, NHS workers continuously show little or no understanding of their pension and are pretty much the worst workforce in that respect, in my experience.

Linton

King_Drax_I said:

I understand that the Chancellor, Ms. Reeves, is going to be accessing pension funds surpluses in order to fund new investment.

What effect is that going to have on the stability of the pension funds and, importantly, how much more or less individual pensioners will receive per month from their occupational pensions?

In my case, I am a retired NHS medical professional and I am in receipt of the pension that I have contributed my own money towards for my entire career. Is that going to be at risk, or affected, in any way? How can the Chancellor get away with raiding/stealing my money, and that of other colleagues who have also been contributing for decades? Or is that not what is actually happening?

Wer do not know how the proposals to use pension money for development funding will be implemented. But as far as I can see...
  
I assume you are in  a defined benefits scheme where the pension you receive is defined in your employment contract.  Where the money comes from does not matter as long as your employer is still around to honour the commitment.

Secondly as an NHS pensioner there is no lump sum of money assigned to provide your pension.  It is effectively paid out of current taxation. The same applies to the Civil Service, the Military and no doubt many other Government bodies.

The next class of people who should not be affected is those people with defined contribution pensions who can to a greater or lesser extent choose their own investments.

So it seems to me (with no knowledge of investment banking) that the easiest way for the government to finance development is to offer those pension schemes funded from investments (unlike the NHS one) access to bonds of some type that pay a good rate of interest but perhaps have a lesser guarantee than gilts much like a corporate bond.  An organisation issuing such a bond would be very large and so unlikely to go bust.  In any case the political ramifications would make it very unlikely for large amounts of pension money to be lost.

hugheskevi

Marcon said:

The NHS scheme is unfunded so never had either a deficit or surplus - it's funded (effectively) by the lucky old taxpayer.

Absolutely zero impact on you or your NHS colleagues. You continue to have the best security available - and for the record, the proposals worrying you do not involve 'raiding or stealing' pension money from any schemes.

It has a notional £40.9bn deficit (slide 23 of the 2020 Valuation). It is notional because the scheme is unfunded, but there is a pretend pile of assets that grows in line with the scheme discount rate over time.

That for the most part means nothing in practice. Employers pay a higher contribution rate to correct the deficit over 15 years. But most employers are funded from the Exchequer, so the Exchequer is just giving them money to hand back to the Exchequer to rectify the notional deficit. It does help with statements such as 'Record funding allocation for the NHS!' though - which is then clawed back by the Treasury.

The only real losers from it are the private companies that participate in the scheme - for those, the costs of the notional past service deficit contributions are real. And perhaps taxpayers, who pay for the calculation of the notional assets, liabilities, and the pretend deficit.

Marcon

hugheskevi said:

Marcon said:

The NHS scheme is unfunded so never had either a deficit or surplus - it's funded (effectively) by the lucky old taxpayer.

Absolutely zero impact on you or your NHS colleagues. You continue to have the best security available - and for the record, the proposals worrying you do not involve 'raiding or stealing' pension money from any schemes.

It has a notional £40.9bn deficit (slide 23 of the 2020 Valuation). It is notional because the scheme is unfunded, but there is a pretend pile of assets that grows in line with the scheme discount rate over time.

Fair comment, but I didn't think it was worth further confusing OP with facts like that, which would inevitably trigger panic reactions from some people reading this thread...

Albermarle

I understand that the Chancellor, Ms. Reeves, is going to be accessing pension funds surpluses in order to fund new investment.

That is just media spin/clickbait headlines. What is being proposed AIUI, is that DB pensions schemes in surplus will be allowed more flexibility in where they hold the surplus funds. They will not be forced to do it if they do not want to.

How can the Chancellor get away with raiding/stealing my money, 

She has not proposed to raid or steal any money.

King_Drax_I

Thank you all for some most enlightening and hilarious answers You are right; I know very little about pension stuff, which is why I had to ask.

For the responder who said about me 'reading' the Daily Mail, I don't buy it to read it; I buy it for the sole purpose of cleaning up after my pets. Sole purpose, lol

Grumpy_chap

hugheskevi said:

It has a notional £40.9bn deficit (slide 23 of the 2020 Valuation). 

Which is peanuts in the context of national finances.  In fact, probably not even a whole peanut considering the timeframe over which the deficit falls to be made good.