The Lemon Fool

1nv35t wrote:Way back I worked for BT for a while. Believe I was in their B scheme and that that pension would become payable when I reach age 60. Does this mean that pension is now lost? Seem to remember reading that it transitioned from being government backed to not being so. Now if totally lost !!!! No incentive for anyone to pay into any pension scheme, not even a apparent government assured one.

Your benefits will be preserved.

westmoreland wrote:pity there has never really been discussion of some sort of compromise arrangement where say 25-50% of the pension is defined benefit, and the rest paid into a standard money purchase. most workers understand these schemes are unsustainable but there's no reason it can't be part guaranteed.

Actually that seems to be what BT are planning, details still to be worked out with the CWU.

AleisterCrowley wrote:
We'll you'd have to pay them more, as some pensions are a significant part of the total package

Developed society has "developed society" systems which are still evolving. As has been pointed out, who thinks that it is fair and equitable that pubic sector employees can and do retire at 60 on unfunded final salary pensions? Not everyone here I would guess.

For the first 20 years of my working life I worked as an expat on a modest salary which paid a "gratuity" in lieu of pension at the end of every three year contract. The gratuity was not very much (about 15% of base salary if I recall). Not nearly enough to make a decent pension. Most of us spent the gratuity (we were young) so when I left expat employment and started my own small business I had not a lot, certainly no nest egg.

By the time I was 45 I realised that I needed to make a plan for my family in retirement. I now have a HYP, built from personal savings and the sale of my small business when I reached 60 or so.

So I generally agree with Lootman. People need to look after themselves or make voluntary class 3 contributions and manage on the state pension. Or work outside Europe for a while and find out how the other two thirds of the world lives.

Reasonable points, but as an example a friend of mine works in the NHS
He said his decision to follow the NHS career at the time was based on the good pension offsetting the relatively poor pay - the whole package in other words

AleisterCrowley wrote:Reasonable points, but as an example a friend of mine works in the NHS
He said his decision to follow the NHS career at the time was based on the good pension offsetting the relatively poor pay - the whole package in other words

But I think the relatively poor pay has changed in recent years, especially for doctors, who earn a lot and are able to retire on good pensions in their mid-fifties (I have two in my extended family who have done so) which is part of the reason we now have to wait so long for GP appointments; I am having to wait for a month for my next one. The district nurse who looked after my husband retired in her early fifties on a full pension (I think it was based on length of service rather than age) and a podiatrist told us he was amazed at the amount of holiday he was entitled to after working in the NHS for a very short time. One has to look at the overall picture and if one thing improves it might be necessary and fair to cut back on another and as another poster said, benefits up to the time of change are usually preserved.

Bouleversee wrote:But I think the relatively poor pay has changed in recent years, especially for doctors, who earn a lot and are able to retire on good pensions in their mid-fifties

There's been something of an own goal for joined up government as measures ("Lifetime Allowance") designed to stop fat cats getting fatter have also had the effect of requiring doctors to retire to avoid losing any additional pension accrual in tax.

All of them in my practice work part time and all bar one have changed recently. Hence very long waits and no continuity or follow up.

AleisterCrowley wrote:as an example a friend of mine works in the NHS. He said his decision to follow the NHS career at the time was based on the good pension offsetting the relatively poor pay - the whole package in other words

Anyone who makes a decision at age 20 or 25 based on what he thinks will happen when he is age 65 is taking on a fair amount of risk. Jam today is always worth more than jam in 40-odd years time.

And that is even more true if you work in the private sector where there is a very good chance that your employer won't be around then.

I always declined to participate in pension plans whenever that was an option. The payoff just seemed to be too far in the future and I don't like having money tied up for decades.

I retired in my 40's without much in the way of pensions. (Although my wife still works and is well paid - that makes a difference).

Paying into a company pension scheme is usually a good way to save for retirement though, compared with the other options
I've still got my old, frozen, BT DB scheme, worth a wee bit more than current state pension

AleisterCrowley wrote:Paying into a company pension scheme is usually a good way to save for retirement though, compared with the other options
I've still got my old, frozen, BT DB scheme, worth a wee bit more than current state pension

If it is a DB plan then I'm sure that is a good deal, which is precisely why companies have been so keen to get rid of them.

But with a DC plan, and particularly if there is not a generous employer contribution, then personally I'd prefer maxxing out an ISA than paying into a pension. There is no tax when you withdraw from ISAs and meanwhile the money isn't tied up.

But each individual has to make that determination for themselves.

Lootman wrote:

AleisterCrowley wrote:Paying into a company pension scheme is usually a good way to save for retirement though, compared with the other options
I've still got my old, frozen, BT DB scheme, worth a wee bit more than current state pension

If it is a DB plan then I'm sure that is a good deal, which is precisely why companies have been so keen to get rid of them.

But with a DC plan, and particularly if there is not a generous employer contribution, then personally I'd prefer maxxing out an ISA than paying into a pension. There is no tax when you withdraw from ISAs and meanwhile the money isn't tied up.

But each individual has to make that determination for themselves.

But you don't get any tax relief on the way into an ISA, unlike pension fund contributions, and pension funds can be left to heirs IHT free. IMO it's best to do a bit of both if you have the option and live off the ISAs and only draw the pension when ISA income/capital is insufficient for requirements or only draw from pension up to taxable level..

In most cases you're stuffing an ISA with taxed income, so you may be 40%+ 'down' already
The tax situations are different of course, as pensions are taxed at the back end- but many will be in a lower tax band during retirement

Bouleversee wrote:

Lootman wrote:

AleisterCrowley wrote:Paying into a company pension scheme is usually a good way to save for retirement though, compared with the other options
I've still got my old, frozen, BT DB scheme, worth a wee bit more than current state pension

If it is a DB plan then I'm sure that is a good deal, which is precisely why companies have been so keen to get rid of them.

But with a DC plan, and particularly if there is not a generous employer contribution, then personally I'd prefer maxxing out an ISA than paying into a pension. There is no tax when you withdraw from ISAs and meanwhile the money isn't tied up.

But each individual has to make that determination for themselves.

But you don't get any tax relief on the way into an ISA, unlike pension fund contributions, and pension funds can be left to heirs IHT free. IMO it's best to do a bit of both if you have the option and live off the ISAs and only draw the pension when ISA income/capital is insufficient for requirements or only draw from pension up to taxable level..

Yes, the tradeoff is no tax relief on ISA contributions versus the payments eventually being tax-free. Part of the consideration there is your tax rate now and what you think it will be in the future.

And yes, in fact I do have both. Although I opted out of occupational pensions when I could or closed them and cashed them out when I could, I ended up with a couple anyway, which will pay me about 40K a year when I start withdrawals.

Lootman said:

"And yes, in fact I do have both. Although I opted out of occupational pensions when I could or closed them and cashed them out when I could, I ended up with a couple anyway, which will pay me about 40K a year when I start withdrawals"

Not bad for someone who retired in their forties. You must have been earning a fortune.

miner1000 wrote:

AleisterCrowley wrote:
We'll you'd have to pay them more, as some pensions are a significant part of the total package

Developed society has "developed society" systems which are still evolving. As has been pointed out, who thinks that it is fair and equitable that pubic sector employees can and do retire at 60 on unfunded final salary pensions? Not everyone here I would guess.

Pretty much all public sector pensions are contributory - usually around 7% of the employees pay - and now have retirement ages of 65 or even later ie same age as for state pension. The only exceptions I am aware of are the armed services which is still non-contributory and, just for retirement age, the Police. Most have also switched from being final salary to being career average DB pensions.

Of course those with DC pensions can and do retire at 55 (used be 50) if they have built up a sufficient pot whereas those in unfunded public sector DB schemes are not allowed to do a pension transfer to a DC scheme and take advantage of the new pension freedoms. Those in funded DB schemes whether public sector or private sector are allowed to transfer but the process is expensive and difficult because of the requirement to take advice and the reluctance of many pension providers to accept transfers from insistent clients ie those who want to proceeed anyway even if the advice they received was not to.

1nv35t wrote:Way back I worked for BT for a while. Believe I was in their B scheme and that that pension would become payable when I reach age 60. Does this mean that pension is now lost? Seem to remember reading that it transitioned from being government backed to not being so. Now if totally lost !!!! No incentive for anyone to pay into any pension scheme, not even a apparent government assured one.

I don't think they could make a change which makes a pension " lost". Indeed, there's some comfort in the announcement: "Benefits accrued in the BTPS for service prior to 1 June 2018 remain preserved within the BTPS and subject to revaluation in line with BTPS rules and relevant legislation.​"

Taking this a face value, it seems that the closure is for new benefits rather than ones already preserved - which I guess would apply to you. You may find, however, that there are some change for the worst: e.g. they may have played around with the rate of increase of the pension benefits. You need to give someone a call to find out the exact position!

NB - this isn't a suitable board for further discussion of pensions

Look at the top of the page, Arb.

Bouleversee wrote:Look at the top of the page, Arb.

Yes but he may have missed this viewtopic.php?p=126406#p126406