New Or Old Pension Scheme???

[sievo666]

Hi all, new to the forum and wondered if the RAF groundcrew out there would like to share their views on the 2 pension schemes and the recent OTT(offer to transfer)

I know it differs for most of us but Which is the better in your opinion?
And anything else interesting you know about them, is it just another way for the RAF to "save" money etc etc etc

AFPS 75 OR AFPS 05 Discuss :D

[TheBeeKeeper]

Seems to be that if you are close to retirement at 55, and think you'll live long enough to benefit from the 65 payout, then the AFPS05 is the way to go.... anyone else? AFPS75 is favoured!

One big gripe..... my FS received the second version of the OTT package after there was a mistake in the first, and noticed that is AVC's had not been included into the equation. When he called up the pension bods to complain, they stated that the decision had been made not include AVC's for people as it was all too dificult.

How can anyone be expected to make a decision without all the facts?!?!?!?

TBK

[southside]

This is a no brainer this one......


New....

[Almost_done]

The problem you have is;

1. At what point are you going to retire from the RAF?

2. At what rank will you retire?

3. Is there a cats in hells chance of you getting promoted between now and when you retire?

The new pension scheme is worthless to anyone not coming out at 55yrs service. Basically I come out 07 after 22yrs on the old system as if I transfer to the new system I lose @ £45K by the time I am 65 and god willing live till 80 that loss reduces to @£20K.

So to make the same on the old pension I must eek out my life till over 100, well with the alcohol abuse, exposure to the nasty stuff in the 80's not much chance of that!

For the Gov they hoped that by showing and giving 2 reduced lump sums people would be better off, however that is per circumstance and per individual (oh a new RAF motto there).

For the FS and the WO ranks they will probably make @10K profit overall.

The figures are approxomate as I have not included index linking, pay rises (jokes).

Best advice go see an independent financial manager, may cost a couple of quid but if your in for the long term and can see a good promotion streak ahead it may prove benificial.

[tonkatechie]

There's a quite stern warning somewhere in all the info that superiors (and subordinates with bigger brains) should not advise others on what to do, but merely to explain what is on offer. This is to prevent being liable for crap advice....

HOWEVER....

if you're as bitter and twisted as everyone else in the mob, you'll believe in the old adage: 'They never offer you something better'.
Yes, there will undoubtledly be people who will be better off, but you can bet your pension ('scuse the pun) that for most people the better option is to stay put. Unless you plan on dying inwhich case your wife will be beter off on the new plan!

[southside]

'They never offer you something better'. ....apart from the new pension which is a lot better...in fact, about £4k a year better. Thank you Mr Blair

[Right here right now]

Go to the pensions calculator on the web (can't for the life of me remember where it is tho!) and put your details in and it'll give you comparisons of the 2. You can mess about with it and change your rank and your leaving date so you can make a more informed decision. I'm sticking to the old one as I'm far too young to even think about what I'll be up to at 55, let alone know if I'll be alive at 65!

[November4]

Pension calculator (http://www.mod.uk/issues/pensions/pensions_calculator.htm)

[Melchett01]

apart from the new pension which is a lot better...in fact, about £4k a year better. Thank you Mr Blair

Yes, the new one is so much better :\ So much so, that assuming I leave at my pension point and live until I'm 80, then my rough initial calculations have me losing out by a minimum of around £120K over the course of a lifetime. An having had a play around on the pensions calculator, under the new scheme I need to make Air Rank to come out on top ...... fat chance

How is that better - unless we're now applying LEAN principles to pensions as well now. :\

So thanks Mr Blair, PMA et al, but forgive me if I don't believe you when you say I'll be better off

[sievo666]

hmm all interesting points thanx guys, and dont even get me started on lean (god damn tape for ya mug place)
Ive only been in eight years so far and it seems to me having read the "easy to follow" leaflets etc etc ill be better off sticking with the old pension unless i live till im quite old.....which i guess i wont know till i get there lol

[rej]

Southside, I am really intrigued as to how you have come up with that figure of being £4k better off. I would make sure that your pack-up did not contain an error.

Unless I've really cocked up on my calculations, I reckon that I will be about £1k better-off in total under the new scheme IF I stay in until I am 55, but considerably worse off if I transfer to AFPS 05 and then leave early. With 2 option points between now and then, and of course the PVR route, I consider that it would be foolish for me to transfer. You really need to use the pension calculator and then start doing the sums for annual income after tax etc. Again, unless I'm mistaken, there is a lot more to be lost than to be gained by transferring from '75.

[southside]

Whilst I understand that everyone is different I re-checked the figures on the pension caluclator and on the old scheme i will get £26,050 and on the new scheme will get £33,962. Which is £7912 better off.

Youre right in so much as you have to stay til yr 55 to get that AND will be penalised big time if you PVR.

[LFFC]

Southside,

I guess you must be aircrew on the Professional Aviator pay spine. I think sievo666 has been looking at it from RAF groundcrews' point of view.

Not everyone is as lucky as us and won the jackpot - so let's spare a thought for others.

[Safety_Helmut]

I suspect southside is referring to the pension he will get when he has left school, finished his ATC service, got accepted into the RAF/Army/Navy, completed his training, done some time, grown up a little bit, made some sensible posts on pprune etc etc

Safety_Helmut

[southside]

Apologies. Yeah, Im on the PA spine. But even still, APFS is based on your final salary and therefore (quite rightly) the longer you stay in the more you get.

[sievo666]

yes i was thinking of groundcrew situation rather than aircrew apologies if i didnt make it clear, although all opinions are greatfully accepted :P
Yes i do think i will be staying with the old scheme as if i decide to leave early for whatever reason at least ill be beter off.

[Norma Snockers]

For PA spine guys. Have you looked at what happens if you PVR so that your exit is 1 day before your 55th b'day. By my caculations you make £17,000! You get your ED payment - £100K, a reduced pension for 10 years (losing about £83K, but then they pay you another £100K on your 65th b'day and you go to the full pension (therefore making 17K!). Or have I overlooked something?

[sievo666]

lol thats a very good point.....live for the moment :P

[Ginger Beer]

Further to Norma's reply,

The EDP/lumps are all tax free too, whereas the pension/ early departure payments are taxable. There is certainly a case for 2 tax free lumps as opposed to a higher but taxable pension/payment (whatever they call it) ?

:confused:

Ginge

[DP Harvey]

I was recently speaking to a WO in the ground trades, aged late 40's, due to leave at Age 55. Like us all, he knows that the new pension at Age 55 is significantly better than the old one. Nevertheless he says its a very difficult decision. He's not happy with the way that the Government is manipulating the Armed Forces and he, quite understandably, doesn't want to commit himself to age 55 just to get a larger pension while selling his sole. He would like to be able to maintain a flexible response to everything that might happen to him in the next few years, which will include the PVR option. Of course, that would mean that he has to reject the new scheme. He says, after 30 years of loyal and enjoyable service, that its so close he could almost taste it, but there are also quite a few years of being disproportionately pi$$ed about ahead. I don't envy his decision. I'm PA and only a few years away from 55. I sent back my acceptance letter and the next day I and 11 others were chosen from a cast of 12 to be dicked about in CS95 from dawn to dusk. Yep, my sole was sold so easily :-(

[LFFC]

.... don't forget that officers become eligible to attend resettlement courses at the age of 50. Moreover, they only have to give 6 months notice to leave the Service after that age - after resettlement courses and terminal leave, that effectively means that they only have to work for a couple of months before starting a new job.

The intention always was that this allowed people to start job hunting at age 50 and leave whenever the right opportunity raised its head.

The new pension scheme won't actually change that logic. If you've been offered a good job, leaving a few days early and settling for less than 75% of your pension for over 10 years won't be too traumatic - especially as you'll get a second lump sum at age 65.

However, what might change is that it may make people think twice about leaving in their final 5 years just because they are p*ssed off!

So the message is quite clear:

For those on the new pension scheme - if you think that you'll want to leave early - start job hunting and expect to work as a civilian until you're 65. If you think you can take the heat - stay in until 55 ..... and then play golf!

For those on the old pension scheme - golf may be an option even if you leave a couple of years early.

[southside]

He's not happy with the way that the Government is manipulating the Armed Forces and he, quite understandably, doesn't want to commit himself to age 55 just to get a larger pension while selling his sole

Me thinksd yr oppo is a lot better off than most. The government, quite rightly, are not going to commit to your mate if he isn't prepared to commit to them. I still think that we are in a lot, lot better position than those at the Mirror group and those poor unfortunate souls at ASW.

[Ginseng]

Granted, but it isn't our fault that many pension schemes elsewhere are under considerable pressure, although I have the greatest sympathy for those who are affected. The choice we are being asked to make here is whether we want to be in the Armed Forces as a member of AFPS75, or AFPS05. All other considerations are irrelevant, however hard-hearted that may make us feel. There are no prizes for making the wrong choice out of sympathy for others - do what is right for you.

Regards

Ginseng

[timex]

The biggest difference is in your Annual sum, have a good look at both options. If you want more money in the early yrs of retirement then AFPS 75 looks the way ahead.

Remember you can commute on the old system but not on the new.

I lose £2000 pa on the new system for 6 yrs then £1000 for the next 15 yrs and only go into the Black at 65.

You can always got professional advice from IFA's

[ddsd200-7]

Anyone know how going on to the new pension scheme effects your IPP with respect to the aircrew FRI: cannot get a straight answer out of the Roger Nigel pension "experts".

[FFP]

In what respects ?

[ddsd200-7]

The FRI payment is based on the date of your IPP and five years before your IPP. As there is no IPP on the new scheme on what date is the FRI payment calculated.

[oldfella]

Just as in previous posts on this subject. There are those who want the best of both i.e. go to new scheme but with no penalty if they decide to leave early. No system is going to give a reward for not staying.

It is an individual decision and can have long reaching consequencies. The main factor seems to be how long you expect to live. As a younger guy I couldn't even think of the day I might be leaving, now it's approaching fast. I still cannot think about reaching 65, 75 or 85. treasury and Government plans and schemes change far too often and I have elected to take the biggest bang for the buck now. It's in my pocket and I can do as I wish with it rather than hoping to have a bigger bank balance some time way down the road - but as I said, it's an individual choice.

[Ginger Beer]

DDSD,

I'm in the same boat matey, on the new scheme I am about to reach 1 yr to my new "IPP". So, will the FRI still be applicable ? Dunno, trying to find out.

Also, as I'm within 3 yrs of IPP, in fact 1 yr to go, on the new scheme. Should I be boarded now for PAS ?

It's the same problem, as they are both related to IPP. If the new scheme doesn't relate to those 3 letters we're probably left in the cold ? No real change eh ?

Surely someone from PMA reading this could point us in the right direction, can't get any joy in psf.

Ginge

edited for spooling:\

[Tracey Island]

Fellas - don't worry about the Aircrew FRI, it'll be gone as from 2007.:(

[southside]

don't worry about the Aircrew FRI, it'll be gone as from 2007


Not a chance. The FRI will be along (in the RN) for a long time. We will be short of aircrew for a long time unless we start a heavy recruitment proceess.

[Ginger Beer]

Yeah but, no but,

as peeps change over to the new pension scheme, should they decide to do so, how is the FRI and boarding for PAS going to be affected ?

Both schemes are in place to retain aircrew to and beyond their IPP. When/if we chop across, the IPP effectively changes and there are some financial effects e.g. FRI amounts (how many years left to IPP) and entry to PAS for us NCA that are affected.

Ginge

[ddsd200-7]

Ginger

Exactly my point.

How are we supposed to make an informed decision when they refuse to answer our questions and won't tell us all the facts.

For someone a year away from IPP and therefore FRI its very frustrating.

[The Proctologist]

"We will be short of aircrew for a long time unless we start a heavy recruitment proceess."

Southside - I think you need to speak to your poster and ask him how short of aircrew we are at the moment! But I guess you will find out when your tour is up and you want advancement!

[Jambo Jet]

I do not think that a massive recruitment drive is required.

We do need to recruit. We then need to give our recruits quality instruction and experience. (When I went through training I had about nearly 500 hrs by the time I arrived on an OCU).

Surely it is more cost effective to give a student pilot 10, 20 or even 100 extra hours on a cheap trg ac rather than have to teach and recover basic skill on a frontline ac (which costs approx 5000 pounds an hour to run).

The future? Recruitment? Yes. But right now the frontline Sqns cannot physically accept any rookies. There is just not the flying.

We need to make the job attractive again. Frontline ME pilots getting less than 100 hrs a yr is not helping to retain, let alone build the experience that raw recruits will look up to when they arrive on the frontline Sqns in a couple of years time.

Pensions? LOL. Who cares? If a solution to the problem of ageing ac and quality trg time is not found then there will not be anyone in their right mind staying on beyond 38 and Im sure the PVR trend will only worsen.

Action addressees please take note.

[highandmighty]

Good Point Well Persented. Why recruit when I kn ow 2 people in the last 12 months who have PVR´d as a result of holding for 2 years without flying.

[16 blades]

Haven't FRIs gone for good now due to the redundancy programme? (RAF at least).

16B

[Yellowbaron]

Get a financial adviser to have a look.

[snakepit]

Point to consider:

AFPS 75
When you leave at or beyond your IPP you receive an immediate pension .:ok: And hopefully your payments are proctected under pension law.

AFPS 05
When you leave at your Early Departure Point you receive a regular payment that the MOD/government promises to pay you for the better part of up to 25 years 'honest gov we wont change the rules at any time cos you can trust me I'm a politition'. Hopefully when you reach your pension point at 65 the rules will still be the same.


(legal peeps please correct if wrong)

Probably just cynical.

[BEagle]

With all the meddling with pension legislation Bliar and Grumpy Gordon are currently involved with, it'd be a very brave person indeed who, unless he/she could absolutely guarantee wishing to stay in until 55, would join the new system.

Leave between 40 and 55 and wait until possibly 67 (if that's what is going to be forced upon other public sector workers) for a higher pension - or stay on the AFPS 75 system and have an immediate pension in your 40s to augment a lower paid job but one which gives you a better quality of life?

To cite a typical example, if you are a current SA Flt Lt at the age of 45 with 24 years reckonable service and decide that you're going to leave as you've had enough of sandy places, when would you receive a lump sum and pension:

1. On the 'old' system?

2. On the 'new' system under current proposals?

Perhaps someone could do the sums?

[LFFC]

I think we've probably thrashed that to death in the past Begs, but your point is well made: Your example officer would initially get about half of what he could expect under the old pension scheme - but don't forget that he would also get a second lump sum when he finally gets his full pension at age 65 (assuming he lives that long) to help compensate for the reduced pension in the early years.

But - oh yes - I wonder how that second lump sum would impact any "means test" that Grumpy Gordon seems intent to introduce for the basic state pension?

My guess is that we can kiss goodbye to any thoughts of getting a basic state pension in the future.