Armed Forces pension
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Biggus,
I agree that guess work is not always helpful. However, the problem is that no one has any facts & there are no accessible official avenues to voice concerns. Enquires to the appropriate SME hit dead ends. At some point there must be a consultation period and these worries OR envisage worries need to be known by those making the decisions on the future pension.
Timing to engage with the workforce is critical. Potential changes could scupper your financial planning for the last 25 years. If so then people may, regrettably, be forced out prior to any changes happening. i.e. at options or on PVR (~mid 2013 to be out by 2015). That is only 18 months away! The air force could lose many experienced & previously loyal staff.
I agree that guess work is not always helpful. However, the problem is that no one has any facts & there are no accessible official avenues to voice concerns. Enquires to the appropriate SME hit dead ends. At some point there must be a consultation period and these worries OR envisage worries need to be known by those making the decisions on the future pension.
Timing to engage with the workforce is critical. Potential changes could scupper your financial planning for the last 25 years. If so then people may, regrettably, be forced out prior to any changes happening. i.e. at options or on PVR (~mid 2013 to be out by 2015). That is only 18 months away! The air force could lose many experienced & previously loyal staff.
Enquires to the appropriate SME hit dead ends
So those that should know don't and those that you would hope might know at least in which direction things are going are remaining silent without so much as an update or indication of what is being considered. Given that level of uncertainty, people will just take what they have and walk if an IP at an option point is the only concrete information they have. Out of interest, has there been any announcement on when we might get an update? Only asking because as part of the diaspora, I generally receive the IBNs about 2 weeks after they have ceased to be meaningful or relevant.
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Join Date: Jul 2007
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I hope its ok to post this here, I know there are some people waiting for news concerning pay news and possible changes to (personal) pension legislation. George Osborne has announced that he is capping public sector pay increases at 1% in the 2 years following the end of the pay freeze. Not sure if this is going to apply to special merit cases though.
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50% tax relief on certain EIS/VCT type investments.. a 12 month CGT holiday on and investments into SEED schemes (must be this: Tax-advantaged venture capital schemes: a consultation - HM Treasury ) - that should make some people happy.. (irrespective of personal Marginal Rate??).
No mentions that I can see or heard concerning changes to Higher Rate tax relief for personal pensions or the taking of (pension commencement) tax free cash, which had been mentioned as a possibility by some.
No mentions that I can see or heard concerning changes to Higher Rate tax relief for personal pensions or the taking of (pension commencement) tax free cash, which had been mentioned as a possibility by some.
Last edited by Al R; 29th Nov 2011 at 12:44.
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It means, in real terms, that over the 4 years of pay cap, public sector pay and pensions will have reduced by about 20%. And that's before any changes to the military pension schemes.
I guess that's why so many in the public sector will be on strike tomorrow.
I guess that's why so many in the public sector will be on strike tomorrow.
One fine chap I work with has done his sums (he is nearly 51) and recons his pension will be worth more if he leaves now and rides the CPI rate rather than the pay freeze/cap. His PVR has been accepted and he is negotiating an early release from the 6 month waiting period.
It's another kick in the teeth.
It's another kick in the teeth.
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It's actually really quite a smart strategy by the government; print more money, accept the high inflation rate that results from doing so, keep interest rates low, freeze public sector pay and pensions, sit tight and wait for the debts to shrink away.
Sadly though, the cost of most PFI deals for provision of a service are index linked! What a dreadful mistake entering into those deals must seem to the Treasury now!
Sadly though, the cost of most PFI deals for provision of a service are index linked! What a dreadful mistake entering into those deals must seem to the Treasury now!
Last edited by LFFC; 29th Nov 2011 at 16:23.
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The Forces Pension Society newsletter today had no significant news on the new pension scheme so some of the alarm is definitely premature and should be saved up for some genuine alarm and necessary desperation in the future.
More alarming I think is the today's 1% cap on top of a 2 year pay freeze. LFFC is quite correct that pension entitlement on leaving will reduce significantly in real terms but inflation is forecast to drop next year (I know, we'll see) so it might not be as bad as 20% but it is bad enough to suggest an immediate exit is worth considering for anyone who can leave.
I think that AFPS 05 has a protection built in for this kind of thing. It would be worth joining the Pension Society and checking before reaching for the Mess Webley!
More alarming I think is the today's 1% cap on top of a 2 year pay freeze. LFFC is quite correct that pension entitlement on leaving will reduce significantly in real terms but inflation is forecast to drop next year (I know, we'll see) so it might not be as bad as 20% but it is bad enough to suggest an immediate exit is worth considering for anyone who can leave.
I think that AFPS 05 has a protection built in for this kind of thing. It would be worth joining the Pension Society and checking before reaching for the Mess Webley!
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One fine chap I work with has done his sums (he is nearly 51) and recons his pension will be worth more if he leaves now and rides the CPI rate rather than the pay freeze/cap. His PVR has been accepted and he is negotiating an early release from the 6 month waiting period.
It's another kick in the teeth.
It's another kick in the teeth.
sideways, you have it right. The chap in question will receive a non-indexed linked pension for over 3 years but at age 55 the indexing against CPI will be applied in a big lump. If he stays in his AFPS75 pension will hardly increase at all and the value of his gratuity will have been eroded by inflation (no pay rise so the only increase in pension will be due to number of years served).
He was surprised how little increase in value his pension would receive by serving the additional 3 or so years and has chosen to take his gratuity and his pension now. The FPS did the calculations for him and it suits his circumstances. I was taken aback by the tiny increase in his pension if he had served the remaining years and it has got a few others I work with in the same age bracket thinking about their life choices!
Comparing an indexed linked pension with non-index linked pay is an interesting prospect for those whose finances have been prepared for retirement.
He was surprised how little increase in value his pension would receive by serving the additional 3 or so years and has chosen to take his gratuity and his pension now. The FPS did the calculations for him and it suits his circumstances. I was taken aback by the tiny increase in his pension if he had served the remaining years and it has got a few others I work with in the same age bracket thinking about their life choices!
Comparing an indexed linked pension with non-index linked pay is an interesting prospect for those whose finances have been prepared for retirement.
Even more glad I "banked" my pension 2 months ago. My pension should grow by 5.2% this year and probably similar next year with only 9ish years to run to index linking again 
Also, glad to have started a new scheme where I get 1/70th for every year I work now until 60.
I suspect it may have been one of the brightest moves of my life...
...I did have to give up the free medical, dental and HTD allowances though.
I also worked out that I was significantly better off doing the resettlement commute. I took £4800 off my pension to raise £39k tax free and I will be paying that for just shy of 10 years (call it £48k). However, as a top rate 40% taxpayer I would be giving the Govt £19200 in tax for that £48k over the same period if I didn't commute; which would mean in real terms I pay £28800 to raise £39k - so I'm £10200 better off over the next 9.6years (call it £1k a year for cash!).
LJ
Also, glad to have started a new scheme where I get 1/70th for every year I work now until 60.
I suspect it may have been one of the brightest moves of my life...
...I did have to give up the free medical, dental and HTD allowances though.
I also worked out that I was significantly better off doing the resettlement commute. I took £4800 off my pension to raise £39k tax free and I will be paying that for just shy of 10 years (call it £48k). However, as a top rate 40% taxpayer I would be giving the Govt £19200 in tax for that £48k over the same period if I didn't commute; which would mean in real terms I pay £28800 to raise £39k - so I'm £10200 better off over the next 9.6years (call it £1k a year for cash!).
LJ
Join Date: Mar 2005
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You're not a top rate tax payer if you are only paying 40%. You are a higher rate tax payer, that is all.
Come back when you gross £150k and then we'll allow you to indulge in a little smugness
Come back when you gross £150k and then we'll allow you to indulge in a little smugness
Whatever!
Yes, I am feeling smug for once. However, I hope my illustration on commutation helps as well?
LJ
Smug: on
PS I grossed more than £150k this tax year but luckily for me £112k is tax free!
Smug: off
Yes, I am feeling smug for once. However, I hope my illustration on commutation helps as well?
LJ
Smug: on
PS I grossed more than £150k this tax year but luckily for me £112k is tax free!
Smug: off
Join Date: Feb 2007
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Smug is working till 55, leaving with a 6 figure handout and a mid 30's pension, topping that up with property rent, never working again because all you bils are paid and spending the rest of your life out of the rat race, travelling far and wide, spending each day in the sun and smiling
Nothing short of a Euro Millions win can possibly top that for me
Standing by for the inevitable queue of the usual suspects telling us military folk how marvelous life is since leaving the service
Nothing short of a Euro Millions win can possibly top that for me
Standing by for the inevitable queue of the usual suspects telling us military folk how marvelous life is since leaving the service
Last edited by Seldomfitforpurpose; 30th Nov 2011 at 07:58.