OT: New Employer's Pension Scheme

[The Natural Philosopher]

Indeed. That's why I suggested what I did. The maths never added up in the first place.

[Dave Plowman (News)]

Being of a certain age I know of plenty who are now pensioners of a well funded and managed private company pension scheme.

And I've still not had a satisfactory explanation as to why what was once ok isn't now.

[Malcolm G]

This report argues that it is the fact people are living so much longer

not sure it quite answers your question but looks interesting.

My general impression 20 years ago was certainly that defined contribution schemes looked to be pyramid schemes.

[The Natural Philosopher]

Being of a certain age I know of plenty who are now pensioners of a well funded and managed private company pyramid scheme.

Because we ran out of suckers to feed the base of the pyramid.

[Dave Plowman (News)]

And are retiring later.

Only if they had lower contributions than needed to sustain them.

Non funded government pensions can certainly be regarded in some ways as a pyramid scheme since they rely on current income to fund payments. I'm talking about a properly run pension scheme.

[dennis]

People are living longer, a lot longer after retirement age. You need to about double what you and your employer were contributing and nobody is prepared to do so especially when people might live even longer in retirement in 30 years time.

People need to do what I did 30 years ago, put some extra contributions in.

[Tim Streater]

So rather than these folk getting, now, the value of what they put in, they are in effect getting a lot more. But no one knew that 30 years ago for defined benefit schemes.

If people are getting annuities based on what they've been paying, these will presumably be a lot smaller than they might have expected, too, as otherwise the pension companies will go bust.

[Dave Plowman (News)]

The UK workforce is contracting? What's all this fuss over immigration, then?

[Dave Plowman (News)]

'We'? You have nothing to do with my company pension. Or any other such scheme.

[Dave Plowman (News)]

Ah. Right. So basically neither the employer or employee are willing to pay the going rate for a decent pension.

Many of us had no option.

[dennis]

You only have to look at the firemen to see that.

[Capitol]

That is correct, probably about 40%. Fortunately I stock market invested which has given a much better return.

[Tim Streater]

I'm talking about us all as a generality. Under Blair/Brown (and to a lesser extent under their predecessors) it was assumed there would be continuing expansion and so we could go on offering ludicrously generous pension packages to people and run deficits all the time. "No more boom and bust", remember?

At last it's understood [1] that you can't and shouldn't go on borrowing and leaving ever increasing debt to future generations. Hence the efforts to reduce the deficit, eventually to zero, at which point the debt will start to shrink. As it is it costs more to service the debt than we spend on education.

[1] Well, the Tories understand this. Millibean and other socialists don't get it at all. The Greens go around saying "Hello flowers, hello sky" - they are firmly in LaLa land. Not quite sure what the kippers think.

[Tim Streater]

You could probably have put enough aside for a decent pension if (a) you were earning enough and (b) you were aware that it might be a good idea to do so. Most people were probably in neither group.

[alan_m]

The problem in trying to invest for 100years is that the 'rules' tend to change every 4/5 years.

What's the betting in, say, 10 years time the Government in power will realise that in order to fund the state pension they could 'nationalise' ALL of the private pension schemes and raid the pot of gold.

Wasn't SERPs meant to give people a second earnings related pension?

[Dave Plowman (News)]

Firemen are public service employees. Twas the private sector I'm interested in.

[Dave Plowman (News)]

I ask again -'we'?

What have you or the government got to do with a private company pension scheme - the contributions to which are set by that company in agreement with its employees?

I'm not referring to state provided pensions, whether the universal one or job related. Although it's also interesting that governments of all colours seem to make the basic OAP brickwalled, but want to reduce those job related ones.

[Dave Plowman (News)]

That's about the closest I've seen.

Basically, private firms and their employees no longer want to make decent provision for pensions.

So why the change? Is it just part of the general 'wanting everything now' with no thoughts to the future?

When I was younger, I might well have opted out of the company pension scheme if it were allowed, as I certainly wasn't awash with money. But now I'm retired, I'm glad I couldn't.

[Huge]

(c) You had realistic expectations of the size of your pension. I've seen people on the telly saying they want £50K/yr, obviously not realising you need at least £750K in your pot to get that.

(d) You started soon enough. People in their 20's don't want to even think about pensions, IME, but sticking a few quid a month away from that age is going to make a huge difference.

Correct.

[Huge]

Wouldn't surprise me at all. It's happened twice in Argentina.