Pensions watch out!!

[Grimweasel]

From the BBC today...

Civil service pensions shake-up

Civil servants are already angry over job cuts
Controversial plans to end civil servants' final salary pension schemes and up their retirement age from 60 to 65 have been published by ministers.
Cabinet Office Minister Ruth Kelly said the measures were about making the pensions system fairer, particularly for the lower paid, not saving cash.

Public service unions say some people could see their pensions halved and are already warning of strikes.

The changes could push senior officers out of the public sector, they suggest.

Under the new plans pension payments would be based an average pay throughout the workers' career rather than the final salary prior to retirement.

What we want is for ministers to listen to the argument around pensions. We will engage in dialogue

Jonathan Baume
First Division Association

Ms Kelly said the proposals "intended to modernise the civil service pension arrangements" while "reaffirming our commitment to the principle of a good quality defined benefit pension scheme".

She added that switching away from the final salary scheme "would not save the Exchequer one single penny."

It would also "put public sector pensions on a much more sustainable footing for the longer term".



I wonder if this is on the cards for the military next...after all we are run by Civil servants and I can't see those who oversee us letting us get away with our pensions un touched???

Tax man friend of mine told me that we are not as safe as we think. Late ammendements can always be put in he says. Gordon Brown has fluffed his sums and he knows the biggest drain on the treasury is the Welfare system.Tax mate has a woman on his books with three kids that is having another to simply make money. She currently gets £14k in her hand yearly with accomodation paid for as well as her bills...this is all very wrong.
And who will be next on the list? The Forces. The public on the whole is fed up with subsidising public sector pensions when their own pensions are being raided by the government (loss of tax dividend credit etc, £5Bn a year!!)


Stand by......

[Mikehegland]

Whilst I would agree that the Armed Forces pension is as safe as David Blunketts job. The AF Pension is just about to undergo a massive change and it has taken the best part of 5 years for that to happen. So I should say that we are relatively safe (for the time being).....However, when I joined I was led to believe that the AFPPS was the best of the best....Im not sure that the guys and girls joining today will hear the same words.

[Yeller_Gait]

So why are the forces about to start a "final salary" based pension scheme, just when the government are changing the civil service pension scheme away from that, to an "average salary" based pension?

The principal that lower paid workers who spend a lifetime in the civil service will end up with a larger pension (in relative terms), where as the high fliers will end up with a reduced pension (again relative) is sound. But at the end of the day the government are doing it to save money, so I do not see your average civil servant getting a better pension.

On the other hand, air ranks and senior officers in the forces may end up with larger pensions under our new scheme???

[astazou]

My credentials

Financial adviser with defined benefit pensions from teh RAF and a privat sector company as well as defined contribution pensions from two private sector companies.

Analysis

The pension problem is a function of the need for money to be set aside over the long term. Most individuals are unable to balance the present desire to take a holiday or buy a new television with the future need to avoid living on dog food. Hence the growth of the 'mandatory' pension, whether through a company or the government. Until recently, we seemed relatively well placed but the whoile edifice has started falling apart because the treasury has decided to raid the 'funded' pension schemes and government has made no acceptable provision for meeting its unfunded schemes. The introduction of means-tested tax credits for pensioners is this governments way of saying " don't bother making yoour own prvision; we'll pay you in your old age using tax taken from those fools who bothered to save. However, the deal is that you must vote for us if you don't want to be left high and dry".

Finally, this government cannot resist tinkering with the system so we are about to move to a new, "simplified" regime (2006) and (to get to the point) the public sector provision is about to be undermined. Expect the RAF pension to be under attack in short order. Easy meat !

Notice two things:

The proposed start date for the civil service chnage is 2013; safely 12 months beyond the retirement (at 60) of two of the most influential senior civil servants !

The MPS have recently voted themselves a spectatularly good pension scheme !

Suggestion

My suggestion is that MPs should take the lead by moving to a defined contribution scheme, subject to the vagaries of stock market performance, tax, charges, fraud, annuity purchase, more tax and stress. They are only ever likely to make sensible decisions if all our interests are aligned. Currently, they are sitting in their own silver lined lifeboats while we swim in shark infested waters.

[teeteringhead]

But commissioned pensions in the armed forces have always been effectively a final salary scheme.

The figures (from memory, so don't shout if slightly wrong) are based on a "representative" salary for each rank, and go from 48.5% for the maximum 34 years (tough if you were keen enough to be commissioned before you were 21!), reducing at a steady rate of about 1.25% (??) per year down to 27.25% (??) at the 38/16 IPP.

However, the "representative" salary is normally the top rate, so after 34 years you could get 48.5% of more than you are currently earning, which (for a bluntie) could turn out to more than 50+% of your final salary.

Example: bluntie promoted at 53 does 2 years to get full pension in new rank. Gets 48.5% of top rate, which is more than 50% of his 2-year seniority rate....

I use a bluntie as an example, cos flying pay muddies the waters .... and I only got flying pay for 30+ years, how could I possibly expect it to be pensionable......:{ :{