Pension Trap
 

A crewroom discussion recently brought up the term 'pension trap'. Different ideas were given to when this occurs - consensus being somewhere between 12-16 years serving as an officer - i.e. the run up to IPP.

Does anyone have any figures to support this? or give a better explanation then our simple crewroom musings.

Thanks
TR

Thud, how about you giving your understanding then we can agree or disagree.

PN

If they had different ideas does that not mean that there would also be different understandings? Different people could have different views in respect of each idea and different understandings of each view.

I think I will lie down for a spell.

I understand the 'Boarding School Trap' more than a pension trap.

Thud,

I've been party to many similar musings over the years, so for what it's worth, here's my take on it:

Your IPP payments from 38 to 55 are about 150£k. your gratuity if you max commute is about 70£k which is actually worth 115£k if it were untaxed. By my reckoning then, if you leave before your IPP you loose a pre tax amount of approx £185£k. This figure would obviously need to be factored slightly because that 115k is spread over 17 years and gets erroded by inflation each year.On the otherhand, if you also factor in the extra cash you gain each year by chucking 70K at you mortgage at age 38 you gain a bit, but by that point my brain starts hurting.

Ultimately the location of the trap all depends on how much you plan on earning in your last years at the top level of seniority in an airline. Top whack F/L is about 64k ish. By joining an airline say 5 years early, you spend an extra 5 years of your working life earning nearer 100k (if you luck in!) So by my rough guestimation, I'd say about 5 years but I have plenty of mates who left with far less time than that to do simply because they couldn't put up with it all any longer. And for what it's worth, they seem happy doing the BA / Virgin thing rather than counting the pennies thay could have had in the long run.

Sorry I couldn't be more prescise as I think you were after a less vauge answer...what can I say, I learned everything I know from the crew room!!!

PS sorry about the spelling, in a hirry!!

Stupid question, but if you PVR what exactly happens to your pension vice if you stayed in to IPP (38/16). My understanding is that, once 55, you will recieve a pension for your reckonable years of service?

I know I could dive into the JSP, but if any of the pension gurus out there know the answer it will save my small brain from having to read through pages and pages.

Not if you are PAS on the higher levels! Add about 10K to that figure.:ok:

Aye W, 'tis true.

Been stuck "Pension Traps" twice - both times by being all prepared to leave and the end of my term and then promoted. To capitalise on each rise meant staying in at least another two years.

Pension boosted - satis.

Eventually left at the 24 year point - more satis!

Currently caught in a "FRI Trap" - Kerrrchiinggg! :ok:

One man's trap is another's opportunity as is everyone's personal "enough! time to leave" point.

LJ

I think if you choose (or are chosen for) redundancy you get to keep the FRI payment:)

There will be many variations around a financial theme when reviewing ones status in Pension Trap terms. FWIW I believe it to be 100% an individual matter in which if your own personal circumstance dictates that it would be foolish to leave due to the long term security that an improved pension and associated length of service offers, then you are pension trapped.

My own situation (PAS) is that the PAS system was introduced to retain staff and has been effective in doing this. Should I decide or indeed redundancy decide that my time is done, then EDP (Early departure pay) is not as good a deal then serving full time. The redundancy packages being discussed are no compensation for a few years salary and immediate full pension.

I could argue that I am in a pension trap but the fact is that the equation includes present and future quality of life / EDP v Pension / Salary v Redundancy pay / Time left to serve v new career opportunies. .....and it will never be a 'simple' calculation or black and white answer.

Thanks all for you time in posting replies - especially Arty and luchbox.

Approaching my 10 years in the service and wondering whether to jump to the civvy side of life or stick with it. I think it is time to get the ATPL in the back pocket and keep an eye on the airline recruitment.

Thanks again for your inputs - enjoy the cricket/rugby.

TR

And that equation is different for everyone. ;)

There is a pension trap if you're vaguely capable of maths
 

what a complete load of balls. There becomes a point in your service when you're too close to the IPP to even think about leaving. It would be impossible, even with the best skills, ambition and will in the world, to recover the loss of pension earnings by leaving early; unless financial recklessness is something one finds enjoyable.

I doubt you need an explanation of the amount I would lose on PVR or redundancy versus staying in to IPP - the sums made my eyes water and make the BS tolerable for just a few more years.

@Herc-u-lease

Dry your eyes Princess.

If you don't like the 'BS' then stop stealing rations, man-up and Foxtrot Oscar. It's people like you that undermine morale. I 'manned-up' and walked. Crack-on!!!

Manned up and walked, or wimped out when the going got tough?

If that's your thought process MightyImp, then you'll probably find a huge chunk of the RAF's fighting power walking. I don't know what it was like when you left, but I can guarantee you that I know more people that want to leave than want to stay, and to a man - and woman - they have all done the calculations to work out when financially is the best time to go.

Doing your best Clint Eastwood impression and 'manning -up' is all well and good, but it won't pay the mortgage.

I fear we could all say these words. Well said none-the-less.

Good to be ballsy but agree that mortgage needs paying. £185k to chuck away, I'm either very jealous of your finances or you are so unhinged I don't want to fly with you anyway. I know more people who have burnt fingers from the civvy world than are cashing in. I also think that, having both, to generate an equivalent civvy pension to the mil needs eye watering investment.

You can't be PAS pre-IPP, or after 12-16 years service as in the original post.