So you thought your pension was safe!

[ANAPROP]

Gordo want's to get rid of the MP's final salary pension scheme as a precursor to doing the same for the entire public sector!

Gordon Brown to scrap final salary pensions for MPs - Telegraph (http://www.telegraph.co.uk/news/newstopics/politics/4617198/Gordon-Brown-to-scrap-final-salary-pensions-for-MPs.html)

The move by Mr Brown could eventually allow politicians to propose scrapping all public-sector final salary schemes...

I've thought for many years that the Govt would find a way to cheat me out of my pension prior to retirement. Unfortunately this is seen as a vote winner by Brown as These pensions have proved increasingly controversial as private-sector employees have seen their taxes continue to fund the retirement of those working in the public sector while the value of their own funds has shrunk.

Looks like the light at the end of the tunnel is about to be turned off...

[Gnd]

Well sort off, you will now be able to stay in untill 65 and the state pension will cover the short fall - Happy days!!!!!!!!!!

[tucumseh]

The Prime Minister has called for an investigation into how MPs’ retirements are funded because he fears they are becoming too expensive for the taxpayer.


I thought their retirements were funded through lucrative directorships with companies on whose behalf they'd lobbied.

[ADVOCATE_56]

We should be wary, but. Any review is going to be "managed" by the Sir Humphreys who have a vested interest. There is going to be a General Election in the next 15 months ( Zanu Liebour's 5 years expires on Thursday, 5 May 2010 ) and having built up the client state over the previous 13 years, they are not going to alienate all those public sector employees by seeking a mandate to trash their (our) pensions. Assuming Cameron gets the nod on 5th May next year, he is going to be so busy trying to find a way out of the dung heap that Bliar/Broon have created that he will not want to take on the Public Sector.

At present I think the bigger worry is whether the money will last until May 2010.

[Flying Serpent]

Unfortunately for most of us I think that this is inevitable.
What will replace it? A career averaged pension?

I had the option of a higher paid but less secure job in the private sector a few years ago but chose to stay in the public sector because the overall package of job security, pension and working conditions were better for me and the family.
Besides I actually like what I do.

I don't mind if Gordo wants to ditch the final salary scheme. However he should do the right thing and give us decent pay rises on time and ensure our rates of pay are similar to the private sector!

FS

[Al R]

I hate to say it, but this HAS to be done.

There is simply not enough money to pay the ageing (State employed) population such a generous pension. Its not right and its not fair, but thats the reality and who brings it about isn't the real issue here, but when. Of course, Brown will want to hand Cameron the poisoned chalice who, in fairness, has called for this for quite a while now.

David Cameron: Time to slash public sector pensions | This is Money (http://www.thisismoney.co.uk/news/article.html?in_article_id=458548&in_page_id=2)

The tragedy is, many of the defined contribution schemes which replaced them are now being hammered as the rules are less onerous, as people can't contribute, and as the markets got hammered and as new 2012 pensions legislation is on the horizon anyway.

[SRENNAPS]

I don't mind if Gordo wants to ditch the final salary scheme. However he should do the right thing and give us decent pay rises on time and ensure our rates of pay are similar to the private sector!


On behalf of my wife who has spent many years working for the MOD and continues to do so with total loyalty, despite the fact of rubbish pay rises, several months late.

Flying Serpent - WELL SAID:D:D

She also enjoys her job and feels that she is doing her bit to support the lads and lasses out there.

[Beatriz Fontana]

Al R,

That's exactly what I thought when the news broke. A feeling of dread. A lot of the civil servants I know got on to the final salary scheme before it closed (nearly ten years ago now). To be told that it's closing anyway is going to be the proverbial nightmare.

One of the biggest draws to public sector work was the pension - the pay below the senior civil service is, to say the least, crap.

I wouldn't be surprised to see colleagues leaving the service and thereby opening the way for more higher-paid temporary consultants to fill the gaps. It's a false economy.

[capewrath]

Al R wrote:-
"I hate to say it, but this HAS to be done.

There is simply not enough money to pay the ageing (State employed) population such a generous pension. Its not right and its not fair, but thats the reality and who brings it about isn't the real issue here, but when. Of course, Brown will want to hand Cameron the poisoned chalice who, in fairness, has called for this for quite a while now."

That is perfectly true, but part of the problem is that there are far too many people working in the public sector and the numbers are ever increasing.
In some areas 25% of council tax revenue is used just to meet public sector pensions. That is grossly unfair.

[Door Slider]

Forgive my ignorance but I assumed that being on a 'contract' with a final salary pension scheme then that would still stand even if the government decided to scrap it. I would have thought that the new pension what ever that may be would be for people signing on after its inception date, am I wrong??

Thanks.

For anyone that reads the AFPRB report every year the table which compares civilian to military lifestyle and perks etc then one of the few remaining perks of military life is the pension, guess there will be none soon, kiss good bye to the education allowance too!

[Al R]

Beattie,

I suppose the only advantage one has, is time in being able to plan ahead. If possible, consider the pros and cons of contributing more into your scheme to boost benefits.

[Al R]

Capewrath,

I agree, 100%. How many expensively, corporately uniformed reception staff do there need to be at my local Council offices? Brown had to do it to reduce the burden on the private sector and to make the dole queues look shorter. And because at heart of course, he's still an insecure control freakery obsessed Socialist in a shiny suit who couldn't make ends meet if his life depended on it.

[Pontius Navigator]

Read the article closely. It is a master piece by Sir Humphrey:

The Prime Minister has called for an investigation . . .

The move by Mr Brown could eventually

the option of ending final salary schemes examined.

A Number 10 source said: “The Prime Minister is keen to move

Or as Mrs PN said, like getting Turkeys to vote for Christmas.

[jim2673]

Not exactly going to be retention positive is it?

How many people do i personally know that have done 12 years on the AFPS 75 scheme that are in the pension trap of having to do 22 age 40. If the geovernment scraps the immediate pension and gratuity payment after 22 i see many , read that as 10's of thousands of military men going ASAP.

The thought of a immedaite pension after 22 years is the only thing that keeps a lot after 12 years.

Also my D/V settlement was based on the fact that age 40,my pension CETV was valued at £250,000. How many will be seeking readress of their D/V settlement if the pension does not exsist untill age 65/70?

[Melchett01]

I hate to say it, but this HAS to be done

No it doesn't.

What HAS to be done, is the introduction of proper financial management practices to actually fund these pensions properly rather than requiring them to be funded from the annual budgets in competition with salaries, R&D budgets, equipment funding, day-to-day running costs etc.

If you know that you have a large financial obligation looming , you either budget for it or face the consequences of chosing not to. As an example, many people on this forum will have thought about the education of their children: possibly the the costs associated with boarding schools (above the CEA), potentially the costs of private day education, and almost certainly the likely costs of a university education. And I can guarantee you have probably thought long and hard about how to fund those future known liabilities and have taken steps to do so. If you hadn't and then came on here complaining about the costs, you would be packed off with fairly short shrift and not a lot of sympathy.

So why does the Government - of whatever hue - think we should be sympathetic to the fact that they have done absolutely nothing to fund their known liabilities apart from to take the money out of existing funds that they know will also have to fund other current liabilities? The public sector pensions row could have been sorted years ago by correctly funding these pensions through whatever scheme they chose - govt backed securities, investment funds for example etc etc etc. Armed Forces pensions should be seen as part of the costs associated with having a professional military to defend the country, not a bonus or perk as many seem to think at the moment.

However, now we are faced with a growing financial and social crisis - none of which is the fault of the Armed Forces, but which has the potential to to devastate the Forces if the pensions go. Given that the pensions are funded out of the annual defence budget, the general public will see this and ask why, when troops are short of kit and dying on dusty battlefields, should we be paying for retired people to live a comfortable life when young men and women desperately need the money to be spent on operational equipment. The fact that we know that operational funding comes out of separate budgets is irrelevant; the general public largely don't know this or care. This political element, with an election looming, is a massive driver for all the main parties.

The other aspect is the comparison between public and private sector working practices, salaries and pensions. There is a growing outcry that why should the public sectors receive these gold plated pensions when we don't and yet we have to fund them? A valid question. Almost.

What those complaining of a pensions apartheid have singlularly failed to grasp is the fact that for far too long, public sector employees were the poor relations when it came to renumeration packages. Certainly in the Forces there were none of the large bonuses, commercial salaries and other benefits and allowances that were available to private sector employees. In fact, I don't think it would be so unfair as to say that in recent years, many of the Forces consider they have received a bonus simply by surving operational tours and being able to see their familiies again. The point here is that for all too long, the private sector - particularly in the City and the big multi-nationals - have been happy to take the fruits of their 'successes' and keep them all for themselves to fund comfortable, sometimes lavish lifestyles. But now those 'successes' are being seen for what they really were, we are expected to share in their pain.

But with an election looming (possibly sooner than we all think, but that's another issue), this is rapidly gaining traction as a political issue. As PN pointed out, those announcements were very carefully worded, and unfortunately, we are now relying on those same self-serving Sir Humphries and MPs to save our pensions. Not an ideal situation, but it's where we are. And now it comes to a trade off - will the turkeys vote for Christmas or will the MPs making a bid for power win out?

The Armed Forces' Pension Scheme has already been downgraded (for most) through the change to 05. I can only hope that doing this will be enough to keep the wolves at bay for those currently serving. If there is to be yet another change and the closure of the AFPS, I can only hope that there will be a sense of justice, and those that are currently in that scheme and have served their country will be allowed to retain their pensions with a new scheme introduced from a point in the future. However, I won't hold my breath. Justice ,and what is actually right and proper rarely, gets a look in amongst the 21st century politicians and self-centred elements of the electorate. However, failure to tackle this issue in a just manner will create an even bigger problem for the government and the country that far outweighs the current pensions crisis: namely the devastation of the Forces. Thousands will walk either early or at their next option points; there will an erosion of trust between the members of the Forces and the senior leadership, who will be perceived not to have stood up for their personnel. This will impact on operational effectiveness along with a wholesale rejection by the Forces of anything the government says. In short, this has the potential to cause serious damage to the country as a whole if those conducting any inquiry or making the decisions do not do so having taken a broader view, and not just been swayed by short term balance sheets and political aspirations.

Fingers crossed, but not overly hopeful.

[sisemen]

the general public will see this and ask why, when troops are short of kit and dying on dusty battlefields, should we be paying for retired people to live a comfortable life when young men and women desperately need the money to be spent on operational equipment

Because for my 30 years they abated (read 'took') 11% out of my pay to fund my pension. That's why I have no qualms at all about looking at my bank statement each month.

If the government have dropped a bollock in making adequate provision for those entitlements then that is their problem.

Hark, I hear the tumbrils moving and the rusty creak of Madame Guillotine!

[EdSett100]

I don't think either AFPS 75 or AFPS 05 will be amended/replaced anytime soon. The vast majority of service personnel do not remain in the forces until age 55, when the big final salary based pensions are payable. Service to age 55 will not be offered on a widespread basis, as it is has been in the past. EDPs will be the norm for most people and the average EDP is not a large income by any means. I guess that most middle age MOD civilians and other public sector employees remain with the government until age 65, which does attract a large pension for most of them. I think it these people that the PM has in mind.

[charliegolf]

Melchett said:

The Armed Forces' Pension Scheme has already been downgraded (for most) through the change to 05.

That, i think, might be the saving grace, at least for current members, and for a while. This is already happening in some areas like teaching. That gives any government the opportunity to talk big and do nothing.

Big talk on climate change and carbon reduction are examples of this. X reduction by 2015- that's 2 more elections away! A lot of long grass then.

CG

[Biggus]

EdSett100

Reference your comment...

"Service to age 55 will not be offered on a widespread basis, as it is has been in the past...."

ACOS manning have, due to a shortage of personnel in the RAF, actively considered the option to extend the retirement age to 60 (as the RAAF have apparently recently done) - but instead, they are going to make more use of extensions past 55 than they have done in the past. In the light of this information I would suggest your comments above are not very accurate....

[jim2673]

FAA Exteneded Career selection signal last year had a splattering of age 55 restrictions. From the last 2 years Ec selections it's apparant that (1) If you have a pulse you 'll get selected.(2) 18% shortfall in SK and Lynx Avionic supervisors as listed in Hansard remains extant and could be quite possibly getting worse.

[Al R]

Melch,

I think we both agree in some areas, but I’m referring to a principle, and the possible consequences of getting it wrong for the people who are possibly going to be the most vulnerable in society and the most cherished by society. The g’ment can’t afford to gamble with the modern practice that you advocate, and which could possibly be right for a bog standard small/medium sized company. The methodology used by the Government to calculate its liability is way out of date, and only the g’ment would dispute that.

In the US (and I stand by to be corrected) the amount transferred into this ‘fund’ is a percentage of the serviceman's basic pay. So.. if the RAF was to implement policies that affect the future value of retirement benefits, it would see the ongoing budgetary consequences of that decision immediately, in the form of an increase or decrease in the amount to be transferred to the retirement fund. Public sector pensions are unfunded, completely - there is no separately managed pot of money drawn on to pay them - so the cost to us all is calculated using gilts, which have yields indexed to inflation. And now, that is not only out of date and dangerous practice, but badly f:mad:ked up as a consequence of the current malaise.

Our pensions (and I get one too) aren’t funded from annual budgets. The military one is rubber stamped by Parliament annually after estimating how much money is going to be needed for the year ahead and adding that amount to the existing budget on a ‘pay-as-you-go’ basis and by using a Prerogative Instrument. This system has worked well as far as paying retirees go, but it does not hold policymakers responsible and/or accountable for decisions made today, or for the money, affecting the size of the future MoD retirement bill. The number of deferred members too, is massive and it won’t be for 15-20 years that our massive (by today) Cold War army wants its money. What then?

If however (and is this what you’re advocating?) the military was compelled to transfer into a fund the amount necessary to pay for future retirement commitments, and invest that, the situation might be better, but it would also expose the military community to factors such as the credit crunch. Then, can you imagine the carnage? You refer to ‘short term balance sheets and political aspirations’ but it isn’t that easy - I referred earlier to the carnage of getting it wrong. It is a no win situation, but by doing nothing, the problems are only going to mount up. Forget 'blame' - thats not the issue anymore.

[Pontius Navigator]

I guess that most middle age MOD civilians and other public sector employees remain with the government until age 65, which does attract a large pension for most of them. I think it these people that the PM has in mind.

EdSett, I take issue with that statement and want to set the issue straight.

Had I been a full career civil servant I would retire on half pay after 40 years service. That would be 25% lower than my service pension was after 38 years service a number of years ago.

The CS pension is also contributable in the same way as a serviceman's. The comparable pay is far lower (I am not saying it is wrong or too low) and the pension benefits are much lower too.

It says on the tin, a gold plated pension for a lower than average wage. It is was true and it remains true for the bulk of the CS below SCS level.

[Old Ned]

Hang on guys. MPs have to vote for this first and as they always vote MASSIVELY for their own increased salaries, I can't really see them voting too soon or too seriously for an effective pay cut in retirement. It could take years to agree, and it is probably only a ruse to try and get our eyes off the appalling mess Brown and Darling have put us all in anyway.

Many Pruners have squarely hit the nail. It is the ludicrously bloated Labour client state (including the civil service) that has caused this mess. The government, of whatever hue, has always taken money in with one hand and immediately paid it out with the other. This week's national insurance contributions are paid to pensioners and benefit recipients next week.

Remember that it was Nye Bevan - one of the founders of the Welfare State - who used to say: "The great secret about the National Insurance fund is that there ain't no fund."

Pip pip

ON

[KeepItTidy]

Well the current advertisement for all armed forces jobs includes the words a great pension as well as many other perks.
If they were going to get people to join up and then remove that so called perk then I would suspect it may lead government in to trouble.
The forces already have moved to the new pay scheme which pays out more at 55 rather than the pay now 75 scheme.

So I have to agree with what EdSettt says I think this is more based on the civilian sector rather than small percentage of troops who manage to get a pension after 22 years.

God knows either way we all agree it will not go down very well with everyone. I know I will be voting next election

[Pontius Navigator]

And all this brouhaha about huge directors' bonuses - bonus £1,000,000 pass £400,000 straight to Alastair.

Cut the bonus, increase profits, and Alastair still takes his cut with corporation tax. So what really focusses their attention is lower pay, bonus and profit which all hit the tax take.

Give the banks £10bn and £4bn comes straight back and another £900m in VAT. And of course another slice in fuel tax, road tax, car tax etc etc. Win-win for someone. I would be surprised if the treasury actually forked out more than £3bn.

[Saintsman]

What galls me is that it was Broon who created the mess in the first place when he robbed pension funds to fund his plans. If it wasn't for that, final salary schemes would probalbly still be the norm.

[NURSE]

Its is interesting to listen to various Govt ministers and their Shadows when challenged about public sector pensions. When its in general terms its all about finishing final salary schemes for Public servants. But when asked about specfic groups servicemen, Frontline NHS staff etc they get a little more coy as they know that attacking those groups is a vote looser. Maybe they should look closley at the civil service itself and cap some of the senior pensions. Or as was sugested in Yes Prime minister link pensions to honours either you get a gong or you get index linking.

[Pontius Navigator]

when asked about specfic groups servicemen, Frontline NHS staff etc they get a little more coy as they know that attacking those groups is a vote looser. Maybe they should look closley at the civil service itself and cap some of the senior pensions.

I would not disagree about senior civil servants.

Of other groups such as servicemen and NHS their may be wider public vote sympathy but consider the wider civil service.

Job centres, local government, ministries etc. They also carry a vote and given the proportion of the work force on the Government payroll it is probably a given that the public service workers could elect a Government despite the counter vote of private sector workers, may of whom are on Government contracts too.

Killing the final salary scheme will come but it will be no short term financial panacea.

[Rigger1]

I’m shocked and yet again dismayed to read all the people on here saying they wish they were paid the same as the private sector. Some of you are in for a real shock when you leave, most of the pilots will be ok, some of the officers will but not all and as for the rest of you .... IT IS NOT GOLD PLATED OUT HERE. I’ve just had Sqn Ldr ops guy who has just started work under me and he was happy to be able to get £29K, he has had a real shock.
I recently (2 years ago) worked for a large defence contractor in a position equivalent to Flt Sgt / WO and was on £23k. I know a lot of SNCO’s and above who come out and can only get jobs paying around 20k, and then I read (again) on prune how people wish they were paid the same as us civvies. OK some ex guys have the pension, but please, when you all come out, get back on here and tell us what it’s really like, not all the BS the resettlement people tell you.

[GOLF_BRAVO_ZULU]

Interestingly, or irritatingly, not Senior CS who signed on to retire at 60 now have to resign at 60. The option to continue to 65 has now become the expectation and "default" position.

Best to bugger off at the earliest option before the rules silently change, again.

[NURSE]

Rigger totaly agree have over the years seen many ex servicemen when leaving the services suddenly get the reality check of what the real world is willing to pay them compared to what the armed forces is willing to pay them.
Same goes for civil servants. My wife who works in local government but came from an industry background sees how people in Local Government think they are worth their comparable to industry salaries but don't have the levels of responsibility or risk someone in the same job in industry has. And I would say the same goes in the NHS.
Public service is a very different beast from industry in some areas the levels of responsibility are way ahead of industry in others not so. Its not helped by Govt amalgamating the pay systems to try to make pay fairer/simpler.
If I was in the forces doing the job i do now even with x factor taken away I would be about 3-4,000 better of a year. If I worked in Private sector I would have less responsibility as the patients they see are not usually as life threatening I would be 1-2,000 worse off. But how can some of the management grades justify their salaries? The chief Exec of an NHS trust isn't as exposed as the Chief Exec of a Buissness he is more like the Branch manager. Maybe the govt needs to look at the realies of some senior public sector jobs and face the truth that the huge salaries, bonuses and perks don't bring in Good management from the private sector as the good management in the Private sector doesn't always have the skills to run a public service. Or if they are that good Industry will always pay more to retain them.

[Vage Rot]

.... IT IS NOT GOLD PLATED OUT HERE. I’ve just had Sqn Ldr ops guy who has just started work under me and he was happy to be able to get £29K

Ah - but he's not now spending 4-6 months of every year living in a **** hole in the desert and getting shot at!!

Personally, I was debating leaving or staying. I'm in until 55 and would have to PVR but any hint of not getting my pension until 60 or 65 and I'm off NOW!

I can see this being a HUGE retention issue, if you are past your IPP then why stay? If you are under 30 then why stay any longer for a poor pension? Leave sooner rather than later and, by the time that you retire, you will be higher up in the new company.

Now, if they increase our pay by the 10% that it is abated (yes, our scheme isn't truly non contributory) then we can take out private pensions with the extra money. Chance of that? Zilch, it's being paid to RBS and Lloyds staff in bonuses as we speak!

Also, if they change our pension scheme from the one to which we contracted, can we take the CETV to a new scheme!??? Doubt it!

Nope, definitely time to go!:ugh:

[charliegolf]

Ah - but he's not now spending 4-6 months of every year living in a **** hole in the desert and getting shot at!!


Are there many occurences of Sqn Ldr Ops getting shot at?

CG

[VinRouge]

Obviously spoken by someone who has not had the sh*t shelled out of them in Basrah then.... :mad:


They simply could not get away with this. There is a rather strict no retrospection rule.

What I think is more likely is a change in the rules for those joining in the near future...

Far easier (legally) to change for those that have not yet signed up.

As for where they will get the cash from, I hear the BOE are firing up the printing presses as we speak, after the B*stards that pr00ne has voted for have led us down into the worst economic crisis in the past 90 years.

[L1A2 discharged]

In reply to Rigger 1.

It is not gold plated out here, but its ok. If I include the pension I am on considerably more than when I left, slightly under if I dont. But I am not going OOA.

Still paying 40% tax on a big chunk .......

Had 2 pay rises since joining the company, with more responsibility come greater rewards - and risks.

No mortgage, no one shoots at me (this week anyway), organise my own trips and then have transport and accomm etc booked for me.

[Seldomfitforpurpose]

Rigger,

That was a most refreshing change from the usual "I earm way more now that I used to" fiction that the majority of ex serviceman posting on Pprune somehow feel the need to share with us :ok:

[Beatriz Fontana]

Have to say that in my experience, the jobs that me and my colleagues do are paid at least 40% less than comparable jobs in the private sector. We've had some issues with recruiting, until now that is as the economic downturn has made the public sector more attractive.

Depends entirely upon what career you choose. Doesn't take away the fact that traditionally the pension was a key draw to public service and the government of the day is going to have one nasty shock if the scheme is completely reformed.

Although I have to say that many departments have reformed their pensions and ended the final salary scheme up to a decade ago. It's the old, not-so old hands mid-career, retired military who join the civil service and those just below SCS that are going to be the problem areas.

[The Gorilla]

Seldom
Fiction?
Just make sure you pick the right industry to retire into!
:ok:

[MReyn24050]

I recently (2 years ago) worked for a large defence contractor in a position equivalent to Flt Sgt / WO and was on £23k. I know a lot of SNCO’s and above who come out and can only get jobs paying around 20k, and then I read (again) on prune how people wish they were paid the same as us civvies. OK some ex guys have the pension, but please, when you all come out, get back on here and tell us what it’s really like, not all the BS the resettlement people tell you.

Several years ago I was offered a job by Westlands within their Product Support Department. However, when hearing the terms of employment, I stated that the pay they were proposing was less than I was getting in the Service the response was "Well you are getting your Service pension which will make up the difference". The answer was "Goodbye Westlands".

[Al R]

Seldom,

I couldn't earn any less. :uhoh:

[Melchett01]

Several years ago I was offered a job by Westlands within their Product Support Department. However, when hearing the terms of employment, I stated that the pay they were proposing was less than I was getting in the Service the response was "Well you are getting your Service pension which will make up the difference". The answer was "Goodbye Westlands".

And were those terms of service the same as those on offer to others without a service pension? Surely there must be something in employment law which says you can't pay an individual less just because they have a separate and completely unrelated source of income?

[MReyn24050]

were those terms of service the same as those on offer to others without a service pension?
At the time I had no idea and I certainly did not bother to find out as I had had a much better offer elsewhere.

[Twon]

Altering either AFPS 75 or 05 could have many problems; these, to name a few:

- Do we get the notional 11% back in our pay to allow us to fund our own pension pot?
- If the enforced retirement age is 55, can they defer payment to 65?
- If there are no option points you lose both the pension "trap" retention and possibly lose people earlier or gain an ageing service population who try to stay until 55.

I'm sure there are lots more issues, particularly emotive ones, but the first point has been commented on before; if our take home pay is less because we have a great non-contributory scheme, what happens when that scheme goes - does pay go up? Will there have to be changes to the retirement age, possibly up to state pension age!! What incentives will have to be introduced to retain those no longer motivated by the pension trap?

Answers on a postcard/postage stamp, please.

[Melchett01]

So anyone had any more thoughts on where those of us on AFPS 75 will stand if Cameron and his mob get into power next year? The Telegraph today doesn't make for comfortable reading in respect of pensions.

This would include a review of lucrative final-salary pension schemes which are now almost obsolete in the private sector.

David Cameron, the Tory leader, and George Osborne, the shadow chancellor, are determined to tackle the “pension apartheid” between the public and private sectors.

Mr Osborne has drawn up plans that would begin by looking at highly paid GPs.

He has identified how some GPs “retire”, taking a full pension, only to be re-employed shortly afterwards as a consultant within the NHS.

A senior Tory source said: “It is clear that this sort of practice has got to stop and this is the area we will look to tackle initially.”

Although far-reaching reforms to public pensions are unlikely to be retrospective, the proposals are certain to trigger an outcry from unions that will test Mr Cameron’s resolve if he wins power.

At the start of a wide-ranging Daily Telegraph series on the Conservatives, Mr Osborne today writes that the country can no longer afford the “large increases in public spending” over which Labour has presided.

And he condemns Gordon Brown for carrying on spending in an attempt to limit the damage to his election chances next year.

He writes: “Most other countries are looking for ways to turn the spending taps off, not to turn them up.”

Mr Osborne is wary about making a commitment before the election to scrap final salary pension schemes, but the inequity between what private sector workers retire on and the current public sector deals will be addressed.

Those lower paid public sector workers, including teachers, nurses and some council employees, will for the large part be left untouched by the Conservative clampdown.

There are five million public sector workers currently entitled to a state pension when they retire, at a cost to the taxpayer of up to £500,000 each.

Local government workers make up the largest number at 1.6 million, followed by 1.5 million NHS staff, 600,000 teachers, a similar number of civil servants, 200,000 members of the Armed Forces, 150,000 police officers and 50,000 firemen.

Most state employees still enjoy generous final salary pension schemes, which means their pension is based on the salary they retire on, with many also “index linked”, keeping pace with inflation.



Are there any members of the Forces Pension Society on here? What's the feeling amongst the FPS about any change of govt. Funnily enough, breakfast news had an interview with a representative of the senior civil service pensions society - he believed these pensions were sustainable!

[VinRouge]

My understanding is (after asking the chap from the afrmed forces pensions society) there can legally be no retrospection. Any changes can only be made to future pensions provision, what you have already earned, you keep.

Can you honestly imagine the tories taking away pensions away from the forces? I cant. They may pare back 1* and above, or set a maximum pension, but would this necessarily be a bad thing? We might actually get air rank with balls as opposed to staying in the job to get a bigger pension.

[Al R]

They wouldn't change existing retirement contracts. Although, in the wider sense, the Tories have said that they will support Pensions Act 2007 provision which sees workplace contracts introduced from 2012, which compel (by default anyway) employee and employer contributions into a pension scheme. Said contracts are being seen by many as an excuse for some employers to dumb down existing arrangements to save money.

[Pontius Navigator]

A similar thing to GPs pensions exists with former service personnel retiring with a pension and then taking up employment as FTRS or CS. They get their pension and then start to build up a second pension. There are penalties and so on before 55 but after 55 you get the full unabated pension.

However these are existing T&Cs so would need to be introduced in the future. So much of what both parites would do are cast far in to the future. Sometimes we forget and suddenly it all goes dark when the legislation kicks in.

[The Gorilla]

AIU which ever party comes to misrule from next June there can be no retrospective action for those who are already in possession of a pension benefit.

They can ONLY alter the T&C's for those who are in a scheme but not yet drawing benefits from that scheme.

At least that is what the trustees of my railway pension scheme have advised its members in a recent newsletter.

TG

[Melchett01]

Gorilla

That's what I am concerned about - namely that as I (and many like me) are not yet drawing our pensions, we will suddenly find the rug pulled out from under us just before we are about to start drawing it.

I'm hoping that the change from AFPS 75 to 05 will be enough to keep thm happy and leave those of us on the 75 scheme to get the benefits we have signed up to and worked for. Given the current state of the country, economy and the general contempt with which we are held by the politicians, I'm getting increasingly worried every time the Tories say anything about pensions. :sad:

What's the betting that any move by a future govt to degrade the AFPS 75 scheme prompts a flurry of people leaving in order to draw their benefits before they are lost

[greycoat]

Back in the early 90s whilst on a UN tour, chatting to a Canadian colleague about a similar topic, he said that in Canada mil pensions had been paid tax free and a change of Govt changed the rules and pensions were then taxed. Not sure how correct this info was, is anyone in a position to comment. If it is correct then could something similar happen here with pensions getting 'special' tax treatment?

[Al R]

Your pension is treated as income and effectively treated as if it were taxed (unless you have the funny pension of course, which is treated completely free of tax). But it is done so by abatement of your tax code - a moot point perhaps, but it does mean that it isn't tax free in the first place, so therefore isn't liable to any further erosion.

The military pension is an unfunded scheme which is based on 'prerogative instruments'. PIs are not subject to approval, annulment or amendment by Parliament - they derive their authority directly from HM and has a kitty which is drawn directly from the 'Consolidated Fund', so the amount would seem safe. The annual amount required fopr each year is voted in in Parliament and it'd be a brave person who dissents.

Under the Naval and Marine Pay and Pensions Act 1865, PIs for the RN and RM are by an Order of Council, for the Army it is the Pensions Warrant 1977 and for the RAF it is the QRs (for the Royal Air Force). Of course, the rules can change for new entrants.

[olddog]

Former service personnel retiring with a pension and then taking up employment as FTRS or CS. They get their pension and then start to build up a second pension. There are penalties and so on before 55 but after 55 you get the full unabated pension.



P Nav

Not unless the rules have changed recently! I served as a regular until age 54 and then 5 years as FTRS. Despite a popular misconception that the full pension is reinstated at 55, my pension was abated for my full period of FTRS service so that I only received the same as my equivalent rank coleagues from pension plus salary (ie Full seniority Sqn Ldr pay while in FO/FL post). I did however accrue 5 years extra pension.

[HarrysHawk]

I am now drawing my pension and I have a separate tax code for this (i.e. pay 40% on all of it) and a different code for my new main job.

Melchett and AIR - thanks for your contributons to this thread. Nice to see a thread totally devoid of nonsense and, instead, containing a lot of informed opinion.

I agree with a couple of other contributors in that, since 1997 when Brown "prudently" raped the pension system of certain tax benefits, the whole shebang has been doomed to crisis. Literally billions each year have been creamed off from this policy, mainly to help pay for the three additional parliaments and all the associated staff and other costs that go along with them. Did you all know, for example, that the main Westminster coffers subsidise the Scots, Welsh and Irish enormously? If each regional parliament was made to be self-sufficient this would go some way to reducing the additional burden carried presently by those in England. Please don't think I have anything against the Scots, Welsh or Irish - I don't. I just fail to see how Brown's vision of a "fair and equal society" works in this instance.

I would like to think that our Servicemen and women will continue to benefit from the pensions they have been promised and rightly deserve. I'm not sure it will actually happen, and agree that should benefits be cut we will see a snow-balling crisis of retention and unrest.

HH

[Al R]

Harry,

I hope you retired as close to April (well, after it!) as possible and I'm not sure of your age, but don't forget (?), pension legislation changes next April. Then, you'll have to be over 55 in order to draw retirement benefits. If you aren't yet 55 but are over 50, then it is is possible for you to continue making private pension contributions, get a further 20 or 40% uplift on all your contributions (depending on your marginal rate - normal or higher rate tax payer) and if you like, then take up to 25% tax free cash next April and draw income from the rest or keep it invested. As long as you're earning what you're chucking in and can afford it, and if it suits you, then its a (potentially) good tax efficient use of military pension payments by recycling additional taxed income/cash.

[Grimweasel]

Al,
Does that include soldiers etc who retire at 40? Does that mean troops will no longer get an immediate pension when they leave after 22yrs etc?

[Al R]

No, sorry - it just refers to private pensions. The mil pension can still be drawn at 40.

[jpboy]

Some well informed comments posted-thanks for the info.

Just to clarify a couple of points and please accept that all opinions are given in good faith and correct to the best of my knowledge. I am in the fortunate position of drawing the pension post PVR having passed the 38 point and in civvie employment offering a final salary scheme after 5 yrs of service. I took advice from an IFA recently re pensions and was told that pension law and contractual law are seperate issues ie. at any time an employer can change your pension provided they offer an alternative. Without wishing to thread creep as to wether HM Forces have contracts I believe that any Air Force Act re pensions could be changed accordingly to alter pension rights for those not allready drawing one.

The fact is that in civvie street few employers offer final salary schemes. Most who did offer them closed them to new employees initially before scrapping the schemes entirely causing much bad blood for those who had the rug pulled from under them. Indeed, this issue is the reason Barclay's employees may well strike in the near future, keep an eye on that case for a taste of what happens in the civvie world as the public sector will follow in due course.

The terms and conditions for HM Forces are hard earned and richly deserved. Fight to retain what you believe is rightly yours, a decent pension is high on that list.

[Vage Rot]

Harry,

I hope you retired as close to April (well, after it!) as possible and I'm not sure of your age, but don't forget (?), pension legislation changes next April. Then, you'll have to be over 55 in order to draw retirement benefits. If you aren't yet 55 but are over 50, then it is is possible for you to continue making private pension contributions, get a further 20 or 40% uplift on all your contributions (depending on your marginal rate - normal or higher rate tax payer) and if you like, then take up to 25% tax free cash next April and draw income from the rest or keep it invested. As long as you're earning what you're chucking in and can afford it, and if it suits you, then its a (potentially) good tax efficient use of military pension payments by recycling additional taxed income/cash.

EEK!! I missed that one! Does that mean that should one PVR after Apr 10 that you don't get your Gratuity and Pension straight away?

If that's the case, I'm off NOW!!

Serious question actually guys and gals, does anyone know?

[Madbob]

As jpboys says "The terms and conditions for HM Forces are hard earned and richly deserved. Fight to retain what you believe is rightly yours, a decent pension is high on that list."

The main difference with the armed forces as an employer when compared with civvy street is the fact that the army/navy/air force really only want 17-38 year-olds in the majority of ranks (both commissioned and non-commissioned) and a spattering of people aged 40 plus, who are either destined for high command, staff positions etc. or else in specialist roles as aircrew or whatever. In which case service to 55 is an option. To get the scewed age profile it chucks loads of people out well before their "sell by date"

By and large though, after age 55 the armed forces don't want you any more (no matter how good or useful you might be) and for many this is where their income peaks. By contrast, in civvy street, many people find that their careers can last another 5 or 10 years and the military pension is a very useful "top up" when having to start a second career late in life.

Take it away and retention levels will plummet, morale will go down the pan and recruitment will suffer too. What is also over-looked is that in the armed forced you can't just give notice and quit. Once you've signed-up that's it - you're locked in. Job security may be some comfort when times are tough outside but it's the last thing you want when the posting's cr4p or there's the offer of a tempting job on the outside.

I can't thing of better ways for an already unpopular, out-of-touch government making itself even more unpopular than by it's cack-handed management of the public purse. :ugh::ugh: There are very good reasons why those in the armed forces need to be treated differently from those in the civil service, NHS, police, fire service etc. and with a war on this is not the time to go changing peoples hard-won pensions.:=

MB (ex jp boy :ok:)

[minigundiplomat]

I cant see them tinkering with pensions just at the moment - it's all most people are staying in for. They would end up with thousands walking, pilots, NCA and engineers & rocks, at a very inopportune time.

When the op tempo drops, as we are repeatedly promised it will, then its a different story. As soon as we start a drawdown in Afg, put on your running shoes!

[Al R]

This is a thread from the recent past that offers much useful insight.

http://www.pprune.org/archive/index.php/t-367455.html

[HarrysHawk]

Harry,

I hope you retired as close to April (well, after it!) as possible and I'm not sure of your age, but don't forget (?), pension legislation changes next April. Then, you'll have to be over 55 in order to draw retirement benefits. If you aren't yet 55 but are over 50, then it is is possible for you to continue making private pension contributions, get a further 20 or 40% uplift on all your contributions (depending on your marginal rate - normal or higher rate tax payer) and if you like, then take up to 25% tax free cash next April and draw income from the rest or keep it invested. As long as you're earning what you're chucking in and can afford it, and if it suits you, then its a (potentially) good tax efficient use of military pension payments by recycling additional taxed income/cash.


AI R,
Thanks for this - I'm nowhere near 50 or even 55. I thought I was reasonably up on these matters but, after reading the above and your link in the previous post, I'm not so sure any more. I retired beyond mid-financial year so will also, it seems, get a smaller incremented total than a colleague who left after the beginning of April.

Are you saying that I may be at risk should the legislation change, even though I am now retired from service and drawing the pension?

I would normally have PM'd this sort of question but feel, in this instance, many others may be in a similar position and might benefit from some additional advice - my IFA certainly mentioned nothing of these issues.

HH

[Al R]

Firstly, no - but having said that, as we know, the g'ment can introduce legislation to do anything if the circumstances are extenuating enough. But, assuming nothing dramatic and unforeseen had happened, military veterans pensions already in payment are safe. Your 'pot' is pre funded by the g'ment, so don't worry, the principle by which it is paid out is safe. If money in circulation ever did run short, the g'ment would simply print more money (and introduce inflationary risk), just as they woud have to do to cover State pension benefits. The amount your pension pays each month could drop, but that would be because it might be linked to an index which, in turn, is deflationary. It would be a brave or desperate g'ment which would mess about with the military pension..

Try and find an IFA who ideally, has a military speciality/knowledge about AFPS 75 and 05.

[Vage Rot]

I sent an email to the pensions people today asking the question. will post the reply when I get it.

[Al R]

Interesting IoD report just published, especially so as the IoD is sometimes seen as a measure of Tory fiscal thinking (I wonder how much of it George Osborne will be drawing on next year..). Either way, pension reform for the future is looming ever larger on everyone's radar.

http://www.iod.com/intershoproot/eCS/Store/en/pdfs/policy_paper_save_50_billion.pdf (http://www.iod.com/intershoproot/eCS/Store/en/pdfs/policy_paper_save_50_billion.pdf)

Item 26: One year pay freeze across the public sector, excluding members of the armed forces serving in conflict zones. The exemption in the pay freeze for members of the armed forces serving in or returning from conflict zones, such as Afghanistan, is morally the right thing to do, and will have a negligible effect on the overall saving.

Item 27: Increase employee contributions to all unfunded public sector pension schemes by a third.

The pensions divide between the public and private sectors has been much discussed. In brief, the main points are as follows:

In the context of a rapidly ageing population, pension reforms will be unavoidable. In the private sector, a combination of demographic pressures, tax increases and more onerous regulation has led to a 41 per cent fall in the active membership of defined benefit (DB) schemes. At the same time, the state pension age will increase to 68 by 2046. By contrast, existing scheme members in the unfunded public sector schemes will still retire at 60.

90% of public sector employees are members of DB pensions, compared with just 12 per cent in the private sector. According to a recent survey of 1,000 IoD members, only 12 per cent of company directors are enrolled in an occupational DB pension, the same proportion as for the private sector as whole, while 45 per cent have no occupational or employer sponsored pension at all.

Excluding member contributions, a public sector pension for a typical employee is worth over 40 per cent of salary, compared with just 7 per cent for a typical private sector defined contribution (DC) scheme. The Institute for Fiscal Studies has calculated that relatively generous pensions add 12% to the salary of public sector employees, over and above private sector employees.

Unfunded public sector pension liabilities are now as much as £1.1 trillion, while the IoD has estimated that the total bailout of public sector pensions (in addition to the already high employer contributions) could reach £335 billion, over £13,000 per household, over the next 50 years.

Given that public sector pay is now higher than in the private sector for all but those at the very top, there is no longer any justification for people to pay, through taxes, for pensions they can no longer afford for themselves. It is fair for public sector employees to contribute more towards the very high cost of their pensions.
The case study on page 23 of this report might strike a chord too.

http://www.policyexchange.org.uk/images/publications/pdfs/Public_Pensions_Final_Jun_09.pdf (http://www.policyexchange.org.uk/images/publications/pdfs/Public_Pensions_Final_Jun_09.pdf)

Though he is quick to point out that the police contribute more as a percentage of their salary than anyone else, he worries about how the Government can continue to pay for these pensions when the population is ageing. “I am part of the baby-boom generation, yet there are fewer young people. I do wonder how they can keep paying these pensions without taxes having to rise.” When asked about his plans for permanent retirement, he says that in spite of his age he cannot afford to do this, and sees himself working indefinitely. When asked about his opinions, he says that he thought that contributing what he did, plus what the police contributed on top of that, if invested over the length of his service ought to give a substantial pension.


He adds that his pension is a fair reflection on what is an “unsociable and dangerous” job in which many men do not reach the end of their service. But if this obligation turned out to be too expensive, it is not for the Government to renege on it: “They have made a commitment at the beginning of your service, and it is up to them to honour it. In the first place, pensions should be formulated in a transparent and sustainable manner which is understood by both the employer and employee.”

[NUFC1892]

An interesting post by Al R but how on earth will the Tories distinguish between those serving or returning from combat zones and the rest. All of us who are medically fit are liable for deployment and go where we are sent, when we are sent. I just don't see linking pay (as opposed to allowances) to operational service as being viable. Perhaps those who are medically downgraded or otherwise unable to deploy should have their pay frozen until they are fit:{. Somehow I don't think so.

34 years served and 4 to go until my pension that I had intended to retire on. Am I worried - you bet!!

[Al R]

Thats a good point, and it crossed my mind too. The only thing I can assume is that the IoD was painting with a broad brush and that it probably didn't differentiate or consider the matter in too much detail - certainly beyond the principle of not shafting the troops under any circumstances.

I don't think you have grounds to worry.

You would have grounds to worry if you were a civvy and if you turned 50 after April 6th next year.. the date that HMRC decided you would have to wait a further 5 years before drawing any civvy pension. I spoke with a woman this week, whose Powergen pensioned husband is 50 on.. (I kid you not) April 6th 2010. :oh: