Latest on our pensions??
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Gingseng, why do you consider that you "might have to retire" at 54 years old? What circumstances would make you leave the RAF so close to a good pension, which is what it will be for you, if you are high up on either the career or the PAS scale at the time?
Am I missing something?
Am I missing something?
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DPH,
Well, just suppose you become unfit for further service, or your trade is effectively made redundant, or your personal circumstances change so as to make it impossible to continue. It does happen. The comparison I was making was not between leaving early and making the magical 55th birthday. It was between the relative implications of leaving equally (and only a little bit) early from the current and future schemes. This is a risk, however small, that everyone who signs on to 55 will carry and if it happens to you, the financial effects would be significantly different between the two schemes. Remember too that many, particularly in the non-commissioned ranks, will never be offered service to age 55, and therefore will not in future receive a pension at all until their preserved pension becomes payable. What they will get, if they have done 22 years and been in service on their 40th birthday, is an early departure payment worth substantially less than their current pension stream. Starting to get my drift now? Happy to indulge in further discussion. When the time for the choice comes, this will be the most significant financial decision most will have had to make since joining up. We all need to talk about this an awful lot more. Pity the guys and gals who join after 1 Apr 05 - they will never have the choice. Regards
Well, just suppose you become unfit for further service, or your trade is effectively made redundant, or your personal circumstances change so as to make it impossible to continue. It does happen. The comparison I was making was not between leaving early and making the magical 55th birthday. It was between the relative implications of leaving equally (and only a little bit) early from the current and future schemes. This is a risk, however small, that everyone who signs on to 55 will carry and if it happens to you, the financial effects would be significantly different between the two schemes. Remember too that many, particularly in the non-commissioned ranks, will never be offered service to age 55, and therefore will not in future receive a pension at all until their preserved pension becomes payable. What they will get, if they have done 22 years and been in service on their 40th birthday, is an early departure payment worth substantially less than their current pension stream. Starting to get my drift now? Happy to indulge in further discussion. When the time for the choice comes, this will be the most significant financial decision most will have had to make since joining up. We all need to talk about this an awful lot more. Pity the guys and gals who join after 1 Apr 05 - they will never have the choice. Regards
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Ginseng, I'm more than happy to discuss this. I agree that most ground airmen (90%+) will not reach age 55 and those with a choice are best advised to stick with the existing system.
There is also the risk of injury, etc. I believe that those of us who are reasonably certain (as much as you can be, touch wood) to reach age 55, and therefore have only a few years left, will not receive a substantially better pension anyway, due to the short(ish) time in the scheme.
There is a lot of loose talk bandying about, based on the 50% of the final salary (£51K now on Level 20 PAS, rising to £59K in the next 6 years at 2.5% growth), which needs to be addressed. Folk ought to realise that they will only receive one 70th of their final annual pay for every year in the scheme, which will be added to whatever is transferred from the old scheme. I've calculated that a Level 20 PAS MACR, which is what I shall be when I leave at 55 yrs old will get 6/70ths of £59K (£5K) added to whatever I take across in the next year or so, which will probably be about £15K. When compared with what I might have got with the old scheme index linked to my retirement date, its probably about £1K more.
So, do I feel lucky? Is it worth the risk of an unforeseen early departure with a deferred pension at age 65 in order to receive another thousand pounds, approx, every year for the rest of my life? Its not that easy to answer, but with only 6 years to go I think I'll go for it. If it had been 10 years or more...hmmm....doubtful.
Regards
There is also the risk of injury, etc. I believe that those of us who are reasonably certain (as much as you can be, touch wood) to reach age 55, and therefore have only a few years left, will not receive a substantially better pension anyway, due to the short(ish) time in the scheme.
There is a lot of loose talk bandying about, based on the 50% of the final salary (£51K now on Level 20 PAS, rising to £59K in the next 6 years at 2.5% growth), which needs to be addressed. Folk ought to realise that they will only receive one 70th of their final annual pay for every year in the scheme, which will be added to whatever is transferred from the old scheme. I've calculated that a Level 20 PAS MACR, which is what I shall be when I leave at 55 yrs old will get 6/70ths of £59K (£5K) added to whatever I take across in the next year or so, which will probably be about £15K. When compared with what I might have got with the old scheme index linked to my retirement date, its probably about £1K more.
So, do I feel lucky? Is it worth the risk of an unforeseen early departure with a deferred pension at age 65 in order to receive another thousand pounds, approx, every year for the rest of my life? Its not that easy to answer, but with only 6 years to go I think I'll go for it. If it had been 10 years or more...hmmm....doubtful.
Regards
I decide to leave 3 years early because I didn't like what I was hearing about the meddling with pensions, PA spine hollow promises and uncertain greedy Gordon tax thievery. As well as because of all the lies, spin and ever increasing cuts and ever increasing overstretch. Which means that I don't get an inflation-linked pay rise over the next 3 years as a result.
Imagine if the PA spine had been around for the last 10 years and the currently rumoured cuts were just about to hit. If you were 40 and decided to PVR, you'd be well in the $hit. You would have to stay 'locked-in' for another 15 uncertain years of suffering if you weren't to lose out hugely.
As an 'in the know' Binnsworth inmate remarked to me this time last year when I did 8 weeks of Binnsworth porridge - "Don't trust the bug.gers an inch, get out whilst you can. Wish I could"!
Imagine if the PA spine had been around for the last 10 years and the currently rumoured cuts were just about to hit. If you were 40 and decided to PVR, you'd be well in the $hit. You would have to stay 'locked-in' for another 15 uncertain years of suffering if you weren't to lose out hugely.
As an 'in the know' Binnsworth inmate remarked to me this time last year when I did 8 weeks of Binnsworth porridge - "Don't trust the bug.gers an inch, get out whilst you can. Wish I could"!
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DPH
Ah, now you are taking the discussion to even more interesting depths. Remembering that the initial review document spoke of “cost neutrality” and transfer being on an “actuarially neutral basis”, it is possible to make some informed guesses as to what the transfer arrangements might look like. You are probably fairly close to the mark. I suspect the offers will be calculated to place you on exactly the same pension as you would have achieved in the current scheme, assuming you serve to 55. It is just possible that you will be offered the chance to achieve a 50% of final salary pension, but personally, I think pigs might fly.
Why do I say this? Well, I can see no case that HM Treasury would support for offering a substantial increase in pension to someone who has already served a fair portion of their time, purely for agreeing to transfer to a new pension scheme. It has already been stated, for example, that you will not be able to gain more qualifying years on transfer just because your age on joining the current scheme was below the minimum reckonable age at the time (21 for Officers, 18 for OR’s). Nor will additional/specialist pay suddenly become pensionable within the new scheme. Interestingly, although the initial discussion proposals spoke longingly of a true “final salary” scheme, the more recent documents have pointedly used the term “final pensionable salary” (italics mine). This can hide a multitude of sins, since even the current Representative Rates of Pay could fairly be described as your “pensionable salary”.
All of this has probably started to worry some of the PAS personnel, who may be living with the expectation that their higher basic rate of pay will all be convertible to a 50% pension on transfer. Just consider for a moment how the MoD would be shooting itself in the foot if it allowed that to happen. To quote the MoD, additional pay is not pensionable because it has always been paid at rates which recognise that fact; if it were, it would have been paid at lower rates. So is the MoD really going to offer you the chance to convert all of your flying pay to basic pay, and then choose to have it fully pensioned by joining the new scheme? I can hear the pigs getting airborne now! Just consider this quote on Transition from the MoD’s own report on the consultation process:
“Work is being undertaken on the detail of the transfer arrangements. This will need to ensure that the transitional arrangements are not over-complicated to the point that the choice cannot be properly understood and will also need to address the small numbers of scheme members who may be in a position to gain unreasonable benefit from the choices that are given to them on transfer.”
We will all just have to wait to see the detail of our offers, then do the sums, then take independent advice ……………
Regards
Ah, now you are taking the discussion to even more interesting depths. Remembering that the initial review document spoke of “cost neutrality” and transfer being on an “actuarially neutral basis”, it is possible to make some informed guesses as to what the transfer arrangements might look like. You are probably fairly close to the mark. I suspect the offers will be calculated to place you on exactly the same pension as you would have achieved in the current scheme, assuming you serve to 55. It is just possible that you will be offered the chance to achieve a 50% of final salary pension, but personally, I think pigs might fly.
Why do I say this? Well, I can see no case that HM Treasury would support for offering a substantial increase in pension to someone who has already served a fair portion of their time, purely for agreeing to transfer to a new pension scheme. It has already been stated, for example, that you will not be able to gain more qualifying years on transfer just because your age on joining the current scheme was below the minimum reckonable age at the time (21 for Officers, 18 for OR’s). Nor will additional/specialist pay suddenly become pensionable within the new scheme. Interestingly, although the initial discussion proposals spoke longingly of a true “final salary” scheme, the more recent documents have pointedly used the term “final pensionable salary” (italics mine). This can hide a multitude of sins, since even the current Representative Rates of Pay could fairly be described as your “pensionable salary”.
All of this has probably started to worry some of the PAS personnel, who may be living with the expectation that their higher basic rate of pay will all be convertible to a 50% pension on transfer. Just consider for a moment how the MoD would be shooting itself in the foot if it allowed that to happen. To quote the MoD, additional pay is not pensionable because it has always been paid at rates which recognise that fact; if it were, it would have been paid at lower rates. So is the MoD really going to offer you the chance to convert all of your flying pay to basic pay, and then choose to have it fully pensioned by joining the new scheme? I can hear the pigs getting airborne now! Just consider this quote on Transition from the MoD’s own report on the consultation process:
“Work is being undertaken on the detail of the transfer arrangements. This will need to ensure that the transitional arrangements are not over-complicated to the point that the choice cannot be properly understood and will also need to address the small numbers of scheme members who may be in a position to gain unreasonable benefit from the choices that are given to them on transfer.”
We will all just have to wait to see the detail of our offers, then do the sums, then take independent advice ……………
Regards
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Gingseng,
The following info is extracted from Section 7 of the New AFPS - Framework of Scheme (PDF 54Kb) at http://www.mod.uk/issues/pensions/index.htm
Its the overview of how we transfer into the new scheme. The tables mentioned in the text will be interesting.
SECTION 7 – TRANSFERS IN AND OUT
7.1. This section will apply to members who leave service with a preserved pension, or have
not accrued 2 years qualifying service (but see para 2.4), and to members who join or re-join the
new AFPS after having accrued pension benefits in another pension arrangement. Pension
credits arising from a pension share may not be transferred in or out.
Transfers In
7.2. A member who joins or re-joins the new AFPS with pension benefits in another pension
arrangement may apply to have those benefits transferred to the new AFPS, provided that the
member applies within 12 months of joining the scheme. Transfers-in will not be accepted
where an individual is under notice of invaliding or of discharge in some other way.
7.3. An individual who elects to transfer pension rights from another pension arrangement
into the new AFPS will be credited with reckonable service in the new AFPS in respect of those
transferred pension rights, calculated using tables prepared by the Government Actuary’s
Department.
7.4. The transfer value tables will be applied to the transfer value to give periods of
reckonable service for personal pension, lump sum and widow(er)’s/partners’ benefits. The
length of reckonable service credited may, however, be restricted where the limits imposed from
time to time by the Inland Revenue for approved occupational pension schemes or under AFPS
rules for maximum reckonable service would otherwise be exceeded.
7.5. Where a member has pension rights under the new AFPS that have been credited to
another pension arrangement by means of a transfer value payment and those pension rights
are subsequently transferred back into the new AFPS, that service will buy the benefits
determined by the scheme actuary as equivalent to the transfer payment made to the AFPS.
Precise arrangements for transfers-in will be the subject of detailed further work.
7.6. Where service credited within the AFPS is less than service served in the exporting
scheme, the calendar length of the previous service will count for the purpose of the two-year
qualifying period for pension benefits. However, neither actual service in previous employment
nor reckonable service credited in the AFPS will count towards the minimum period of service
necessary for the award of Early Departure Payments or full pension.
The following info is extracted from Section 7 of the New AFPS - Framework of Scheme (PDF 54Kb) at http://www.mod.uk/issues/pensions/index.htm
Its the overview of how we transfer into the new scheme. The tables mentioned in the text will be interesting.
SECTION 7 – TRANSFERS IN AND OUT
7.1. This section will apply to members who leave service with a preserved pension, or have
not accrued 2 years qualifying service (but see para 2.4), and to members who join or re-join the
new AFPS after having accrued pension benefits in another pension arrangement. Pension
credits arising from a pension share may not be transferred in or out.
Transfers In
7.2. A member who joins or re-joins the new AFPS with pension benefits in another pension
arrangement may apply to have those benefits transferred to the new AFPS, provided that the
member applies within 12 months of joining the scheme. Transfers-in will not be accepted
where an individual is under notice of invaliding or of discharge in some other way.
7.3. An individual who elects to transfer pension rights from another pension arrangement
into the new AFPS will be credited with reckonable service in the new AFPS in respect of those
transferred pension rights, calculated using tables prepared by the Government Actuary’s
Department.
7.4. The transfer value tables will be applied to the transfer value to give periods of
reckonable service for personal pension, lump sum and widow(er)’s/partners’ benefits. The
length of reckonable service credited may, however, be restricted where the limits imposed from
time to time by the Inland Revenue for approved occupational pension schemes or under AFPS
rules for maximum reckonable service would otherwise be exceeded.
7.5. Where a member has pension rights under the new AFPS that have been credited to
another pension arrangement by means of a transfer value payment and those pension rights
are subsequently transferred back into the new AFPS, that service will buy the benefits
determined by the scheme actuary as equivalent to the transfer payment made to the AFPS.
Precise arrangements for transfers-in will be the subject of detailed further work.
7.6. Where service credited within the AFPS is less than service served in the exporting
scheme, the calendar length of the previous service will count for the purpose of the two-year
qualifying period for pension benefits. However, neither actual service in previous employment
nor reckonable service credited in the AFPS will count towards the minimum period of service
necessary for the award of Early Departure Payments or full pension.
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DPH
Thanks for that
No surprises here, it merely gives the outline of arrangements that will apply in all cases of transfer in/out of the new scheme, for example if someone joins having previously amassed pension benefits with a previous employer. Whether it tells us anything specific about in-service transfer from the current AFPS to the new one rather depends on the content of the tables refered to, but as yet unpublished. I doubt that the final details have yet been worked out.
Regards
Thanks for that
No surprises here, it merely gives the outline of arrangements that will apply in all cases of transfer in/out of the new scheme, for example if someone joins having previously amassed pension benefits with a previous employer. Whether it tells us anything specific about in-service transfer from the current AFPS to the new one rather depends on the content of the tables refered to, but as yet unpublished. I doubt that the final details have yet been worked out.
Regards
