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17th Dec 2011 - 10:33am
Max777's AvatarMax777Godlike
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HnS wrote:

The government has confirmed that it will press on with changes to pensions for teachers and civil servants.

The announcement comes despite no agreement being reached with unions over the planned increase in contributions from many staff.

"The government has confirmed it is prepared to ignore the views of the vast majority of the respondents to its consultation on increasing contributions for civil servants, and will try to impose what it has planned to do all along," said a spokesman for the PCS union.

So much for the 'Big Consultation' excercise, we knew what we wanted and are going to do it anyway approach perhaps ?


For an example of teachers' pensions, have a look at this link.

http://www.teacherspensions.co.uk/resources/pension_calculator.htm

Using hypothetical figures of a final salary of £37K and a length of service of 35 years, the calculated pension is £16187 per annum and a lump sum of £48562.

If one assumes that the pension contributions paid by the teacher are £37000 x 35 x 6.4%, total contributions will total just under £83K ( that figure is high as the salary will not have been at that level throughout the teachers career). This means that a teacher will have recovered all their contributions within 2 years of retirement.

Generous?

I was given this information by one of my Friday night drinking pals who retired from teaching in the summer after 35 years service, so I'm pretty sure of how correct it is but if any teachers on the site wan't to dosprove these figures I'd be interested in seeing their calculations.
 

 

17th Dec 2011 - 12:53pm
Dave__Notts's AvatarDave__NottsSite Moderator
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Max777 wrote:

If one assumes that the pension contributions paid by the teacher are £37000 x 35 x 6.4%, total contributions will total just under £83K ( that figure is high as the salary will not have been at that level throughout the teachers career). This means that a teacher will have recovered all their contributions within 2 years of retirement.

Generous?


Totally agree with you if the pension is put under a government matress and never invested in private industry.

If you done the same with any investment you would arrive at the same answer.........it is generous and that is what investment is for.

I would be more impressed if you took your teacher friends example from day one, showed me the investment that was made over the years, and then come up with a figure that shows that his pension contributions do not cover his entitlement.

Dave_Notts
 

 

17th Dec 2011 - 1:57pm
Geordiecpl2001's AvatarGeordiecpl2001Super human rambling
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Pension funds typically invest in a range of things, from buldings to stocks and shares and commodities.

Bet if the teachers contributions had been invested in those over 35 years the 83K would look a whole lot bigger, maybe 10 times bigger. Plus some of it will still be growing whilst he is being paid out.

John
 

 

17th Dec 2011 - 5:24pm
Max777's AvatarMax777Godlike
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Dave__Notts wrote:

Max777 wrote:

If one assumes that the pension contributions paid by the teacher are £37000 x 35 x 6.4%, total contributions will total just under £83K ( that figure is high as the salary will not have been at that level throughout the teachers career). This means that a teacher will have recovered all their contributions within 2 years of retirement.

Generous?


Totally agree with you if the pension is put under a government matress and never invested in private industry.

If you done the same with any investment you would arrive at the same answer.........it is generous and that is what investment is for.

I would be more impressed if you took your teacher friends example from day one, showed me the investment that was made over the years, and then come up with a figure that shows that his pension contributions do not cover his entitlement.

Dave_Notts


Unfortunately it is not invested in private industry, as such but in United Kingdom Plc, which as you must no doubt realise, is bust. So what sort of yield has the investment returned?
 

 

17th Dec 2011 - 5:43pm
Max777's AvatarMax777Godlike
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Geordiecpl2001 wrote:

Pension funds typically invest in a range of things, from buldings to stocks and shares and commodities.

Bet if the teachers contributions had been invested in those over 35 years the 83K would look a whole lot bigger, maybe 10 times bigger. Plus some of it will still be growing whilst he is being paid out.

John



The point is that the contributions have not been invested, other than in UK Plc which is bust.

Have the contributions returned any growth?

I'd be interested to know of any private sector pension funds where the pensioner can expect to recover their contributions within two years of retirement.
 

 

19th Dec 2011 - 1:10am
Dave__Notts's AvatarDave__NottsSite Moderator
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Max777 wrote:


The point is that the contributions have not been invested, other than in UK Plc which is bust.

Have the contributions returned any growth?

I'd be interested to know of any private sector pension funds where the pensioner can expect to recover their contributions within two years of retirement.


Quote:

The Fund is permitted to invest in the following types of investment:

Equities (UK and Overseas)
Company Shares
Managed Funds, unit and investment trusts
Open ended investment companies
Contributions to limited partnerships
Warrants

Private Equity (UK and overseas)

Bonds (UK and overseas)

Index linked securities (UK and overseas)

Property
Direct
Indirect (UK and overseas)

Infrastructure Funds

Cash, temporary loans and deposits

Insurance contracts

Stock lending

Sub-Underwriting

Derivatives

Forward sales of currency


This is where my LA pension contributions were paid into when I paid into the scheme. Can you show me where it is only UK Plc, which is bust?

Dave_Notts
 

 

19th Dec 2011 - 8:12am
Max777's AvatarMax777Godlike
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Dave, the Local Government scheme does not include teachers and also that scheme runs at a net deficit every year and has to be subsidised by taxpayers.
 

 

19th Dec 2011 - 2:24pm
Ben_Minx's AvatarBen_MinxSuper human rambling
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Well, as I may have said earlier, employers pension contributions form part of an overall "reward package". Are the pension figures quoted generous, depends on how you look at it. Is a career peak salary of 37k for a graduate professional generous? I dunno, I do know its not the best paid job compared with others with similar qualifications and that one of the better aspect of the "reward package" is the pension. Another aspect of the " reward package" is the long holidays. You have to look at the "reward package". Did you know, forward thinking employers have "reward packages" that individual employees can tailor to meet their personal needs. You can give up pension for holidays or vice versa or dental insurance health insurance all sorts. The fact that a decent pension makes up for a relatively shit salary (compared to others with similar qualifications) may explain why people are getting a little upset about them being cut.


Max777 wrote:



................

Using hypothetical figures of a final salary of £37K and a length of service of 35 years, the calculated pension is £16187 per annum and a lump sum of £48562.

If one assumes that the pension contributions paid by the teacher are £37000 x 35 x 6.4%, total contributions will total just under £83K ( that figure is high as the salary will not have been at that level throughout the teachers career). This means that a teacher will have recovered all their contributions within 2 years of retirement.

................

Generous?

 

 

19th Dec 2011 - 3:18pm
Max777's AvatarMax777Godlike
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Ben, the figure of £37K was just a figure used to illustrate the pension entitlement. It was in no way meant to define a career peak, I'm sure many teachers earn a higher salary than that, I could have used a head master 's salary of £100K + which is what a union leader would have used to highlight 'fat-cat' salaries/pensions in the private sector.

As you have already acknowledged, there does need to be some reform in the public sector pensions. It is not the fault of the employees that their contributions have not been invested nor that past government have not fulfilled their side of the bargain by not paying it's share of the contributions but at least this government is trying to sort out the mess it inherited. Of course, why they have not just decided to take the easy option and ignore the problem, like all previous governments, leaving the problem for our kids and grandchilren to sort, only they know!
 

 

19th Dec 2011 - 3:55pm
Ben_Minx's AvatarBen_MinxSuper human rambling
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I take your points.
 

 

19th Dec 2011 - 10:23pm
Max777's AvatarMax777Godlike
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Good to see that progress appears to have been made in the dispute........with the exception of Mark Serwotka's PCS Union. Of course he had to struggle by last year on a salary of £89K and pension contributions of £26K. Nice to know we are all in it together!
 

 

21st Dec 2011 - 2:27am
Dave__Notts's AvatarDave__NottsSite Moderator
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Max777 wrote:

Dave, the Local Government scheme does not include teachers and also that scheme runs at a net deficit every year and has to be subsidised by taxpayers.


You are right in that teachers are not in the LG scheme. Yet when I read these threads or the papers they all seem to be lumped together. Some can't see two schemes, they just see Public Servants

The net deficit. I have read a little on this but can't get my head around it as one side says it is a deficit while others say it is there but the likelihood of all employees claiming their pensions tommorrow is ridiculous. So the deficit would never come into play.

Dave_Notts
 

 

21st Dec 2011 - 12:17pm
Max777's AvatarMax777Godlike
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Dave__Notts wrote:

Max777 wrote:

Dave, the Local Government scheme does not include teachers and also that scheme runs at a net deficit every year and has to be subsidised by taxpayers.


You are right in that teachers are not in the LG scheme. Yet when I read these threads or the papers they all seem to be lumped together. Some can't see two schemes, they just see Public Servants

The net deficit. I have read a little on this but can't get my head around it as one side says it is a deficit while others say it is there but the likelihood of all employees claiming their pensions tommorrow is ridiculous. So the deficit would never come into play.

Dave_Notts


From what I understand about the LG scheme is that it has an annual defecit, ie the outgoing payments are greater than the ingoing contributions and the difference has to be funded by the taxpayer.
 

 

21st Dec 2011 - 5:23pm
Bluefish2009's AvatarBluefish2009Godlike
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Max777 wrote:

Dave__Notts wrote:

Max777 wrote:

Dave, the Local Government scheme does not include teachers and also that scheme runs at a net deficit every year and has to be subsidised by taxpayers.


You are right in that teachers are not in the LG scheme. Yet when I read these threads or the papers they all seem to be lumped together. Some can't see two schemes, they just see Public Servants

The net deficit. I have read a little on this but can't get my head around it as one side says it is a deficit while others say it is there but the likelihood of all employees claiming their pensions tommorrow is ridiculous. So the deficit would never come into play.

Dave_Notts


From what I understand about the LG scheme is that it has an annual defecit, ie the outgoing payments are greater than the ingoing contributions and the difference has to be funded by the taxpayer.


I do not wish to fund it, I would rather not pay as much tax and then fund my own pension
 

 

21st Dec 2011 - 7:32pm
Lizaleanrob's AvatarLizaleanrobGodlike
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Bluefish2009 wrote:

Max777 wrote:

Dave__Notts wrote:

Max777 wrote:

Dave, the Local Government scheme does not include teachers and also that scheme runs at a net deficit every year and has to be subsidised by taxpayers.


You are right in that teachers are not in the LG scheme. Yet when I read these threads or the papers they all seem to be lumped together. Some can't see two schemes, they just see Public Servants

The net deficit. I have read a little on this but can't get my head around it as one side says it is a deficit while others say it is there but the likelihood of all employees claiming their pensions tommorrow is ridiculous. So the deficit would never come into play.

Dave_Notts


From what I understand about the LG scheme is that it has an annual defecit, ie the outgoing payments are greater than the ingoing contributions and the difference has to be funded by the taxpayer.


I do not wish to fund it, I would rather not pay as much tax and then fund my own pension


im with you on this blue but i have no problem paying more tax provided it was used for things like better schools,hospitals,industry ect ect
id rathr not pay someones better off future as i think they are resposible for that as i am mine and you are yours (if that makes sence)
 

 

21st Dec 2011 - 7:38pm
Bluefish2009's AvatarBluefish2009Godlike
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Lizaleanrob wrote:


im with you on this blue but i have no problem paying more tax provided it was used for things like better schools,hospitals,industry ect ect
id rathr not pay someones better off future as i think they are resposible for that as i am mine and you are yours (if that makes sence)


thumbup.gif

Makes perfect sense to me Rob
 

 

23rd Dec 2011 - 1:51am
Dave__Notts's AvatarDave__NottsSite Moderator
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Max777 wrote:

Dave__Notts wrote:

Max777 wrote:

Dave, the Local Government scheme does not include teachers and also that scheme runs at a net deficit every year and has to be subsidised by taxpayers.


You are right in that teachers are not in the LG scheme. Yet when I read these threads or the papers they all seem to be lumped together. Some can't see two schemes, they just see Public Servants

The net deficit. I have read a little on this but can't get my head around it as one side says it is a deficit while others say it is there but the likelihood of all employees claiming their pensions tommorrow is ridiculous. So the deficit would never come into play.

Dave_Notts


From what I understand about the LG scheme is that it has an annual defecit, ie the outgoing payments are greater than the ingoing contributions and the difference has to be funded by the taxpayer.


Thats the strange thing Max. You say it is a deficit but the unions and the LG pension groups say the members pay in more than they pay out.

Dave_Notts
 

 

23rd Dec 2011 - 5:05am
Cubes's AvatarCubesSite Moderator
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Dave__Notts wrote:

Thats the strange thing Max. You say it is a deficit but the unions and the LG pension groups say the members pay in more than they pay out.

Dave_Notts

Is that down to the volatility in the investment market over the past few years? I know my pension fund is struggling to show any growth, but my hope is that the units I'm buying at a crap price now will one day be worth more. Unlikely, but it's all the hope I have right now.

In the words of a wise old sage: "The value of your investment can fall as well as plummet"! icon_wink.gif
 

 

23rd Dec 2011 - 9:40am
Ben_Minx's AvatarBen_MinxSuper human rambling
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From the LGPS website.

The LGPS is a valuable part of the pay and reward package for employees working in local government or working for other employers participating in the Scheme, and for some councillors. It provides benefits for you and your family both now and in retirement.

The LGPS is widely viewed as one of the most valuable financial rewards of the job.
You can look forward to your retirement with the LGPS which gives you:

Secure benefits –
the scheme provides you with a secure future income, independent of share prices and stock market fluctuations.

At a low cost to you –
with tax-efficient savings and lower National Insurance contributions for most people under state pension age.

And your employer pays in too –
the scheme is provided by your employer who meets the balance of the cost of providing your benefits in the LGPS.
 

 

23rd Dec 2011 - 10:35am
Max777's AvatarMax777Godlike
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Dave__Notts wrote:

Max777 wrote:

Dave__Notts wrote:

Max777 wrote:

Dave, the Local Government scheme does not include teachers and also that scheme runs at a net deficit every year and has to be subsidised by taxpayers.


You are right in that teachers are not in the LG scheme. Yet when I read these threads or the papers they all seem to be lumped together. Some can't see two schemes, they just see Public Servants

The net deficit. I have read a little on this but can't get my head around it as one side says it is a deficit while others say it is there but the likelihood of all employees claiming their pensions tommorrow is ridiculous. So the deficit would never come into play.

Dave_Notts


From what I understand about the LG scheme is that it has an annual defecit, ie the outgoing payments are greater than the ingoing contributions and the difference has to be funded by the taxpayer.


Thats the strange thing Max. You say it is a deficit but the unions and the LG pension groups say the members pay in more than they pay out.

Dave_Notts


Dave, as ever it comes down as to how statistics are viewed.

Have a look at the following link,

http://www.audit-commission.gov.uk/nationalstudies/localgov/localgovpensions/Pages/Default.aspx#downloads

From the paper in the link, it is true that the scheme has a positive cash flow, meaning that there is more money going in than out but this is after taking into account the employer ( tax payers) contributions which average a whopping 18%. ( ranging from 14-25%)

In 2008-9, the cash flow is shown as:

Employer contributions £5.5 billion
Employee Contributions £1.8 billion
Total £7.3 billion


Pension payments £5.6 billion
Investments £1.3 billion
Operating expenses £0.4 billion
Total £7.3 billion

As you will see, only some 18% of all contributions are able to be invested.

The paper also states that the investments cover only 75% of future liabilities and that recent investment returns had been lower than expected ( as Cubes suggested). These investment returns will no doubt have deteriorated further since the date of the paper, July 2010.
 
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