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NHS pensioners on the scheme I was on which is now closed don't retire at 55 unless you take a hugely lower pension. 60 was the normal age
Its now 67 ( going up to 68 ) and its career average not final salary
You can access the pension at 55. Just you take a penalty (for the extra years of drawing it).
Some can take it still at 50 (a 'protected pension age') if their scheme allowed that when they joined and have remained in it since before April 2006. I know this for sure... as I have done exactly that !!
As for the point of why getting older people to work longer. There's 2 other reasons.
1. It suppresses the employment market in terms of pay (enables the employers get away with not paying as much - supply and demand etc). And guess what - that's what Tories want - employers getting to pay less to workers.
2. It masks the lack of proper training of the younger people for a few years longer - by having the skilled older workers (riding off the back of the decades of the past when people had proper apprenticeships rather than spending to train younger). I'm in an industry where there was a 10 year gap in meaningful recruitment due to Tory decisions in the 1990s. I was one of the last in before it stopped. Now there's a 10+ year gap of experienced people (engineers in my case) behind me. A huge hole where the late 30s and 40-somethings should be. And those older than me (mid 50s to their 70s) all now retired or heading that way. Great for me personally- more work than I can shake a stick at. But shiiiite for the industry and the overall economy. But hey, that's just the typical result of British short term ism and no planning or strategy for anything.
If we want funds for services and retired what we actually need is the opposite- slightly skilled highly educated people in high paid jobs. But this Gov wants to have poorly paid lowly plebs who do as they are told in the masses instead.
You can access the pension at 55. Just you take a penalty (for the extra years of drawing it).
Some can take it still at 50 (a 'protected pension age') if their scheme allowed that when they joined and have remained in it since before April 2006. I know this for sure... as I have done exactly that !!
As for the point of why getting older people to work longer. There's 2 other reasons.
1. It suppresses the employment market in terms of pay (enables the employers get away with not paying as much - supply and demand etc). And guess what - that's what Tories want - employers getting to pay less to workers.
2. It masks the lack of proper training of the younger people for a few years longer - by having the skilled older workers (riding off the back of the decades of the past when people had proper apprenticeships rather than spending to train younger). I'm in an industry where there was a 10 year gap in meaningful recruitment due to Tory decisions in the 1990s. I was one of the last in before it stopped. Now there's a 10+ year gap of experienced people (engineers in my case) behind me. A huge hole where the late 30s and 40-somethings should be. And those older than me (mid 50s to their 70s) all now retired or heading that way. Great for me personally- more work than I can shake a stick at. But shiiiite for the industry and the overall economy. But hey, that's just the typical result of British short term ism and no planning or strategy for anything.
If we want funds for services and retired what we actually need is the opposite- slightly skilled highly educated people in high paid jobs. But this Gov wants to have poorly paid lowly plebs who do as they are told in the masses instead.
Plus tax free cash or cash by commutation?
No. Cash lump sum is an option which reduces headline pension.
You can access the teachers pension at 55, if you started long enough ago to be on the old scheme. You lose 5% per year before 60. No longer final salary but career average. Lump sum has gone. Tracks CPI not RPI (or other way round, which ever is less). They changed payment structures so pay is earned on working days not spread across the year. Which means if you strike or need to take unpaid time off or buy back days there is a much bigger effect.
I'm old enough to be half and half but I may need to work part time after 60 to pay the bills. The problem is as it won't be full time my reduced wage will effect my career average salary.
Me having to work part time makes it harder to find someone to take up my role. Few younger staff are willing to move to the borders for a part time job. I'll be job blocking. As the employer knows this they will only, currently, agree to folk going to 4 days. Which means no new staff and increase pressure on current staff to cover that day.
I’m old enough to be half and half but I may need to work part time after 60 to pay the bills. The problem is as it won’t be full time my reduced wage will effect my career average salary.
How old are you now?
That's counter to the advice I was given (both from an adviser and ringing them up). I was told that if you were in the two schemes you had to come out of both at the same time - so if you wanted the final salary element at sixty you needed to effectively take the average salary section early (with the penalty).
It's a mute point for me as I switched from the English to the Scottish scheme in 2020 and after the fire service age discrimination case all my English service is now in the final salary scheme and my average earnings service is in the Scottish scheme.
Those who can, do, those who can’t, teach lecture
That’s a bit of a harsh sweeping statement there MCTD*.
Sorry, I missed the 😉,but it's a well known phrase and in my head I thought it was obvious it wasn't meant to be taken literally.
No offence to the talented and dedicated teachers on here.
Its now 67 ( going up to 68 ) and its career average not final salary
Yep, wife works for NHS and she would have loved to retire at 60. It is an area where the equality case was used in the wrong way, i.e. raise everyone up to 67 rather than lowering everyone down to 60.
It is not just physically demanding jobs where older people are not at their best. Most people are just simply not as enthusiastic as they were when they were 30 or 40 and just waiting to retire. I am still motivated at 55 but can't see me being the same at 60.
Another option is for part time to become more of a mainstream option as being 60 and working 2 or 3 days a week is more attractive than 5 days a week.
Was listening to Macron last night on the radio, he is framing the increase an ensuring social/financial justice/equity between the generations. I guess implying that if the older works don't pay a bit more in (by working longer), the younger ones will have to, in order to pay for the older worker's pensions....
That's how the maths works out.. if people retire at a younger age, and live for longer, they are even less likely to have contributed enough in the past to cover their post retirement expense to the state and it's more for the (shrinking as a proportion) working population to carry. While I see the point that it's freezing young people out of some jobs, it's not true for the total unless you have a shrinking job pool, and some jobs aren't accessible to older people anyway.
Same argument also applies for why we need children by the way ;-). Not only do very old people need help for some things, they have large expenses and someone needs to pay for those large expenses, and it's not going to be covered by what you paid in 30 years ago..
While I see the point that it’s freezing young people out of some jobs, it’s not true for the total unless you have a shrinking job pool
I would say it is true unless you have an expanding jobs pool.
IMO it is putting the cart before the horse, use government policy to create opportunity to work, increase the % of GPD into wages and give people better choices and opportunity to invest in their own futures and then look at extending possible working life.
Same argument also applies for why we need children by the way 😉
Or immigration
t’s not going to be covered by what you paid in 30 years ago..
I don't think that how it works anyway, what you paid in 30 years ago went to the retired people 30 years ago.
I don’t think that how it works anyway, what you paid in 30 years ago went to the retired people 30 years ago.
Yep, it's unfunded, this years liabilities paid from this years tax take.
You can access the pension at 55. Just you take a penalty (for the extra years of drawing it).
Not for long, changing to 57 the year after I turn 55!
'I don’t think that how it works anyway, what you paid in 30 years ago went to the retired people 30 years ago.'
A lot of people do think that's how it works tho'. I've paid tax all my life, what's in my pot...
To be pedantic IMO 'it is putting the cart before the horse, use government policy to create opportunity to work, increase the % of GPD into wages and give people better choices and opportunity to invest in their own futures and then look at extending possible working life'
I'm not going to disagree with any of that, except that all those things ARE going to raise the retirement age else you run out of people/labour. Or you raise productivity, and move people out of some of the things they do now. Which I ain't going to argue with either.
I thought in recent years average life expectancy had actually dropped which reduces the "we are all living longer" argument
Some civil service pensions are linked to state retirement age, so if the SRA increases, you suddenly can't take your pension for another x years. Nuvos is one that is linked to SRA Got to be a huge saving there pushing the SRA up again. I'm expecting it to be 70 by the time I get there, goal posts keep shifting. I have a small private pension I can access from 60. I hope I will be able to go part time for the last 10 years....
I thought in recent years average life expectancy had actually dropped which reduces the “we are all living longer” argument
Yep, George Osbourne's austerity has stopped 40 years of continual improvements to life expectancy in the UK!
But public sector final salary pensions had to change. Should I make 90 like my dad did I will have been drawing my occupational pension for longer than I paid in to it.
My Grandma made it to 97, 37 years of her private sector pension paying out.
On the other side I worked with a chap that retired at 65 after +40 years with the firm and was dead within 3 months.
Your pension contributions never came close to the true investment cost for the return required in the private sector (multiply your annual pension by 20 to give you an approximate idea of the pot you’d need). The 20x valuation is still lower that the annuity rates that are 25-30x. A pot of £100k will buy you a single person annual pension of £5k that grows at 3%. From 65.
Before the last few years of shitshow Govt the ratio was nearer x40 for based on the documentation I'd received for my numerous DB & DC pensions - but x20 is the number I often see mention 'publicly', any SME know better?
Or you raise productivity
Productivity has been improving at a far higher rate than the contribution (wages) going to workers for the past 40 years. It is just another slight of hand to demand higher productivity from employees.
What really annoys me in these discussions is that the government spent my contributions as revenue then says " there is no real money in the pot"
If that money ( assuming matched or nearly matched by the employer) had been invested even in a stock market tracker what I had deducted from my wages plus emplyers contributionswould be close to what my pension pot is worth. Mine is slightly unusual in that I only have a partial pension record with a big gap in the middle which exaggerates this.
I've only done a back of the fag packet calculation partly from lack of knowledge and partly because its complex but it appears that with those conditions the pot I would need to get my pension in the private sector and what my contributions both personal and matched by employer is not a huge gap Comes out around 75% ie what I paid plus employers contributions given stock market tracking growth is around 75% of the benefit I actually get
There has been a huge misinformation / propaganda campaign over public sector pensions
If anyone wants to do a real calculation then I can provide numbers.
@convert, yeah not simple. I'm 52 by the end, at 69, it'll not be far off 50:50.
In Scotland all of that.
I was looking at the EIS calculator which is as close as I can see SSPA (?) say you won't actually know until you claim it which seem impossible as to claim it I'll have to be quitting.
Yep, it’s unfunded, this years liabilities paid from this years tax take.
and the national debt.
retired at 65 after +40 years with the firm and was dead within 3 months.
And his spouse?
@tjagain I’m happy to look at some sums. It’s all geometric progressions.
The reason DB pensions closed is that companies found their part of the contributions were too high. And funds have to be maintained by law. Typically at least an extra third on top of salary. The government NEVER made any such contributions to any pot. It’s not just what you’ve saved in your pot, which is about a third of the required sum for an annuity.
The distinction between investing and spending is somewhat moot: govt spending grows the economy which allows for future taxation. At the end of the day we still need workers over the next few decades to produce what the pensioners consume.
Comes out around 75% ie what I paid plus employers contributions
the difference is that the employers contributions are way way higher in public roles than they are for people employed privately. I've got a pretty generous pension (compared to other private pensions) and it just means my contributions are matched 1:1 up to 7% of my salary. The NHS employers contributions are 20-30% of salary
5lab - my fag packet calculations are based on 8 - 10 % from me, 4-5% from employer and with underestimates I think of what the growth would be if it had been invested If it really was 20 - 30 % of salery from the employer the two together would give me a much bigger pot.
Tired - I've sent you some numbers via PM. Rather than have the calculations on here See if I have made a major mess of it
the difference is that the employers contributions are way way higher in public roles than they are for people employed privately. I’ve got a pretty generous pension (compared to other private pensions) and it just means my contributions are matched 1:1 up to 7% of my salary. The NHS employers contributions are 20-30% of salary
You missed the word 'now', before "way way".
And if you believe you've got a "pretty generous pension" at an up-to 7% match then that just shows how far down we've come in the last 20 years.
The actual result will, IMO, be a far greater retirement poverty and TBH your pension isn't going to be much (compared to your wages) if you've only 14% PA going in.
It is yet another transfer of 'wealth' from ordinary folk back into the pockets of corporations & the wealthy.
I suppose the flip side is compared to the current generation of retirees most people are now :
Needing the money upfront to pay a massive mortgage.
Two incomes means two pensions.
5lab – my fag packet calculations are based on 8 – 10 % from me, 4-5% from employer and with underestimates I think of what the growth would be if it had been invested If it really was 20 – 30 % of salery from the employer the two together would give me a much bigger pot.
I did some numbers based on the average nurse.
average salary is £34k
9% personal contribution is £3060 per year
5% company contribution is £1700 per year
assuming a fund growth rate of 4% above inflation per year, your fund after 40 years of employment is worth £193k, That buys you an annuity (age 65) of approx £8000
a nurse on average salary with 40 years service would get a pension of £34*40/54 = £25k
3 times as much.
to get to the same £25k pension the employer would need to be putting in 35% contributions.
But it's average salary so that £34k may be final pay point but they'd have started on much less and average across career will be substantially lower. I think at least £10k lower.
Redo the numbers at £25k career average.
Edit £18k and I'd guess that's high.
My predicted teachers pension is not going to be near that, mind you in going at 60 with 30 years
its 10% we pay now
Nurses start on 27000. Career average is a lot lower than the 34000 figure you give
My first job's company pension was 2/3 final salary for the grand cost of 5% salary per year! Each year you accrued 1/40th of your final salary. Fully index linked at RPI.
Obvs it cost the company a lot more than 5% to honour it, but they made it up rather than the employee.
I was on the 1996 scheme which is better than the current one - significantly so
17 years contributions over 32 years with a final salary of 32000 give me a pension of £6600 pa. I have paid around £40 000 in cash. Allow a chunk for the growth say £60 000? add half as much again % for employers contribution its a pot of around £90000. My pension pot was given a nominal value of £125000
think of it as deferred salary if it makes you happier or that the employer matched my contributions. Mine is skewed in that some of my contributions were a long time ago so would have grown more but the gap where I was out of the NHS does not count for years served
Redo the numbers at £25k career average.
Edit £18k and I’d guess that’s high.
lower average salary would affect both numbers similarly - in fact it hits the defined contribution pension more (as the smaller salary base has an affect on the pot for longer).
with a 25k salary, the defined benefit pension gives you £18.5k vs £5680 for defined contribution at 9% + 5%
a pot of around £90000. My pension pot was given a nominal value of £125000
the nominal value of pots is nonsense. at 55, you'd need a £175k pot to buy an annuity giving you £6600 per year - basically double what you would have.
Its not at 55. I retired at 60
There is something very wrong with your numbers. the new scheme is well recognized as being a much worse deal than the old one. Under the old one the best you could get was half final salery so 16 000
Its not at 55. I retired at 60
my bad, you would only need £156k to buy a pot. Still a chunk more than the 90k you'd have on the current scheme.
Under the old one the best you could get was half final salery so 16 000
interesting, what happens to your salary when you get to the 27 year mark (half of the 1/54 year thing)? you just stop contributing?
I think its that Its that career average is much lower for most folk than you claim. Very few get a full contribution record and many have long periods of part time.Indeed full time contracts are very rare nowadays so the career average is nothing like the number you quote
But as you can tell dont really understand this
90K is what I would have in my pot if you allow a small amount for growth and I get 5% employer contribution. Employer matches my contribution and a more optimistic amount for growth over the time then its really quite close.
Put it this way - the same payments into a mortgage would have given me 300K+ cash
But as above - I accept its a great deal on the pensions ( and holidays and sick pay) However many of us see that as compensation for low pay all career. deferred pay if you like
i also accept pensions need change - including private sector need to be boosted significantly
Edit: the government changed the NHS scheme to make it cheaper for them. I cannot believe the average pensioner will get more from it. did they really miscalculate that badly? its also 10% we pay now
I think its that Its that career average is much lower for most folk than you claim. Very few get a full contribution record and many have long periods of part time.Indeed full time contracts are very rare nowadays so the career average is nothing like the number you quote
I don't disagree with any of that, but that also affects any other pension by the same amount. Lets say you're a statistically common woman, you start at 25 and you do 10 years full time, then 5 years off (kids born), then 20 years at 50%, retiring at 60. you've got pro-rata 20 years contributions at the end of your 35 years. if your average full time equivilent salary is 30k, your pension at the end of that was £11k
working the same number on defined contributions, even with more generous numbers (10% for employee, 10% for employer), your pot at the end is worth £122k and that gets you around £5k pension. again, you need employer contributions to be ~35% to get up to a £11k pension
I'm catagorically not saying that £11k is an unfair pension level - just that the cost of that is way more expensive than you make out. public sector pensions are extremely generous and well funded at cost to the public purse. This is ok, but it is not myth.
The myth is that its not affordable - you do realise that the NHS pension fund takes more off staff every year than is paid out? Its also a tiny % of GDP. Just think of it as deferred salary.
Average NHS pension is around £8000 pa
I have always said to folk that nhs terms and conditions are worth 20 - 25% on top of salary compared to private sector
take away our pensions and give us more salary
Aaaaahhhhhhhhh, must resist, I’ve been doing well so far, arrrrgggggghhhhhh, can’t do it anymore (*it’s worse than that as I own an ebike as well), it’s too cold to go out and my eBay offer on a tennis racquet has been spurned. (*I did 18 miles this morning and can report that frozen ridgeway chalk is surprisingly grippy)
The myth is that its not affordable – you do realise that the NHS pension fund takes more off staff every year than is paid out?
“The NHS scheme carries £760bn of liabilities, representing around 35 per cent of the total bill. Its liability increased by £140bn. The income received by the scheme currently exceeds its payments, with the surplus returned to the Treasury.”
“ In our latest forecast, we expect unfunded public sector pensions spending in 2022-23 to total £2.5 billion (reflecting £49.7 billion of total payments less £47.2 billion of contributions). That would represent around 0.2 per cent of total public spending, and is equivalent to £89 per household and 0.1 per cent of national income.”
From https://obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/public-service-pension-payments-net/
https://en.wikipedia.org/wiki/Ponzi_scheme
public sector pensions are extremely generous and well funded at cost to the public purse
Funny how if they were within the Tory ideology they'd be a worthwhile investment.