Pension Change
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Pension Change
Public sector to lose 'final salary' pensions
Public-sector workers are set to lose their “gold-plated” final salary pension schemes with the publication of a landmark report. The report is expected instead to propose that they receive a portion of their average salary over their entire career in a move aimed at bringing in major savings in future decades.
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Well, as a career Flt Lt, salary averaging is going to work in my favour...
I take relief from this though:
3% I can cope with.
Then this:
Looks as if they get the message - f*ck with our pensions, and there is going to be hell to pay. didnt the original hutton prelim reccommend no changes to AF pensions anyhow?
I take relief from this though:
Lord Hutton, the former Labour work and pensions secretary, is also set to recommend that public-sector staff contribute around three per cent more annually to their pensions schemes in a separate move that will raise £1.8billion a year by 2015-16.
Then this:
Changing the rules for new contributors to go into “career average” schemes would result in significant savings - but these would not be achieved for years down the line.
Current employees would still be able to benefit from more generous final-salary schemes.
Lord Hutton is thought to have ducked away from a more hardline approach because of “political realities,” according to Whitehall sources.
Current employees would still be able to benefit from more generous final-salary schemes.
Lord Hutton is thought to have ducked away from a more hardline approach because of “political realities,” according to Whitehall sources.
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Current employees would still be able to benefit from more generous final-salary schemes.
The work force of tomorrow; and indeed FNGs today, live in a world reaping the wrath of previous mis-management. There is an inevitable overswing and the long term security for new guys now is significantly less in fiscal terms. It may be adjusted to something more palatable in years to come, especially if demand does not match supply. A point for debate would be who is to blame? Is the present final salary pension scheme really untenable if not influenced by external demands on Govt by the financial sector. .....or an insistance by Govt to dance on the world stage as if the Empire remained.
Wind the clock back and we could have retained an appropriate military force, highly motivated and trained, that was armed with the technology required to protect the home nation, and meet our morale comittments to former colony countries. (Independence +50 years). But Govt instead chose us to be an american aircraft carrier permanently anchored off the european mainland.
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It did; Hutton previously stated that SP should not start to pay personal contributions from salary – whether George Osborne accepts that is another issue - we'll have to wait until the budget to find out. Hutton knows that SP have their salary abated (gross) already to take account of the fact that they do not pay an active contribution.
So, if a personal contribution IS to be made, there would have to be a salary increase to compensate for it, and George Osborne has decreed that no public sector is to receive a salary increase for the next two years. It would present a devisive scenario, especially at a time when Plod is being asked to take a pay cut.
If everyone has to move across to the new (career averaging) scheme at outset, then Vin Rouge will be quids in (relatively speaking), compared to someone who is promotion flatlining for a long period and who then gets picked up at the tail end of a career.
The people who could get hurt in the near future are those who might get rolled up into the new National Employment Savings Trust after a full mil career. If you are in that, in your 50s, then somewhere in the region of 2% of your fund will go towards repaying the State start up costs. That investment shortfall mauling is NOT going to be recoverable in a 10 year window.
So, if a personal contribution IS to be made, there would have to be a salary increase to compensate for it, and George Osborne has decreed that no public sector is to receive a salary increase for the next two years. It would present a devisive scenario, especially at a time when Plod is being asked to take a pay cut.
If everyone has to move across to the new (career averaging) scheme at outset, then Vin Rouge will be quids in (relatively speaking), compared to someone who is promotion flatlining for a long period and who then gets picked up at the tail end of a career.
The people who could get hurt in the near future are those who might get rolled up into the new National Employment Savings Trust after a full mil career. If you are in that, in your 50s, then somewhere in the region of 2% of your fund will go towards repaying the State start up costs. That investment shortfall mauling is NOT going to be recoverable in a 10 year window.
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I cannot reply to the Grandfather Rights question with anything beyond logic. But it is so logical that I am confident of being correct.
In my own case, I have contributed to my pension over three decades with a 'hidden' payment from my monthly salary. This hidden payment is also potentially subject to rumour rather then documented fact. However, if true, then I have 'earned my pension', and it cannot be touched.
Based upon previous contentious changes to Terms of Service that I have witnessed over the years, the military will force your hand when accepting any of the following:
1) Promotion.
2) Extension of Service.
3) Structeral Change. Such as trade group amalgamation.
4) Commisioned Service if non-comissioned at present.
A condition of accepting the 'carrot' will be for you to subscribe to the 'stick'. You may turn down promotion/comission but an extension of service offer may eventually force you into a corner. The principle example I can recall concerns the removal of time promotion against reserve rights of pay. It took about 10 years to get as many on board as the system was ever going to achieve, and I dare say a few stragglers remain who have; over the years, rejected offers of promotion.
For the system to mandate a total change of pension policy would be to open the main gate and allow a tsunami of experienced operators to leave. It would be management suicide. Whilst we live in uncertain times; I would like to think that Manning have a grasp on the negative consequences of such action. In fairness, and especially pertinent to redundancy tranche three, Manning do appear to be conducting the slaughter with an element of gentlemanly behavour. ..though 170 baby pilots probably disagree with that.
In my own case, I have contributed to my pension over three decades with a 'hidden' payment from my monthly salary. This hidden payment is also potentially subject to rumour rather then documented fact. However, if true, then I have 'earned my pension', and it cannot be touched.
Based upon previous contentious changes to Terms of Service that I have witnessed over the years, the military will force your hand when accepting any of the following:
1) Promotion.
2) Extension of Service.
3) Structeral Change. Such as trade group amalgamation.
4) Commisioned Service if non-comissioned at present.
A condition of accepting the 'carrot' will be for you to subscribe to the 'stick'. You may turn down promotion/comission but an extension of service offer may eventually force you into a corner. The principle example I can recall concerns the removal of time promotion against reserve rights of pay. It took about 10 years to get as many on board as the system was ever going to achieve, and I dare say a few stragglers remain who have; over the years, rejected offers of promotion.
For the system to mandate a total change of pension policy would be to open the main gate and allow a tsunami of experienced operators to leave. It would be management suicide. Whilst we live in uncertain times; I would like to think that Manning have a grasp on the negative consequences of such action. In fairness, and especially pertinent to redundancy tranche three, Manning do appear to be conducting the slaughter with an element of gentlemanly behavour. ..though 170 baby pilots probably disagree with that.
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Now if 'career average' included all my flying pay...
But would have enhanced your pension.....
When rumours of nuLabor proposals to fiddle with long-standing pension systems started, the pins on my black and yellow came out. When rumours became fact, that, coupled with the whole RAF starting to go incipient, caused me to pull the handle 2 years early - damn glad I did!
When rumours of nuLabor proposals to fiddle with long-standing pension systems started, the pins on my black and yellow came out. When rumours became fact, that, coupled with the whole RAF starting to go incipient, caused me to pull the handle 2 years early - damn glad I did!
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DR
Very good post and pretty much what I observed over a full career as well.
Beags
Agree and did the same myself (except I would delete "nulabour" and insert "all lying b****d politicians of any political persuasion")
Very good post and pretty much what I observed over a full career as well.
Beags
Agree and did the same myself (except I would delete "nulabour" and insert "all lying b****d politicians of any political persuasion")
except I would delete "nulabour" and insert "all lying b****d politicians of any political persuasion"
Such a situation will sadly unfold regardless of the party in power , as 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, so its not really the politicians to blame. We are all living too long and not enough are in work to pay for those alive and in retirement.
The deck of cards is crumbling and its not the fault of the current politicians of whatever persuasion. Its pure demographics.
That said, I would fully support only one part of government keeping final salary pensions and thats the Armed Forces, and not the wider 'non-combatant' MoD or civil service.
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Here's another report; this time from the FT:
Hutton seeks end of state final-pay pensions
Hutton seeks end of state final-pay pensions
By Nicholas Timmins, Public Policy Editor
Published: March 6 2011 22:47
Published: March 6 2011 22:47
In an effort to keep the change as simple as possible, Lord Hutton has come down against a cap on the amount of pension higher earners can receive, or switching them into a form of money purchase pension.
He will argue that the change to career average for future pension earnings will deal with “fundamentally unfair” pensions at the top, where final pay for the highest fliers determines their pensions. In addition, excluding higher earners would remove their contributions, making the taxpayer funding of pay-as-you-go pensions more difficult, not easier.
Under the package, staff would keep the final salary pensions they have earned to date. However, all staff, not just new entrants, would be switched to career average pensions for their future service. There may also be controversy over the index Lord Hutton recommends for increasing the value of the pension earned each year.
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http://www.pprune.org/terms-endearme...roster-fo.html
http://www.pprune.org/terms-endearme...ml#post6287560
Oh dear. Looks as if it is all about to get a bit interesting.
http://www.pprune.org/terms-endearme...ml#post6287560
Oh dear. Looks as if it is all about to get a bit interesting.
Last edited by VinRouge; 7th Mar 2011 at 19:52.
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Yes, he did say that. But Hutton doesn't make the rules, he was taken onboard to offers Osborne advice and bought him breathing time and space, and act as an excuse Patsy. Transiting across to AFPS 13 (or whatever) might not be obligatory, but may well be should you wish to sign on or get promoted. Previously earned rights could well be preserved, so its not so much a loaded gun at your head; more, loaded kid gloves rubbing greedily together as you mull the alternatives.
This may or may not provide (cold comfort) and I hate to be a potential harbinger of doom, but The Armed Forces (Pensions and Compensation) Act was amended to read..
Retirement options are getting wider by the month. As the picture is dumbed down across the board, private company schemes will also come under increasing pressure. I have absolutely no doubt that in 'x' year/years, we will see some budget carriers signing up to NEST in order to mitigate an expensive and long term company commitment. The attitude will be '.. if you don't like it, fine.. then leave.'. There will always be some hungry mouth waiting to take your seat. In all honesrty, I would not be surprised if, in the wake of a massive overhaul, something similar was offered to new recruits. After all, if you are going to make changes, get the bad news out of the way now, rather than drip feed it over the coming years and endure death by a thousand cuts.
The concern within HM Forces is (as far as I can see) that there is going to be a multitude of individuals on differing contracts. Contracts such as PAX for instance, is that it probably is far from being the best product for most people.. but everyone is in it together and so, the blunty or Rock sitting at KAF is paying the same as the EOD operator out on the ground. In contrast, these widely differing levels of beneficial and opaque retirement benefits can only further undermine and dilute military ethos.. or perhaps people just won't care by then - who knows?
Reliance on the company or the MoD is getting a less and less likely option as the months/years go by, especially as the Basic State Pension is also going to overhauled and simplified to 'compensate'. £140 a week, anyone?!
This may or may not provide (cold comfort) and I hate to be a potential harbinger of doom, but The Armed Forces (Pensions and Compensation) Act was amended to read..
(1) The power of the Secretary of State to modify an armed forces pension scheme may not on any occasion be exercised in any manner which would or might adversely affect any entitlement, accrued rights or pension credit rights of any member of the scheme acquired before the power is exercised unless—
(a) the consent requirements are satisfied in respect of the exercise of the power on that occasion in that manner, or
(b) the scheme is modified in the prescribed manner.
(2) The consent requirements are those prescribed for the purpose of obtaining the consent of members of the scheme to its modification.
(a) the consent requirements are satisfied in respect of the exercise of the power on that occasion in that manner, or
(b) the scheme is modified in the prescribed manner.
(2) The consent requirements are those prescribed for the purpose of obtaining the consent of members of the scheme to its modification.
The concern within HM Forces is (as far as I can see) that there is going to be a multitude of individuals on differing contracts. Contracts such as PAX for instance, is that it probably is far from being the best product for most people.. but everyone is in it together and so, the blunty or Rock sitting at KAF is paying the same as the EOD operator out on the ground. In contrast, these widely differing levels of beneficial and opaque retirement benefits can only further undermine and dilute military ethos.. or perhaps people just won't care by then - who knows?
Reliance on the company or the MoD is getting a less and less likely option as the months/years go by, especially as the Basic State Pension is also going to overhauled and simplified to 'compensate'. £140 a week, anyone?!
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Warning of public sector 'exodus’ over pensions
Armed Forces face shock in public pension reforms
From 2015, most of the six million state employees will be expected to retire at the state pension age, which is due to rise to 66 by 2020, under recommendations from Lord Hutton of Furness. Armed Forces personnel, firemen and police officers, who can currently retire in their fifties or even younger, will be denied a pension until they reach 60, he will say.
The Armed Forces, the police and firefighters will have to work until they are 60 and will lose their “gold-plated” final-salary pensions under reforms to public sector retirement benefits to be announced today. Lord Hutton of Furness’ long-awaited report on pension reforms for six million workers includes more than 30 recommendations to overhaul the £30 billion annual public sector pension bill. The key proposal, which will enrage trade unions, is to scrap the generous final-salary scheme for all public sector workers by the end of this Parliament, The Times has learnt. The highest-paid, including doctors, generals, head teachers and top civil servants, could lose tens of thousands of pounds a year from their annual pension in a switch to a less generous scheme linked to the average wage earned during a career.
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Have to see if this affects gratuity and the ability to max commutate. If it does, o think a lot are going to walk... Not least the seniors of wg cdr-star rank who now sound as if they have the option of leaving now or working to much later. Quite frankly, it sucks, but the butchers bill from the last government needs to be paid.
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Vin Rouge
"Have to see if this affects gratuity and the ability to max commutate. If it does, o think a lot are going to walk... Not least the seniors of wg cdr-star rank who now sound as if they have the option of leaving now or working to much later. Quite frankly, it sucks, but the butchers bill from the last government needs to be paid."
That's OK then. As long as it in the name of government profligacy then we should pay. What a load of hoop.
Absolute Betty Swallox. Pay is already reduced. Allowances are reduced and we know there are further MAJOR reductions coming (no entitlement to SFA or SLA post part 2 training - how do you like them apples? massive reduction in BSA). Now our pensions which don't forget we contribute to via a reduction in take home pay.
So if our pensions are now going to reduce massively (average earnings AND RPI to CPI) are we going to see a large increase in our pay packet to allow us to purchase additional pension provision? Not likely.
At the end of the day this is about reducing the cost of the public sector in the long term in order to recude the tax the super rich have to pay. It is a long term goal conveneintly hidden by the financial ineptitude of Blair, Broon and his cohorts.
In my opinion any remaining doubts that the armed forces covenant no longer exists has disappeared. It is time for us to have formal and robust representation in the form of an Armed Forces Federation akin to the police, and modern terms of service offering overtime, fixed hours etc.
This may seem backwards leaning, but the government and the taxpayer must realise you only get what you pay for and the reliance on the goodwill and 'can-do, will-do' attitude of service personnel is over.
'Tommy this and tommy that' indeed.
That's OK then. As long as it in the name of government profligacy then we should pay. What a load of hoop.
Absolute Betty Swallox. Pay is already reduced. Allowances are reduced and we know there are further MAJOR reductions coming (no entitlement to SFA or SLA post part 2 training - how do you like them apples? massive reduction in BSA). Now our pensions which don't forget we contribute to via a reduction in take home pay.
So if our pensions are now going to reduce massively (average earnings AND RPI to CPI) are we going to see a large increase in our pay packet to allow us to purchase additional pension provision? Not likely.
At the end of the day this is about reducing the cost of the public sector in the long term in order to recude the tax the super rich have to pay. It is a long term goal conveneintly hidden by the financial ineptitude of Blair, Broon and his cohorts.
In my opinion any remaining doubts that the armed forces covenant no longer exists has disappeared. It is time for us to have formal and robust representation in the form of an Armed Forces Federation akin to the police, and modern terms of service offering overtime, fixed hours etc.
This may seem backwards leaning, but the government and the taxpayer must realise you only get what you pay for and the reliance on the goodwill and 'can-do, will-do' attitude of service personnel is over.
'Tommy this and tommy that' indeed.
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It does raise an 'interesting' situation - if you need to serve to age 60 to get your pension then how does that fit with having 'lean, deployable forces'? With fewer places in the services can we really have them taken up by old people pushing 60? So the idea of serving until pension will become a thing of the past except for very few, probably very senior officers. Everyone else gets pushed out early with no pension to compensate for the reduced income of having to start a new career at a late age.
So where's the incentive to stay in past about 35? Go early while you can still secure a good second career. If you do stay in the hope of achieving a high rank but don't make it you get forced out in middle age without a financial safety net.
So where's the incentive to stay in past about 35? Go early while you can still secure a good second career. If you do stay in the hope of achieving a high rank but don't make it you get forced out in middle age without a financial safety net.