View Full Version : Pension Trap
26th Nov 2010, 14:36
A crewroom discussion recently brought up the term 'pension trap'. Different ideas were given to when this occurs - consensus being somewhere between 12-16 years serving as an officer - i.e. the run up to IPP.
Does anyone have any figures to support this? or give a better explanation then our simple crewroom musings.
26th Nov 2010, 14:58
Thud, how about you giving your understanding then we can agree or disagree.
26th Nov 2010, 15:42
If they had different ideas does that not mean that there would also be different understandings? Different people could have different views in respect of each idea and different understandings of each view.
I think I will lie down for a spell.
Mr C Hinecap
26th Nov 2010, 16:26
I understand the 'Boarding School Trap' more than a pension trap.
26th Nov 2010, 17:38
I've been party to many similar musings over the years, so for what it's worth, here's my take on it:
Your IPP payments from 38 to 55 are about 150£k. your gratuity if you max commute is about 70£k which is actually worth 115£k if it were untaxed. By my reckoning then, if you leave before your IPP you loose a pre tax amount of approx £185£k. This figure would obviously need to be factored slightly because that 115k is spread over 17 years and gets erroded by inflation each year.On the otherhand, if you also factor in the extra cash you gain each year by chucking 70K at you mortgage at age 38 you gain a bit, but by that point my brain starts hurting.
Ultimately the location of the trap all depends on how much you plan on earning in your last years at the top level of seniority in an airline. Top whack F/L is about 64k ish. By joining an airline say 5 years early, you spend an extra 5 years of your working life earning nearer 100k (if you luck in!) So by my rough guestimation, I'd say about 5 years but I have plenty of mates who left with far less time than that to do simply because they couldn't put up with it all any longer. And for what it's worth, they seem happy doing the BA / Virgin thing rather than counting the pennies thay could have had in the long run.
Sorry I couldn't be more prescise as I think you were after a less vauge answer...what can I say, I learned everything I know from the crew room!!!
PS sorry about the spelling, in a hirry!!
26th Nov 2010, 18:26
Stupid question, but if you PVR what exactly happens to your pension vice if you stayed in to IPP (38/16). My understanding is that, once 55, you will recieve a pension for your reckonable years of service?
I know I could dive into the JSP, but if any of the pension gurus out there know the answer it will save my small brain from having to read through pages and pages.
26th Nov 2010, 19:34
Top whack F/L is about 64k ish
Not if you are PAS on the higher levels! Add about 10K to that figure.:ok:
26th Nov 2010, 20:46
Aye W, 'tis true.
26th Nov 2010, 21:25
Been stuck "Pension Traps" twice - both times by being all prepared to leave and the end of my term and then promoted. To capitalise on each rise meant staying in at least another two years.
Pension boosted - satis.
Eventually left at the 24 year point - more satis!
27th Nov 2010, 00:15
Currently caught in a "FRI Trap" - Kerrrchiinggg! :ok:
One man's trap is another's opportunity as is everyone's personal "enough! time to leave" point.
27th Nov 2010, 01:49
I think if you choose (or are chosen for) redundancy you get to keep the FRI payment:)
27th Nov 2010, 05:58
There will be many variations around a financial theme when reviewing ones status in Pension Trap terms. FWIW I believe it to be 100% an individual matter in which if your own personal circumstance dictates that it would be foolish to leave due to the long term security that an improved pension and associated length of service offers, then you are pension trapped.
My own situation (PAS) is that the PAS system was introduced to retain staff and has been effective in doing this. Should I decide or indeed redundancy decide that my time is done, then EDP (Early departure pay) is not as good a deal then serving full time. The redundancy packages being discussed are no compensation for a few years salary and immediate full pension.
I could argue that I am in a pension trap but the fact is that the equation includes present and future quality of life / EDP v Pension / Salary v Redundancy pay / Time left to serve v new career opportunies. .....and it will never be a 'simple' calculation or black and white answer.
27th Nov 2010, 09:42
Thanks all for you time in posting replies - especially Arty and luchbox.
Approaching my 10 years in the service and wondering whether to jump to the civvy side of life or stick with it. I think it is time to get the ATPL in the back pocket and keep an eye on the airline recruitment.
Thanks again for your inputs - enjoy the cricket/rugby.
just another jocky
27th Nov 2010, 09:43
military lifestyle+sandpit holidays(!!!!!!!)+bullsh@<hidden>+moving every 2 -3 years(although that scope will dramatically reduce after dsdr)+wifey finding it difficult to get job+claims procedure+?
And that equation is different for everyone. ;)
27th Nov 2010, 16:32
no such thing as a pension trap, or a boarding school trap for that matter, just an excuse for those lacking ambition and left behind when others have recognised the right time to move on.
what a complete load of balls. There becomes a point in your service when you're too close to the IPP to even think about leaving. It would be impossible, even with the best skills, ambition and will in the world, to recover the loss of pension earnings by leaving early; unless financial recklessness is something one finds enjoyable.
I doubt you need an explanation of the amount I would lose on PVR or redundancy versus staying in to IPP - the sums made my eyes water and make the BS tolerable for just a few more years.
27th Nov 2010, 18:08
Dry your eyes Princess.
If you don't like the 'BS' then stop stealing rations, man-up and Foxtrot Oscar. It's people like you that undermine morale. I 'manned-up' and walked. Crack-on!!!
27th Nov 2010, 18:20
Manned up and walked, or wimped out when the going got tough?
If that's your thought process MightyImp, then you'll probably find a huge chunk of the RAF's fighting power walking. I don't know what it was like when you left, but I can guarantee you that I know more people that want to leave than want to stay, and to a man - and woman - they have all done the calculations to work out when financially is the best time to go.
Doing your best Clint Eastwood impression and 'manning -up' is all well and good, but it won't pay the mortgage.
27th Nov 2010, 18:30
I can guarantee you that I know more people that want to leave than want to stay, and to a man - and woman - they have all done the calculations to work out when financially is the best time to go.
I fear we could all say these words. Well said none-the-less.
27th Nov 2010, 18:36
Good to be ballsy but agree that mortgage needs paying. £185k to chuck away, I'm either very jealous of your finances or you are so unhinged I don't want to fly with you anyway. I know more people who have burnt fingers from the civvy world than are cashing in. I also think that, having both, to generate an equivalent civvy pension to the mil needs eye watering investment.
27th Nov 2010, 18:36
Not if you are PAS on the higher levels! Add about 10K to that figure.
You can't be PAS pre-IPP, or after 12-16 years service as in the original post.
27th Nov 2010, 18:46
If you don't like the 'BS' then stop stealing rations, man-up and Foxtrot Oscar. It's people like you that undermine morale. I 'manned-up' and walked. Crack-on!!!And when you join the services, they wax lyrical about the benefits of being in the RAF/Army/Navy. Those benefits would not be there unless there was a downside to being in. There comes a point when, as lunchbox legend pointed out, the balance is tipped one way over another. When the banalities of service life become too annoying to want to stay and the benefits are no longer worth the downsides, then is the right time to leave - my potential benefits are still the fat kid on the seesaw. Everybody has their tipping point and you decided you needed to "man-up" and venture into the real world some time ago - good on you! (and be assured I'll be following shortly).
It appears money wasn't a consideration for you when you left:rolleyes: but, to make myself feel better about stealing rations and undermining morale while I wait to collect the pension I've bloody well worked for, I've just asked the JPAC if I can work for free but they said no.
28th Nov 2010, 10:06
Found out on Wednesday that what should have been a routine NSMBOS / Employability Board attendance to confirm a twin pilot medcat restriction due to a one-off anaphylactic reaction to a (bl**dy) langoustine 4 years ago has resulted in my invaliding out of the RN. I so didnt see it coming that the day i found out was the day i moved back down the South West to start refresher flying the following week...
14 years in and happy with the job, RW pilot, signed on until 2024, FRI inbound, etc - now outside by Easter with a medical pension (and 80% drop in household income and 200k mortgage still to service)
Right now, I'd happily still rather be sat in the pension trap, or whatever you want to call it!
I will be appealing the decision, but SDSR is a formidable opponent right now. If anyone has some good snippets of advice, they would be gratefully received!! (numbers for truck driving schools not needed thanks - already got a few of those..)
28th Nov 2010, 12:26
You talk of undermining morale, i dare you to have this conversation about penny counting V's BS in a squadie pub. Good on you for walking, i wont have to share a crew room or a tent with now. Vague recollections of joining for the pride of serving one's country?
29th Nov 2010, 07:54
You have my sympathies as I am in a similar position. A relative died recently of an undiagnosed genetic heart defect and I decided to have it checked out. The consultant found nothing conclusive yet on this basis I have been invited for a 45 minute 'occupational consultation' with my SMO which I believe is the first step towards a medical discharge. At the moment I am in a good position if redundancy occured (although I am in the boarding school trap); but I fear that is there is a vague medical cloud over my health could exclude me from the redundancy fields.
I might add that I am not in a flying tour or anywhere else where my health could impact dirrectly - and immediately - on my work. I have served overseas on numerous occasions without being a burden.