So you thought your pension was safe!
Join Date: Jul 2007
Location: @exRAF_Al
Posts: 3,297
Likes: 0
Received 0 Likes
on
0 Posts
This is a thread from the recent past that offers much useful insight.
http://www.pprune.org/archive/index.php/t-367455.html
http://www.pprune.org/archive/index.php/t-367455.html
Guest
Posts: n/a
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.
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.
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
Join Date: Jul 2007
Location: @exRAF_Al
Posts: 3,297
Likes: 0
Received 0 Likes
on
0 Posts
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.
Try and find an IFA who ideally, has a military speciality/knowledge about AFPS 75 and 05.
Join Date: Jul 2007
Location: @exRAF_Al
Posts: 3,297
Likes: 0
Received 0 Likes
on
0 Posts
First draft of Tory Budget?
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
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
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.”
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.
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.”
Join Date: Jun 2008
Location: Up where we belong
Posts: 92
Likes: 0
Received 0 Likes
on
0 Posts
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!!
. 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!!
Last edited by NUFC1892; 11th Sep 2009 at 17:40. Reason: added last paragraph, nervously
Join Date: Jul 2007
Location: @exRAF_Al
Posts: 3,297
Likes: 0
Received 0 Likes
on
0 Posts
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.
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.
