Pension Change
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60???????????????? What level do you think a 59 yr old will have to reach in the MSFT? It will probably still be higher than an 18 yr old girl!!!! They wont have to do sit ups as it will be a struggle for them to even sit down! As for press ups, not a hope in hell.
More important than that there is no mention of the MP's gold plated pensions in all of this. Then again why am I surprised.
More important than that there is no mention of the MP's gold plated pensions in all of this. Then again why am I surprised.
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I am scheduled to leave in 6 years having completed my 16 years. Do you think that I will still get a pension from when I leave. If this is not the case I can see a lot of people leaving.
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Graham,
The same logic might be applied to the Basic State Pension. The problem is, we have fewer and fewer young workers making headway in the jobs market. By comparison, our potential problem is nothing copmpared to some other's; for instance, Italy.
22/7 Master,
In the first instance, yes, it might be a help. But, if the public perception of the military is changed in order to allign us with police and teachers etc, the long term picture would be eroded. We might get some campaigning top cover generating some good column inches, but then what? What good has that done for the police this week? We have organisations such as the RBL, FPS etc. We need credible organsiations fighting for us; not so much us fighting for 'us' (I accept I am now retired, but old habits die hard..)
Its going to be a very lean 4 or 5 years. I only hope that this is going to be similar to the period at the end of the 70s, which preceded a bouyant turnaround in fortunes a few years later. The difference this time, is that people are now far more cynical and far more inclined to look after #1. This provides some objective assesment of the background to AFPS reform.
http://www.parliament.uk/briefingpap...SNBT-05891.pdf
From this morning;
FT.com / UK / Politics & policy - Hutton urges average salary pensions link
The same logic might be applied to the Basic State Pension. The problem is, we have fewer and fewer young workers making headway in the jobs market. By comparison, our potential problem is nothing copmpared to some other's; for instance, Italy.
22/7 Master,
In the first instance, yes, it might be a help. But, if the public perception of the military is changed in order to allign us with police and teachers etc, the long term picture would be eroded. We might get some campaigning top cover generating some good column inches, but then what? What good has that done for the police this week? We have organisations such as the RBL, FPS etc. We need credible organsiations fighting for us; not so much us fighting for 'us' (I accept I am now retired, but old habits die hard..)
Its going to be a very lean 4 or 5 years. I only hope that this is going to be similar to the period at the end of the 70s, which preceded a bouyant turnaround in fortunes a few years later. The difference this time, is that people are now far more cynical and far more inclined to look after #1. This provides some objective assesment of the background to AFPS reform.
http://www.parliament.uk/briefingpap...SNBT-05891.pdf
From this morning;
But in a bid to reassure public servants close to retirement about the value of their schemes, he told BBC TV on Thursday morning that it would be “quite wrong and legally unacceptable” to remove benefits so far promised. “Everything you’ve currently got, you keep,” he said. “But going forward, I think we’ve all got to share in the cost of rising longevity.”
Bert Angel
I am no expert, far from it, but I thought that for the last 25 years or so that SPs (like other pensions) were portable.
I can certainly remember exRAF guys coming into air traffic with CAA/NATS and moving their service accrued pension in to our scheme.I wish I had been able to do it when I left the RAF in 73. As it is I have nothing to show for my first 10 years of work (apart from a small gratuity)-c'est la vie, the 33yrs I got with NATS still equals a Grp Capt's pension.
So this could be the answer for those who wish to or have to leave in their 30s etc. For pilots joining say BA you may not get year for year, but on retirement from an airline as a captain that pension will easily beat a service pension, apart perhaps AVM and above.
As for the police, well the country can no longer afford folk taking their full 2/3rds pension at age 48 etc.It is well past time that they were brought into line with everyone else.
Standing by for fireworks!
I can certainly remember exRAF guys coming into air traffic with CAA/NATS and moving their service accrued pension in to our scheme.I wish I had been able to do it when I left the RAF in 73. As it is I have nothing to show for my first 10 years of work (apart from a small gratuity)-c'est la vie, the 33yrs I got with NATS still equals a Grp Capt's pension.
So this could be the answer for those who wish to or have to leave in their 30s etc. For pilots joining say BA you may not get year for year, but on retirement from an airline as a captain that pension will easily beat a service pension, apart perhaps AVM and above.
As for the police, well the country can no longer afford folk taking their full 2/3rds pension at age 48 etc.It is well past time that they were brought into line with everyone else.
Standing by for fireworks!
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But in a bid to reassure public servants close to retirement about the value of their schemes, he told BBC TV on Thursday morning that it would be “quite wrong and legally unacceptable” to remove benefits so far promised. “Everything you’ve currently got, you keep,” he said. “But going forward, I think we’ve all got to share in the cost of rising longevity.”
I can't see many front line soldiers wanting to fight at the tender age of 58 or 59. Could imagine it? It would be like a scene from Dads Army. Maybe we should stop giving away 10 Billion pounds a year in overseas aid. How about we look after ourselves for once.
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Brian,
You can transfer out of AFPS, but as a core strategy, what has been accrued to date is a guarantee of income.. so you'd probably be bonkers to do so. What might be added are other measures, such as a personal pension (don't forget the other half), other investment approaches (Investment ISAs/VCTs etc). They diversify your approach to retirement, give you flexibility and more options, and have the potential to offer greater performance and income.
Are these measures needed, however bitter to swallow? The Treasury’s own forecasts show that the public sector shortfall, on the £32 billions paid out this year will rise from £4 billion to £10.3 billions by 2015-16 if there are no changes. By contrast, in 2004-05 the shortfall was only £1.25 billions. That figure of £32 billions is now two-thirds of the total amount paid out through the basic state pension which covers all pensioners – not just the one in five who work in the public sector.
You can transfer out of AFPS, but as a core strategy, what has been accrued to date is a guarantee of income.. so you'd probably be bonkers to do so. What might be added are other measures, such as a personal pension (don't forget the other half), other investment approaches (Investment ISAs/VCTs etc). They diversify your approach to retirement, give you flexibility and more options, and have the potential to offer greater performance and income.
Are these measures needed, however bitter to swallow? The Treasury’s own forecasts show that the public sector shortfall, on the £32 billions paid out this year will rise from £4 billion to £10.3 billions by 2015-16 if there are no changes. By contrast, in 2004-05 the shortfall was only £1.25 billions. That figure of £32 billions is now two-thirds of the total amount paid out through the basic state pension which covers all pensioners – not just the one in five who work in the public sector.
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Does that mean those close to retirement can still go at 55? What do they class as close to retirement? 3 Years? 5 years? When they say we've all got to share in the cost of rising longevity does that mean the MP's as well?
I can't see many front line soldiers wanting to fight at the tender age of 58 or 59. Could imagine it? It would be like a scene from Dads Army. Maybe we should stop giving away 10 Billion pounds a year in overseas aid. How about we look after ourselves for once.
I can't see many front line soldiers wanting to fight at the tender age of 58 or 59. Could imagine it? It would be like a scene from Dads Army. Maybe we should stop giving away 10 Billion pounds a year in overseas aid. How about we look after ourselves for once.
Hutton suggests leaving a number of other similarly important decisions to g'ment (specific accrual rates for benefits, contribution rates and indexation etc). In particular, Osborne also has to decide whether the accrual rate for who leave a public sector pension scheme before retirement should be linked to prices or earnings (there is a recommendation that benefits being accrued should be uprated in line with average earnings for those who remain contributing members of the schemes).
Whowhenwhy and Random,
Hutton suggests it should be possible to introduce these new schemes before the end of this Parliament, in 2015, while allowing a longer transition, where needed, for groups 'such as the armed forces and police'.
People, it's no good asking questions like, "...how does this effect me? I'm leaving in 20XY on AFPS0X having severed for XY years, X of which in my current rank....", etc, etc...
Hutton has set out broad principles, not fine detail, which the government doesn't even have to follow.
At the end of the day all you have at the moment is enough information to worry you, not any detailed information you can use for planning.
Time will lead to more detailed information, no doubt in the classic MOD way of "roadshows", DINs, glossy "Q&A" brochures, rumours on unofficial websites, etc....
It will also no doubt take months to work out the fine details, so be patient people....
Hutton has set out broad principles, not fine detail, which the government doesn't even have to follow.
At the end of the day all you have at the moment is enough information to worry you, not any detailed information you can use for planning.
Time will lead to more detailed information, no doubt in the classic MOD way of "roadshows", DINs, glossy "Q&A" brochures, rumours on unofficial websites, etc....
It will also no doubt take months to work out the fine details, so be patient people....
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Biggus,
Correct - Hutton was tasked with slashing the bill. It seems he has done that. Given the zeal which Osborne has gone about his task in other areas of cost cutting, it seems likely he'll offer a few titbits back, but the general thrust of what Hutton suggests is going to be enshrined I would imagine.
Overall, things could be worse. Hutton has not recommended a cap on the amount of pension higher earners can receive, or proposed switching employees into the cheaper ‘money purchase’ defined contribution schemes which are now the norm in the private sector, or even worse, heading towards NEST.
It gives an ample lead in time for people to realise though, that the times, whether they like it or not.. are a changin'. Its going to be a nasty shock for everyone involved with a public sector pension (me included) but in some ways, its a good thing we now know where the land lies.
Correct - Hutton was tasked with slashing the bill. It seems he has done that. Given the zeal which Osborne has gone about his task in other areas of cost cutting, it seems likely he'll offer a few titbits back, but the general thrust of what Hutton suggests is going to be enshrined I would imagine.
Overall, things could be worse. Hutton has not recommended a cap on the amount of pension higher earners can receive, or proposed switching employees into the cheaper ‘money purchase’ defined contribution schemes which are now the norm in the private sector, or even worse, heading towards NEST.
It gives an ample lead in time for people to realise though, that the times, whether they like it or not.. are a changin'. Its going to be a nasty shock for everyone involved with a public sector pension (me included) but in some ways, its a good thing we now know where the land lies.
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Originally Posted by Brian Nav48
As for the police, well the country can no longer afford folk taking their full 2/3rds pension at age 48 etc.It is well past time that they were brought into line with everyone else.
Cameron has nailed his colours to the mast. He's not interested in dealing with the benefit thieves or the business who avoid tax and vat. That's too hard. It's the PAYE earners he's after. And the first ones to suffer are those that can't take industrial action.
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Graham O
"Public Sector pensions have always been a gigantic Ponzi scheme where the payees of the past are funded by the payees of today and simple demographics determines that such schemes are not going to last"
No such thing as simple demographics and not all Public Sector Schemes are alike. For example, the Local Government Scheme is Funded. To class the AFPS, NHS, Police, Fire and Teachers Schemes akin to a Ponzi is somewhat simplistic. There is nothing unsound about using current income in the form of contributions to a scheme to pay benefits rather than need to "secure them" by having to pay much more in cash to an annuity provider.
In the past the larger funded Private Schemes paid benefits out of cash flow too. The problem facing the Private Sector stemmed from the Lawson tax raid on Schemes in the 1980's when they were prevented from running at too high a surplus (based on Government assumptions) and then had to either spend the surplus or pay tax on it. Having spent their surplus to improve benefits, fund redundancy's etc in the late 1980's and 1990's, they were then hit by changes in pensions law, actuarial assumptions and Browns Tax raid in 1997. They have never recovered. After closing their schemes to new members they then faced increased costs combined with the impact of changing accountancy standards that led to growing deficits being stated in their Annual Shareholder Reports/Accounts.
Another little gem from Nigel Lawson in 1987 led to the cap on the pensionable salary that could be used in any tax exempt pension scheme. That led to a plethora of unfunded schemes and a boom in Boardroom pay as total compensation packages were created to reward Company Directors in lieu of pension schemes.
If the unfunded AFPS was a Ponzi what about the NHS? NI Contributions do not pay for it. At least the Government is now honest enough to call Road Fund Tax for what it always was i.e. a tax for having a car!
If demographics are really the issue this affects the UK as a whole and not just Public Sector Schemes. The cost impact on the future payment of State benefits will dwarf that on unfunded pension schemes. What is the Government planning? To "increase" the Basic State Pension to £140 per week and reduce the qualifying payments needed to obtain this
"Public Sector pensions have always been a gigantic Ponzi scheme where the payees of the past are funded by the payees of today and simple demographics determines that such schemes are not going to last"
No such thing as simple demographics and not all Public Sector Schemes are alike. For example, the Local Government Scheme is Funded. To class the AFPS, NHS, Police, Fire and Teachers Schemes akin to a Ponzi is somewhat simplistic. There is nothing unsound about using current income in the form of contributions to a scheme to pay benefits rather than need to "secure them" by having to pay much more in cash to an annuity provider.
In the past the larger funded Private Schemes paid benefits out of cash flow too. The problem facing the Private Sector stemmed from the Lawson tax raid on Schemes in the 1980's when they were prevented from running at too high a surplus (based on Government assumptions) and then had to either spend the surplus or pay tax on it. Having spent their surplus to improve benefits, fund redundancy's etc in the late 1980's and 1990's, they were then hit by changes in pensions law, actuarial assumptions and Browns Tax raid in 1997. They have never recovered. After closing their schemes to new members they then faced increased costs combined with the impact of changing accountancy standards that led to growing deficits being stated in their Annual Shareholder Reports/Accounts.
Another little gem from Nigel Lawson in 1987 led to the cap on the pensionable salary that could be used in any tax exempt pension scheme. That led to a plethora of unfunded schemes and a boom in Boardroom pay as total compensation packages were created to reward Company Directors in lieu of pension schemes.
If the unfunded AFPS was a Ponzi what about the NHS? NI Contributions do not pay for it. At least the Government is now honest enough to call Road Fund Tax for what it always was i.e. a tax for having a car!
If demographics are really the issue this affects the UK as a whole and not just Public Sector Schemes. The cost impact on the future payment of State benefits will dwarf that on unfunded pension schemes. What is the Government planning? To "increase" the Basic State Pension to £140 per week and reduce the qualifying payments needed to obtain this
Draken55
Ponzi schemes they are in the true definition - the payments for the pensioners today come from the payments made by the workers of today. Every day the difference gets bigger and as soon as the payments of today stop, the pensioners of tomorrow should be concerned.
Kind of yes - but as the Private Sector pensions are driven in large, by what their input is into the savings, then it matters not. Nobody is affected other than the contributor themself. The problem is that with Final Salary Schemes funded by the taxpayer, is that if more money is needed, then the only person unaffected is the pensioner i.e. a complete reverse.
Gordon Browns raid on the private pensions schemes was for one purpose - to give money to the public sector he wanted to bloat.
Us private pension holders have our own little individual funds and what happens to it does not materially affect the pension payments of others. If my pension does not perform well, the taxpayers does not have to give me more to top up.
With Publicly funded pensions, the taxpayers continues to pay, no matter how much is drawn out. Thats the difficult bit for many to accept. Why should someone working in the HMRC doing a back office job be protected against inflation and market pressures more than a painter or decorator when they are on the same salary and the HMRC person takes nil risk in their job?
Do I expect military staff to be on the front line or flying at 60 ? Absolutely not, but there are plenty of worthwhile jobs needed in the MOD between the date individuals are considered not suitable for active duty, and the date they retire. Those days should be used to top up pensions without having to fight. Should MOD staff get better pensions than the police, fire, hospital staff, HMRC - darn right they should but retiring at 50 when they have a good second career earning potential ahead of them seems somewhat unfair.
I support the active military having good pensions for the commitment they put into this country. But at the moment its a little too skewed I feel.
And the state pension to £140 pays for itself. Gordon Brown in his maniacal obsession with screwing anyone who has worked hard for a living and succeeded, obsessed about paying someone who was already on a good pension, with a state pension, so he introduced Means Testing. The cost of that testing is so huge (mainly because of the large number of unemployables-elsewhere that are needed to run it) that stopping testing, saving that money and putting it into their Pension would give every pensioner £140.
If demographics are really the issue this affects the UK as a whole and not just Public Sector Schemes.
Gordon Browns raid on the private pensions schemes was for one purpose - to give money to the public sector he wanted to bloat.
Us private pension holders have our own little individual funds and what happens to it does not materially affect the pension payments of others. If my pension does not perform well, the taxpayers does not have to give me more to top up.
With Publicly funded pensions, the taxpayers continues to pay, no matter how much is drawn out. Thats the difficult bit for many to accept. Why should someone working in the HMRC doing a back office job be protected against inflation and market pressures more than a painter or decorator when they are on the same salary and the HMRC person takes nil risk in their job?
Do I expect military staff to be on the front line or flying at 60 ? Absolutely not, but there are plenty of worthwhile jobs needed in the MOD between the date individuals are considered not suitable for active duty, and the date they retire. Those days should be used to top up pensions without having to fight. Should MOD staff get better pensions than the police, fire, hospital staff, HMRC - darn right they should but retiring at 50 when they have a good second career earning potential ahead of them seems somewhat unfair.
I support the active military having good pensions for the commitment they put into this country. But at the moment its a little too skewed I feel.
And the state pension to £140 pays for itself. Gordon Brown in his maniacal obsession with screwing anyone who has worked hard for a living and succeeded, obsessed about paying someone who was already on a good pension, with a state pension, so he introduced Means Testing. The cost of that testing is so huge (mainly because of the large number of unemployables-elsewhere that are needed to run it) that stopping testing, saving that money and putting it into their Pension would give every pensioner £140.
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Can we afford a non-contributory pension for the armed Forces. Perhaps the RAF, Navy and Army should now pay 14% of their gross pay into their pension scheme.
A larger abatement would be a pay cut, not a popular move especially with troops in Afghanistan etc. Perhaps we could all have a pay rise, with a larger abatement, net increase zero?
mlc
I'm getting in deeper here than I wanted to, but are you saying the police contribute 14% of their salary toward their pension?
I always assumed that like the Civil Service that it was non-contrib', in fact before I joined the RAF I was a cadet with Surrey Police (non-pensionable) and IIRC the real coppers had a non-contrib' scheme. Mind you that was 1963-5.
As to the services, I read somewhere years ago ( brain cells can't recall where!) that military salaries were abated by 9%, or was it 11%,anyway 1 different from 10%, to reflect their so-called 'free' pensions.
I'm not knocking the police but I guess their T&Cs were agreed many years ago when the average PC had been a serviceman first, joined perhaps at 23, served 30 years then had a life expectancy of 10-15yrs on retirement. Now those who join at 18 and serve 30yrs must have a life expectancy of 25 yrs plus I guess.
Al R
I think those exRAF guys who joined CAA around 1990 got a very good deal if they transferred their accrued service pension. I'm told our pension scheme was,maybe is, regarded by IFAs as one of the best.
I always assumed that like the Civil Service that it was non-contrib', in fact before I joined the RAF I was a cadet with Surrey Police (non-pensionable) and IIRC the real coppers had a non-contrib' scheme. Mind you that was 1963-5.
As to the services, I read somewhere years ago ( brain cells can't recall where!) that military salaries were abated by 9%, or was it 11%,anyway 1 different from 10%, to reflect their so-called 'free' pensions.
I'm not knocking the police but I guess their T&Cs were agreed many years ago when the average PC had been a serviceman first, joined perhaps at 23, served 30 years then had a life expectancy of 10-15yrs on retirement. Now those who join at 18 and serve 30yrs must have a life expectancy of 25 yrs plus I guess.
Al R
I think those exRAF guys who joined CAA around 1990 got a very good deal if they transferred their accrued service pension. I'm told our pension scheme was,maybe is, regarded by IFAs as one of the best.
Civil service pensions were non-contributory a long time ago but as the money coming out of the scheme to pay for the pensioners who worked in the past, was becoming such a huge sum that the country could not afford, they had to start paying.
I am not 100% sure but I recall it was the equivalent of 7% on Income tax rates to get the civil service pensions scheme back in the black and that was years ago. And since then its got worse.
I am sure someone knowledgeable can identify how but the civil service pensions deficit is today and how much our taxation revenue is. And that gap is narrowing and if left unchecked, will result in all taxation collected (Income tax, VAT, VED, etc etc) basically just paying civil service pensioners.
I am not 100% sure but I recall it was the equivalent of 7% on Income tax rates to get the civil service pensions scheme back in the black and that was years ago. And since then its got worse.
I am sure someone knowledgeable can identify how but the civil service pensions deficit is today and how much our taxation revenue is. And that gap is narrowing and if left unchecked, will result in all taxation collected (Income tax, VAT, VED, etc etc) basically just paying civil service pensioners.
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I did a presentation on Mr Madoff shortly after he was busted - focusing on two areas: the failure of the regulators and, of more interest here, the philosophy separating his scheme from similar looking "legal" entities, specifcally state funded pensions.
When you get down to it, the philosophy is not so different...they are all ponzi schemes of one sort or another (as was the sub prime industry and Enron). In functionality however they are a world apart, because the government controls taxation, the money supply and dozens of other instruments which allows it to plan the financial future of the economy (note that is not the same as saying that governments are any good at planning the economy!!).
On an individual note, my philosophy throughout my service career was that my pension was sacrosanct. What that meant to me was that...
When you get down to it, the philosophy is not so different...they are all ponzi schemes of one sort or another (as was the sub prime industry and Enron). In functionality however they are a world apart, because the government controls taxation, the money supply and dozens of other instruments which allows it to plan the financial future of the economy (note that is not the same as saying that governments are any good at planning the economy!!).
On an individual note, my philosophy throughout my service career was that my pension was sacrosanct. What that meant to me was that...
- I educated myself completely on my rights and entitlements.
- I made career decisions based on I what I would get on exit.
- I kept abreast of developments.
- I trusted no one where my pension was concerned.
- And if anybody ****ed with my pension, all bets were off and I would take whatever action I needed to look after me and my family.
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Graham why are you going on about civil service pensions? Nobody here gives a stuff about the civil service. This is a Military forum not a civil service forum. What is your military service history?