Get away from my pension.

[Wildcat]

I work in the public sector and my pension is not as great as people think it is and it hardly makes up for the apalling wages most civil Servants are on, which tends to be around £3,000-£4,000 less that comparative jobs in the private sector.

 

Besides, I have a legally-binding signed contract. If the government try to renege on that they are going to make life very difficult for themselves.

 

Just like they have found out with the Compensation Scheme changes they tried to illegally impose

[milquetoast1]

If I retired today, and claimed my pension at 55, I would receive £3k pa. That is with 26 years of payments, totalling £160 000 at current pay rates.

 

If I waited until 65, I would get £5.5k

 

I had to laugh when a Unison spokesman spoke on the radio this morning and repeated the claim that the average local government pension is "only" £4000, and even if you look beyond the town hall, the average public sector pension is still "only" around £7,000 a year.

 

The clue to the nonsense behind this "only" statement comes in the post by sibon. To be honest £160k should be getting much more than £5.5k per year. Last weeks Money Box on R4 was about how annuities have fallen, now providing less than 6% for the first time. It seems that two years ago £100k with the best annuities would give you £6.5k per year, but now it is only £5.5k per year.

 

So an average pension of "only" £4k will require a fund of "only" £75k (and rising), and an average pension of "only" £7k will require a fund of "only" £130k (and rising).

 

Compare this to the £25k average value of annuities which are actually being cashed in the real world. This is of course the average of annuities, not people, and the number of people in the private sector with no pension provision at all is frightening.

[crookesey]

I had to laugh when a Unison spokesman spoke on the radio this morning and repeated the claim that the average local government pension is "only" £4000, and even if you look beyond the town hall, the average public sector pension is still "only" around £7,000 a year.

 

The clue to the nonsense behind this "only" statement comes in the post by sibon. To be honest £160k should be getting much more than £5.5k per year. Last weeks Money Box on R4 was about how annuities have fallen, now providing less than 6% for the first time. It seems that two years ago £100k with the best annuities would give you £6.5k per year, but now it is only £5.5k per year.

 

So an average pension of "only" £4k will require a fund of "only" £75k (and rising), and an average pension of "only" £7k will require a fund of "only" £130k (and rising).

 

Compare this to the £25k average value of annuities which are actually being cashed in the real world. This is of course the average of annuities, not people, and the number of people in the private sector with no pension provision at all is frightening.

 

The best/highest annuity would be single life, no guarantee, no escalation and no spouses benefits. Build in these benefits that are standard practice in the public sector and the annuity rate will be nearer to 4%.

[Wildcat]

This is of course the average of annuities, not people, and the number of people in the private sector with no pension provision at all is frightening.

 

 

Fortunately NEST will ensure that every worker is covered by an employer Pension scheme, by 2012 thanks to the TUC winning the argument on this although there is still much work to be done on the detail and much work to be done to improve defined contributions pensions up to a similar level to defined benefit pensions.

 

http://www.touchstoneblog.org.uk/2010/02/db-pensions-are-cheaper-than-dc-pensions/#more-5944

[milquetoast1]

The best/highest annuity would be single life, no guarantee, no escalation and no spouses benefits. Build in these benefits that are standard practice in the public sector and the annuity rate will be nearer to 4%.

You are correct, and those figures I quoted were for the basic single life annuities. I'm not sure what sort of benefits public sector pensioners are entitled to, but if they are as you describe then sibon's figures become more realistic.

 

So an average pension of "only" £4,000 for a local government worker requires an average fund of "only" £100k. One also has to take account of the fact that the average public sector worker will not have worked in the public sector for their whole working career.

[milquetoast1]

Fortunately NEST will ensure that every worker is covered by an employer Pension scheme, by 2012 thanks to the TUC winning the argument on this although there is still much work to be done on the detail and much work to be done to improve defined contributions pensions up to a similar level to defined benefit pensions.

 

http://www.touchstoneblog.org.uk/2010/02/db-pensions-are-cheaper-than-dc-pensions/#more-5944

Please find me more than a handful of jobs in the private sector where a defined benefit pension is offered and you might have a point. Unfortunately they are not, which is why my point that the average value of annuities is said to be £25k is a more valid observation of the reality of what private sector employees are now faced with.

[crookesey]

You are correct, and those figures I quoted were for the basic single life annuities. I'm not sure what sort of benefits public sector pensioners are entitled to, but if they are as you describe then sibon's figures become more realistic.

 

So an average pension of "only" £4,000 for a local government worker requires an average fund of "only" £100k. One also has to take account of the fact that the average public sector worker will not have worked in the public sector for their whole working career.

 

I recall that just for interest I capitalised Tony Blair's pension. It worked out at circa £3 million, had that been in the private sector the £1.4 million over and above the then lifetime allowance of £1.6 million would have triggered a tax charge of £770,000.

 

It didn't apply to Tony though, because he didn't have an actual pension fund.

[Wildcat]

Please find me more than a handful of jobs in the private sector where a defined benefit pension is offered and you might have a point. Unfortunately they are not, which is why my point that the average value of annuities is said to be £25k is a more valid observation of the reality of what private sector employees are now faced with.

 

Not sure what you thought my point was but it had nothing to do with the numbers of schemes in the UK, the point was they are cheaper by 46%.

 

I am also not sure what your point about annuities is? or where your figure has come from, but considering the number of options people have on how much of a lump sum to claim when they take their pension the level of annuity people receive would seem to indicate more what people feel they want to fund the initial stages of their retirement, maybe the cruise they have been dreaming of rather than anything meaningful about the problems facing people with pensions.

http://www.pensionschampions.co.uk/?q=node/21

 

Ps here are some defined benefit pensions:

http://www.tuc.org.uk/pensions/tuc-8553-f0.cfm

 

Nice to see business leaders, leading the way with having some of the best pensions in the UK.

 

A 1/30th accrual rate enjoyed by some of the business leaders in the CBI... nice if you can get it..

http://www.napf.co.uk/DocumentArchive/Press%20Releases/00_2010/20100615_15-06-2010%20Investors%20Want%20Greater%20Transparency%20On%20Boardroom%20Pensions.pdf

[milquetoast1]

Widcat - both sides can quote examples of people with their noses in the trough, as you have and crooksey before you. I'm not interested in how 0.1% of the population can play the rules for their own benefit, if I was in their shoes the money would not make me any happier anyway so I doubt it does them. I'm only interested in the system as it effects the 99.9% of us.

 

Let me lay my own cards on the table here, and I take a pretty socialist view on pensions. I would like to see a world where everyone receives the same basic pension, one that can provide a basic but comfortable standard of living. Anything over and above that should be down to the individual, and from earnings after taxation not before it.

 

Pensions are becoming unaffordable because of the positive fact that we are living longer and healthier. (I am now an age at which all my grandparents were dead, but today myself and my friends still discuss which concert to go to.) The obvious solution is that as we live longer we work longer. The only alternative is that we live poorer.

 

Unfortunately, imho, it seems that our beloved leaders have decided to take the easy option that we should live poorer. Furthermore, that the burden of this retirement poverty should be taken by private sector employees.

 

It saddens me to see this argument decline into an us/them one, and I find myself guilty sometimes, because it misses the point.

[Wildcat]

Widcat - both sides can quote examples of people with their noses in the trough, as you have and crooksey before you. I'm not interested in how 0.1% of the population can play the rules for their own benefit, if I was in their shoes the money would not make me any happier anyway so I doubt it does them. I'm only interested in the system as it effects the 99.9% of us.

 

Let me lay my own cards on the table here, and I take a pretty socialist view on pensions. I would like to see a world where everyone receives the same basic pension, one that can provide a basic but comfortable standard of living. Anything over and above that should be down to the individual, and from earnings after taxation not before it.

 

Pensions are becoming unaffordable because of the positive fact that we are living longer and healthier. (I am now an age at which all my grandparents were dead, but today myself and my friends still discuss which concert to go to.) The obvious solution is that as we live longer we work longer. The only alternative is that we live poorer.

 

Unfortunately, imho, it seems that our beloved leaders have decided to take the easy option that we should live poorer. Furthermore, that the burden of this retirement poverty should be taken by private sector employees.

 

It saddens me to see this argument decline into an us/them one, and I find myself guilty sometimes, because it misses the point.

 

The argument should around protecting everyone's pensions, perhaps there is an argument that pension contributions should increase to cover increased life expectancy, but that argument doesn't cover what has been happening with pensions in particular those in the private sector. The reality of what has been happening is linked in with the way pension funds have been mismanaged and the way that financial services industries have been mismanaged. It shouldn't be an us and them, it should be about everyone uniting together to protect our futures from business leaders and financial services that want to increase profits at the expense of our pension funds.

 

Looking forward the real debate should be around what NEST will deliver.