Pension Lies

[Lima Juliet]

I think that the Govt may be telling a few untruths about the future affordability of the Armed Forces Pensions Scheme. I've just read the AFPS statement of accounts for 2010-11 and it states the cost of the pensions over the past 5 years:

2007 £100.5bn
2008 £97.2bn
2009 £91bn
2010 £120.7bn
2011 £99.7bn

So if the Hutton Report says that the scheme is spiralling out of control - where is the evidence? It actually went down by 20% since last year! And apart from 2009, then 2011 was the cheapest in 5 years (assuming 3% inflation on the 2008 figure).

Any opinions on what I'm missing here? Or is it just another shafting?

LJ

[Henry09]

That is just soooo much money! The amounts do seem to be a little suspect as quoted and I would love to know the reasons for the large changes as seen. I just wish they would come up with a system where we could just sell off our pensions (back to life commutation I guess), they would save loads of money on increases in interest rates over the next 15-20-30 years etc.

[Pontius Navigator]

Interesting.

The present and future data will be a reducing number of potential pensioners getting increasingly large pensions so in relation to the previous years you may have a near static value for new pensions year on year.

From the large air force of the 60s* there will be a large, but reducing, number of pensioners drawing smaller pensions. While the pensions are increasing the numbers drawing will be reducing. Once again the value, as your figures seem to suggest, will be static.

This is in contrast to the national pensions picture with increasing numbers of pensioners drawing increasingly large pensions.

It would appear to be an easy target to suggest the AFPS is unsustainable.

*in particular the larger numbers of full career senior officers. Now we have two ACM then we had many more.

[Lima Juliet]

Here's a link to the report http://www.official-documents.gov.uk/document/hc1012/hc09/0979/0979.pdf

[LFFC]

LJ

These are just my thoughts, so they may be way off the mark, but given their size, I'm presuming that those figures are the projected future costs of the scheme over the subsequent 10 to 20 years.

Regarding the big rise in 2010; at about that time (the figures were probably calculated in 2009) it was just becoming obvious that inflation was going up fast and it was dawning on the government that they had a big problem coming their way.

However, by the time that the figures were recalculated in 2011, the 2-year pay freeze had been implimented, as had the move from RPI to CPI index linking - don't underestimate the impact of that little trick on pensions over 20 years. Together they would easily save 20% over that time frame. Hope that helps.

[Rossian]

.....is the average length of time for a full career person drawing their pension?

Back in 1965 it was three years. I remember F-i-L, aged 89, chuffing about how he'd beaten the odds for so long.

When I was about to retire I asked this same question at a financial forum on the resettlement programme. If any of the whizz kids knew they weren't saying and the insurance guy (who should have had access to the actuarial figures) sort of scuffed his toes on the carpet and said that he didn't have any figures to hand.

So what is it these days?

The Ancient Mariner

[racedo]

Crikey if this is just for the Armed Forces tis no wonder the country is screwed in the future.

Currently the UK working population (i.e.recorded in a job potentially paying some tax maybe not) is 29.6 Million.

The pension costs for the services is £3,334 each for those working and that before doing anything else.

Add in the millions of civil service and local govt workers and reckon its 10 times that.

(Oh lets not get into a slagging match as its not what I was not trying to do just highlighting what an issue it will be in the future)

[Pontius Navigator]

Point I was trying to make earlier is that:

The aging population of pensionable age is increasing.
The pensions in force are increasing. This is a time bomb for the future.

The population of military pensioners is decreasing: exisiting ones are dying and there are fewer to become pensioners. Ergo the military pension time bomb is a red herring.

[teeteringhead]

But Pontius, it's not the military pensions that will cripple us, it's the whole public sector pension time bomb.

NuLabour added IIRC over 500 000 workers to the Public Sector since 1997. As I'm sure you know, a typical CS pension is something like one-sixtieth of final salary for each year served, so one of call-me-Tone's first recruits from 1997 will already have served nearly 15 years, entitling them to quarter pay on retirement - not bad for 15 years - compare and contrast with expectations at IPP!

And of course the NHS remains the World's third largest employer, after the Chinese Army and the Indian Railways .....

So, as you rightly say, us diminishing number of military folk ain't the problem, we are mere small change by comparison. :(

[cazatou]

PN & tth

Neither of you have included the Male "Baby Boomers" from the end of WW2 and the subsequent couple of years in your calculations. To be fair though - I doubt very much whether "Call me Dave" and "Boy George" have taken it into account either!!

[charliegolf]

a typical CS pension is something like one-sixtieth of final salary for each year served,

it's 80ths.

CG

[Tankertrashnav]

Wonder if I can claim to have been the youngest RAF pensioner (leaving aside disability pensions).

Left RAF at age 30 years and 4 days in 1977 under terms of 1975 (IIRC) redundancy scheme. 12 years commissioned service was the minimum for a pension under that scheme. I was entitled to 9/16 of a flight lieutenant's pension (years between 18th - 21st birthday not reckonable).

So at the ripe old age of 64 I have now been on a pension for 34 years, although I have to admit the sum involved is not impressive.

Wouldn't mind making it 50 years :)

[Pontius Navigator]

Leon, in the OP, was talking only of the AFPS and asking where was the evidence for the Hutton report that it was spiralling out of control.

In my OP I mentioned that the numbers of future military pensioners was in decline.

In my subsequent post I said: The population of military pensioners is decreasing: exisiting ones are dying and there are fewer to become pensioners. Ergo the military pension time bomb is a red herring.

Teetreinghead, you said: But Pontius, it's not the military pensions that will cripple us, it's the whole public sector pension time bomb. This is true but it is irrelevant in that the OP was talking about military pensions. I note you did agree that citing the AFPS is small change.

Cazatou, male baby boomers from WW2, of which I am one (and you), is only relevant where they feature in the reducing numbers of military pensioners. Our air force of the 60s had a huge aircrew population that began drawing pensions from the mid-70s (thank you TTN) and that number will already be in decline which will sadly and rapidly decrease over the next 20-30 years.

As an aside, I know of a 3* that swapped wife number 1 for a new model when he was in his early 50s. One assumes that he will draw his pension until around 2035 and wife 2 until around 2060. Now that is a lotta lolly.

[Pontius Navigator]

Cazatout, I think the baby boom issue is probably a minor blip compared with the nulabor induced public sector expansion as a whole and the current non-indigenous population grow this century which will add greatly to the State pension pot problem as well.