OT: The future of EV charging?

[Andrew]

Because when these pals of yours started work, their lifespan was expected to be X years and inflation/interest rates gave predictable investment growth rates to cover the known mortality statistics.

All that went out of the window in the early noughties. The ONS admitted their collosal error in lifespans, so your pals are going to live for X+10, X+15, X+20 years at the very point when interest rates went from

6,7,8%+ to 4%-. Brown also forced the private pension providers to SELL a lot of their equities (at the worst possible time, after the DOTCOM crash) and buy all those gilts that he was furiously issuing to fund a quadrupling of the NHS budget, and other stuff.

If your pals kept to their side of the 'contract' and died at the age they were expected to, then we wouldn't have so much of a problem.

[Andrew]

Err, everyone can !.

A SIPP can be opened for a baby and parents/grandparents can pay in£2880 per year and HMRC tops it up with £720.

When these kids start work they can then pay up to 100% of their income into their SIPP every year, if they choose.

The investments can be whatever you want, more or less, but using global trackers or investment trusts and reinvesting dividends will suffice.

The problem with this approach is that they certainly will hit the pensions lifetime allowance (£1,030,000) long before retirement and then get hit with a nasty potential ** 55% ** tax on the excess, and unlike whinging NHS consultants, earning £150K+ per year (with merit awards) they won't be quietly excused this tax.

[Tim Streater]

Right, but how many actually know? In teh UK, I have a SIPP, unrealised as yet. My US pension from working at SLAC was just as I have described: a pensions company (used in the US by pretty much anyone who is or works for an educational establishment) which accepted my and SLAC's contributions over the period I worked there. I got to choose when and what sort of arrangement to make with the pot: draw-down, annuity, or even two-life annuity, where the Missus continues to collect the same dosh if I peg it before she does. I could also choose, during the pot build-up, whether the money was to be invested in risky or not-so-risky investments, or even just to sit there as cash earning interest. And move it between these categories at any time.

As it was I chose the two-life annuity, the level of which was determined at the time I took it up. So no employer company which could go bust, and no Maxwells nicking the company pension pot.

[Dave Plowman (News]

Are you saying the pension company can't go bust either then?

My company pension scheme is managed by a pension company anyway. I'd think that makes it rather difficult for a Maxwell to get his hands on it

- or if the company went bust.

[alan_m]

Exactly the same rules apply to a company pension. You have the choice how to take it BUT with a serious warning if it was a final salary scheme then many alternatives would not pay as much and not recommended.

[Dave Plowman (News]

Quite - a number of colleagues did this due to smooth talking salesman, and all regretted it.

But they were likely from the Streather mould - where company pension schemes are inferior.

[John Rumm]

Actually Replying to Dave, but for some reason his post is not on my feed...

I was not being hostile particularly. However company plans are perhaps less suited to modern work patterns than was once the time, where it was not uncommon for someone to work for one or two companies their entire working life.

Also many company plans ended up being underfunded / or far more costly to fund than anticipated due to changes in life expectancy after retirement, the anticipated returns on the investments, and taxation policies.

Which is why mandatory pension provision is back with the Auto Enrolment schemes that companies are now forced to run in most circumstance.

[Tim Streater]

This is an important point.

And this is another. The trouble with the defined benefit company scheme is that the framework for what the pension will eventually be is defined at one point in time, but the pension is provided at quite another. If you instead have a pot with a certain value, based on what you and perhaps the company decide to pay in, which grows as you work longer, and when its converted either to an annuity of perhaps you just use it for draw-down, what you then get will be decided at the time you're doing it. You may get less, you may get more, depending on how the economy is going. That is much more likely to be sustainable than the arrangemants having been decided 40 years earlier.

What I propose would need to be mandatory. I'm proposing something which ought to be able to avoid the more egregious aspects of pensions as we've seen them in recent years - the Maxwells, the companies going bust with or perhaps because of pension liabilities (didn't GM do that? Can't remember).

Quite possibly my scheme has its own drawbacks, but not being a pensions expert I can't see what they might be.

[Dave Plowman (News]

Well, yes. And some might say a good thing. People don't normally leave a job and company they are happy at. Nor would a decent company want to see staff it valued leave either.

It all seems to be a symptom of treating people like some sort of supply - to be sourced from the cheapest option. Easily seen in how few companies do much in the way of training now.

[John Rumm]

Some, but by no means all. Any job even tangentially connected with technology is subjected to a much faster rate of change than in the past. Entire industries can spring up, and run to their natural decline in far less time than a working career these days. Deregulation and disintermediation mean that services which were offered by large monolithic organisations are now provided by much greater numbers of smaller entities with more dynamism than previously - but that dynamism also require more adaptability and continuous change.

[alan_m]

I doubt if you will now find a company pension plan actually based on final salary as was common in the past. Most (if not all) company pensions will now be based on money purchase - the amount you and your company pay in and the investment returns is the amount that your final pension will be worth which may be completely divorced from any final salary (or average salary for the last X years)

Even with final salary pensions the pension paid out did change for many over the past decade or so as the pension schemes changed in an attempt to manage shortfalls and extended life expectancy. For instance when I first joined a scheme my pension was based on 1/60th of my final salary for every year I paid into it. Later the terms changed and the pension was then based on 1/65th of final salary for every year paid in. (Historic terms were honoured up to the time of change and then for any future contributions the new terms applied). In the scheme I was in, 20 years ago it was possible to retire at 55 with little financial penalty with regards the pension paid out (at age 55) but this was found to be unsustainable and over intervening years early retirement resulted in a substantially reduced lifetime pension payout. Not necessarily a problem now with money purchase pensions.

If a company has set up a pension scheme for their employees it is very unlikely to pay anything into an alternative private pension scheme.

While the provider of a company scheme and a individuals private scheme may be exactly the same the amount of money paid in may be very different if an individual goes it alone when there is also a company pension scheme in place. If nothing else administrative costs for an individual may be a lot higher than for a large fund.

[Dave Plowman (News]

Not completely, surely, if the contributions to your pension pot are based on your income?

[polygonum_on_google]

Switch to sea coaling? (As around Hartlepool.)

[Roger Mills]

The amount you pay *in* is related to your salary, but the value of your pot at retirement time is subject to very many factors - particularly the performance of the investments. The principal difference between a final salary (defined benefit) scheme and a money purchase (defined contribution) scheme is that the employer takes the risk in the former and the employee in the latter.

[Tim Streater]

Which is as it should be - it's his pot, after all. In the jobs I've had, I've always been able to decide how much of my salary got put into the pension pot each month.

[Vir Campestris]

<snip>

It was Gordon Brown who took 5 billion out of an already creaking pension system, and pretty much killed the final salary pension outside the public sector. (He of course still gets his solid gold pension).

Since then the Tories have done ... SFA to help the situation.

Andy

[Sn!pe]

PMFJI. People are living too long; at least, they were...

[alan_m]

From what I've seen with these pensions it will end up more like the average salary of your 50+ years of working and less to do with the final salary.

If you have job for life that pays the same in 50 years time as it does now (allowing for real inflation) then you may end up with a pension based on a final salary. If however you have a career with stepped pay rises well above inflation as a result of promotions and normal career progression the length of time on lower pay rates will effect the overall pension pot. In general throughout private industry, in the years before retirement pay rises tend not to be above inflation.

[Roger Hayter]

Originally you *did* get a pension based on final salary (best year of last three for instance), regardless of how many years you had worked at a much lower salary. Indeed there was a Spanish practice in parts of the public sector where many people got a special bonus (ostensibly for meritorious contributions to work) nearly doubling their salary in their last year or two, and thus doubling their pension. This has changed and most public sector pensions (except civil service and police?) are now based on career average.

[Adrian]

In message [e-mail]>, Roger Hayter [e-mail] writes

And there were (are ?) some employers who engineer the pay system to ensure that the final salary is rather less than might have been expected (swapping salary for allowances or bonuses).

Adrian