Pension saving BBC article

SouthCoastBoy

In future I can see a big difference between those with defined benefit pensions (primarily public sector) and the rest. We are already seeing it to some extent, although many people my age may have some DB element. I have friends who have worked in the public sector all their working life and are now retiring at around 60. Then those in the private sector and self employed who are dependent on DC funds are continuing to work as they can't afford to retire. 

Bostonerimus1

leosayer said:

The article mentions people of Pakistani heritage of which I know a few 

None of them consider pensions at all - it's all about property. Those that are entitled to a pension eg. LGPS opt out.

Muslims must avoid usury. Most pensions have Sharia compliant fund options, but I can see how Muslims would tend to avoid company pensions. It's similar to the widespread mistrust of investment funds by many people in the UK who see them as risky and a way to lose money. I don't necessarily disagree with this sentiment as the UK financial industry has a history of high fees, poor advice and poor performance.

kempiejon

SouthCoastBoy said:

In future I can see a big difference between those with defined benefit pensions (primarily public sector) and the rest. We are already seeing it to some extent, although many people my age may have some DB element. I have friends who have worked in the public sector all their working life and are now retiring at around 60. Then those in the private sector and self employed who are dependent on DC funds are continuing to work as they can't afford to retire. 

I spent a while in local government so have a small DB pensions available to me at normal pension age, or actuarially adjusted earlier from 55. Lucky me, gold plated index linked fund forever.
But, I wanted to retire at 50 so need to fill my ISA and other non pensions to fund those first 5 years pre SIPP and later DB/SP funds.
The job I did in local government was not as well paid as the same role in the private sector, was the difference the pension perhaps, what I noticed was higher standards of delivery and how much harder and smarter and longer hours I worked in private sector to hit targets. I had nothing like that pressure in my LG role.

Silvertabby

Bostonerimus1 said:

leosayer said:

The article mentions people of Pakistani heritage of which I know a few 

None of them consider pensions at all - it's all about property. Those that are entitled to a pension eg. LGPS opt out.

Muslims must avoid usury. Most pensions have Sharia compliant fund options, but I can see how Muslims would tend to avoid company pensions. It's similar to the widespread mistrust of investment funds by many people in the UK who see them as risky and a way to lose money. I don't necessarily disagree with this sentiment as the UK financial industry has a history of high fees, poor advice and poor performance.

LGPS members don't have individual 'pots' that can be moved into specific fund options.  Each LGPS has one 'pot' -  investment returns and pension contributions in, pension payments/transfers out.  

Bostonerimus1

Silvertabby said:

Bostonerimus1 said:

leosayer said:

The article mentions people of Pakistani heritage of which I know a few 

None of them consider pensions at all - it's all about property. Those that are entitled to a pension eg. LGPS opt out.

Muslims must avoid usury. Most pensions have Sharia compliant fund options, but I can see how Muslims would tend to avoid company pensions. It's similar to the widespread mistrust of investment funds by many people in the UK who see them as risky and a way to lose money. I don't necessarily disagree with this sentiment as the UK financial industry has a history of high fees, poor advice and poor performance.

LGPS members don't have individual 'pots' that can be moved into specific fund options.  Each LGPS has one 'pot' -  investment returns and pension contributions in, pension payments/transfers out.  

That would explain why Muslims would avoid the LPGS pension system.

kempiejon

There is opinion on whether LGPS is haram. 
Mufti Faraz Adam's report concluded as a part of the contractual arrangement between employer and employees, Muslim employees can continue to contribute to, and benefit from, the excellent benefits offered by the LGPS. 

https://lgpsboard.org/images/Reports/ShariaandLGPS/An_Opinion_on_the_Shariah_Compliance_of_LGPS.pdf

Silvertabby

Bostonerimus1 said:

Silvertabby said:

Bostonerimus1 said:

leosayer said:

The article mentions people of Pakistani heritage of which I know a few 

None of them consider pensions at all - it's all about property. Those that are entitled to a pension eg. LGPS opt out.

Muslims must avoid usury. Most pensions have Sharia compliant fund options, but I can see how Muslims would tend to avoid company pensions. It's similar to the widespread mistrust of investment funds by many people in the UK who see them as risky and a way to lose money. I don't necessarily disagree with this sentiment as the UK financial industry has a history of high fees, poor advice and poor performance.

LGPS members don't have individual 'pots' that can be moved into specific fund options.  Each LGPS has one 'pot' -  investment returns and pension contributions in, pension payments/transfers out.  

That would explain why Muslims would avoid the LPGS pension system.

Not all do.  During my 20 years as a LGPS administrator I dealt with many hundreds of opt out requests.  Although we were not allowed to 'advise' we could explain the impact of opting out - loss of pension benefits, death in service grant, etc, before issuing the opt out forms to those (the vast majority) who still wanted to go ahead.  I would ask why they wanted to opt out (I'm nosey !) and almost all said that they couldn't afford it, or some such variation.  How many said that they had to opt out because the LGPS wasn't sharia compliant?  Just one.

Of course, the figures may be different in other areas of the Country, but I never got the sense that most Muslims opted out for religious reasons.  

Albermarle

SouthCoastBoy said:

In future I can see a big difference between those with defined benefit pensions (primarily public sector) and the rest. We are already seeing it to some extent, although many people my age may have some DB element. I have friends who have worked in the public sector all their working life and are now retiring at around 60. Then those in the private sector and self employed who are dependent on DC funds are continuing to work as they can't afford to retire. 

Or continuing to work when they do not need to, in some cases on this forum ..........

GunJack

kempiejon said:

In April 2021, the gap in employee workplace pension participation rates between the public (91%) and private sectors 

Only 91% in the public sector??? Are the 9% deranged somehow? And I say that as a former civil servant who never knew anyone who ever opted out...

SouthCoastBoy

Albermarle said:

SouthCoastBoy said:

In future I can see a big difference between those with defined benefit pensions (primarily public sector) and the rest. We are already seeing it to some extent, although many people my age may have some DB element. I have friends who have worked in the public sector all their working life and are now retiring at around 60. Then those in the private sector and self employed who are dependent on DC funds are continuing to work as they can't afford to retire. 

Or continuing to work when they do not need to, in some cases on this forum ..........

Is that aimed at me?