Joining the ranks of the Unemployed

[thirdcrank]

No reason to feel guilty. I joined on the basis of 2/3 final salary after 30 years service and retired on that basis after 30 years to the day. In between and since, the politicians tried to claw it back. Eg, on one occasion, Thatcher insisted on honouring a promised police pay rise which breached some public sector pay cap/ freeze. Her Willie (Wetlaw) upped the pension contributions to 11% ie an amount exactly equivalent to the cost of Thatcher keeping her promise. More recently, there's been jiggery-pokery over inflation-indexing. The most obvious thing being that Osborne switched the calculation from RPI to CPI, the government's "preferred" measure: preferred because it's generally lower. More covertly, the inflation indexing is divided between the state pension and the pension scheme. This has been jiggled backwards and forwards, always with the claim that it made no difference to the bottom line figure. Fortunately, the Fire Brigades Union spotted that in one of these sleights of actuarial hand, a chunk had fallen between the floorboards.

Promises are easily made but there's a big temptation to renege over the years.

Employers only pay pensions to the workforce to retain them. It's deferred pay. For all sorts of reasons it's now easier to retain people than used to be the case, so they close schemes to newcomers. The newcomers are understandably aggrieved when they discover that others have a better provision and that is used by politicians to spin against existing pensioners and whittle away at their contractual rights.

BTW, I only joined in here to correct your error about contracting out. If you know pensions are a touchy subject, gang warily.

[NATURAL ANKLING]

Hi,
Its only great if you are lucky to afford it....?

Most of the country will have to tighten their belts.

The grumble will be when the young of today are paying taxes so that the lucky few can live in luxury.

Enjoy it while you can, your grandchildren will pay for it, hard but true.

We all wish we were a binman.

[pete75]

Hi,

We all wish we were a binman.

Eh? I certainly don't. Maybe you were heavily influenced by Lonnie Donegan in your childhood.


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[Mick F]

SERPS ............. when it first came out that you could contract out, personnel in the services - or at least in the RN - were asked if they wanted to contract out, or join SERPS.
Can't remember when this was. Perhaps in the mid 70s.

In order to join, it meant that your NI contributions would be higher for the rest of your working life. It isn't surprising to know, that no-one (in my knowledge) took it up. I don't think it was explained - or even knew - what the difference in weekly pension would be, or even if we would receive one.

It seemed at that time, that it was a poor deal. Dunno what extra we'd have paid, but it may not have been worth it considering the cost for 30 or 40 years of payments.

[thirdcrank]

What on earth have binmen got to do with this?

It's true that refuse collection is the responsibility of local authorities, but a large proportion of the people doing the bin emptying will nowadays be outsourced in one form or another.

If I think back a few decades, when binmen may have qualified for local government pensions, it would have been a way of keeping their pay down. I've never considered applying for such a job: in my youth the bins were galvanised steel and heavy because they were full of the ashes from coal fires. Bins were manhandled to the lorry and lifted above head height to be tipped in. Heavy and unpleasant work. I don't know if there were restrictive practices in their recruitment, but it was a lot different from today's wheelie bin systems. Anybody who wishes now, that they had been a binman then should have thought about it then. I'd be surprised if many binmen from that era were able to do the job long enough to qualify for a full pension.

All public pensions including old age pension - State Retirement Pension - are unfunded ie today's pensions are paid for either by today's taxpayers or by public borrowing. National Insurance is a myth: another form of taxation. Other public benefits are funded in the same way.

[Paulatic]

Finally found a good explanation of SERPS and opting out. My understanding now is it would have been compulsory for TC because he was on a final salary pension. I would have been given the option of stopping my SERPS and buying a pension as there was no pension scheme in my employment.
As pensions are paid by today’s taxpayers no wonder I’m in favour of increasing taxes. I still smart at the basic rate of 33% we once paid.

Initial SERPS Implementation

When SERPS was first implemented in 1978, it was introduced as a mandatory programme. That is to say that everyone already paying National Insurance would be making additional contributions to the SERPS programme. Eventual payments would result in an additional 25% of a worker's salary added to the basic state pension at retirement.

The one flaw in this initial implementation is that it gave employers offering defined benefit (i.e., final salary) pension schemes opportunity to contract out of the SERPS on behalf of workers without getting their consent. Those who chose to do so used the opt-out option as a means of reducing their own National Insurance contributions. But this left workers without that additional income they may have wanted.

The government did attempt to protect workers by requiring employers to provide a guaranteed minimum pension if they chose to opt out of SERPS. The size of that guaranteed pension was calculated based on pensionable earnings, years of service, and basic National Insurance contributions.

Defined Contribution Pensions Added

In the years following the initial implementation of SERPS, the government made a few significant changes. Among them was the decision in 1988 to allow members of defined contribution (i.e., money purchase) schemes to also contract out. That said, there was a big difference between contracting out of defined contribution schemes as compared to their defined benefit counterparts.

The original rules allowed defined benefit operators to contract out on behalf of members. The rules introduced in 1988 allowed individual members of defined contribution schemes to contract out. In other words, the decision among defined contribution pensions was left to individual members rather than employers. If an individual member contracted out, he or she would save money through reduced National Insurance contributions. The employer would not. Any money the employer would have paid into SERPS went directly into the member's pension pot instead.

The point of making this change was to allow members of defined contribution schemes the freedom to invest the money they would have contributed to SERPS in other means. Some did so, many did not. Unfortunately, those who contracted out and did not put the money into other investments now find themselves in a difficult position as we prepare to transition to the new state pension. They may not have the state pension income they were anticipating when they opted out years ago.

[Mick F]

We were given the choice. In or Out.

The cost of SERPS per month would've increased your NI contributions. How much, I cannot remember, and how that would have increased my OAP, I don't know.

I suspect that my OAP of £134.88 per week (as from next month) wouldn't be high enough had I opted IN all those years ago to have been worth it. Mind you, if I live to 100 or more, it might be.

Anyone got any figures?

[kwackers]

We were given the choice. In or Out.

The cost of SERPS per month would've increased your NI contributions. How much, I cannot remember, and how that would have increased my OAP, I don't know.

I suspect that my OAP of £134.88 per week (as from next month) wouldn't be high enough had I opted IN all those years ago to have been worth it. Mind you, if I live to 100 or more, it might be.

Anyone got any figures?

That number sounds low - isn't it just shy of £160 a week now? I'm pretty sure that was the number I saw when I had another look yesterday.

I can't remember how many years I was contracted out for but I'm sure at one point during the contracting out phase I saw a figure of around £30k for money paid in from my ex-contributions. These days the numbers have all been rolled so I've no idea of the final actual amount that ended up in my personal pension.
I had another look on the HMRC website yesterday and as far as I could make out if I work another year I'd reach 'max pension' contributions (although a fair number of years I've been self employed or a director of my company so haven't actually paid any or very little NI) so if it seems to me that I might have hit a sweet spot of still having enough years contributions whilst taking out a reasonable amount of cash.

Having said that, I can't really make heads nor tails of what the HMRC site is actually telling me...

[mercalia]

any one who was self employed should have been paying the is it class 2 NI stamp? costs very little and gives you entitlement to the state pension - Osborne wanted to get rid of it ( did he/they ). The real winners are those self employed who did pay the class 2 stamp and retired with the new state pension as before they would have got very little but under the new state pension get it all if they have 35 years that count ( the reason why Osborne wanted to end the class 2 stamp ) . Many expats also bought this stamp to make sure they get the state pension, they are not so happy that it has now gone or soon will be.

[Mick F]

Yes, £159odd as per now.
In order to get that, you wouldn't be in a workplace pension scheme and not have been contracted out.
I'm fully paid up but mine is reduced from the max because I have a service pension and I contracted out donkey's years ago.

I'm £20odd a week down from the max. That's £100ish a month. Back in the old days when I was in the RN, I was paying £50odd a month latterly ........... or was it £90odd? I have all my pay statements so if I could be bothered to look in the box in the loft, I could confirm it.

After leaving the RN, I paid NI voluntarily as lump sums occasionally to the max required.

Again, the same question bugs me.
How much extra would I have paid for 20odd years in the RN had I not opted out of SERPS?

[kwackers]

any one who was self employed should have been paying the is it class 2 NI stamp? costs very little and gives you entitlement to the state pension - Osborne wanted to get rid of it ( did he/they ). The real winners are those self employed who did pay the class 2 stamp and retired with the new state pension as before they would have got very little but under the new state pension get it all if they have 35 years that count.

Perhaps that's how I've managed it.

I was a bit worried, although my PP's have a decent amount of cash in them current annuity rates seem so low as to make it worthless other than as a lump sum. Hence why I checked online expecting to take a hit from all those years of being opted out but apparently not.
I don't have any 'protected' extra on top of the basic £159 but I couldn't work out exactly how I would have earned that anyway.
So currently opting out seems to have given me a decent lump sum from the government and a full pension anyway (well, in 10 years it will have).

[reohn2]

Hi,
Its only great if you are lucky to afford it....?

And I don't begrudge anyone who's worked all there life taking advantage of the offer.

Most of the country will have to tighten their belts.

And who's fault is that then?
Should it not be the the one's who bankrupted the country forcing the chancellor at the time to bail them out for fear of monetary oblivion?
Or perhaps you had a better idea?

The grumble will be when the young of today are paying taxes so that the lucky few can live in luxury

.
Which isn't the fault of the pensioners but the one's who got the country into this mess in the first place.
You'll need to go back to the invention of the UK fostering of a "service" economy in the 80's to the present day and allowing the bankers(tail) wagging the country(dog) to find out who the villains of this piece are.

Enjoy it while you can, your grandchildren will pay for it, hard but true.

But,and I'll repeat,not the fault of the pensioners but of a crooked system loaded against the people on favour of and run by the rich.

We all wish we were a binman.

I used to work with a chap who complained bitterly about policemen and firefighters retiring early and as he liked to put it "on the golf course whilst I'm paying for it".
I always gave him a stock answer as I'll offer you now.
You had your chance to be a binman,policeman,firefighter,whatever,but didn't take that chance,so dont complain about those people who did,but rather complain about who set up the system and those that rode on that gravy train that caused the financial mess the country now finds itself in,and are still in a position to do it again!

[tatanab]

Yes, £159 odd as per now.

As of April 12th for me. I too opted out of SERPS and I reckon the pension I bought with my opted out money pays me more than SERPS would have. So I am happy enough. I can run the house and do all I want on the state pension alone, so my company pensions are real bonus even though they amount to considerably less (in % of salaray terms) than many here write of. I worked abroad for a number of years, but paid voluntary NI contributions which amounted to £30 a month 20 years ago.

[NATURAL ANKLING]

Hi,

any one who was self employed should have been paying the is it class 2 NI stamp? costs very little and gives you entitlement to the state pension - Osborne wanted to get rid of it ( did he/they ). The real winners are those self employed who did pay the class 2 stamp and retired with the new state pension as before they would have got very little but under the new state pension get it all if they have 35 years that count ( the reason why Osborne wanted to end the class 2 stamp ) . Many expats also bought this stamp to make sure they get the state pension, they are not so happy that it has now gone or soon will be.

But what about Class 4 NI.................I paid that and ended paying more tax in total than a employed person...with none of the benefits of an employed person.
Genuine self employed was no easy ride.

[thirdcrank]

... complain about who set up the system and those that rode on that gravy train that caused the financial mess the country now finds itself in,and are still in a position to do it again!

Yes. The spin has been to portray public sector pensioners - like me - as the baddies, deflecting criticism from those who set up the different systems and those who really made a killing.

Re the changes to opting out from pensions in the late 1980's, that was a combination of a philosophy - that market-based investment was superior to state provision - and introducing it without stringent safeguards. For most people, a market-based investment = life assurance company. There's said to be a saying in the insurance trade that pensions don't sell themselves. Generous commissions have been the answer and not all those paid on a commission basis had the welfare of clients as a priority. I remember Allied Crowbar recruiting the likes of nurses to sell pensions to nurses who left the NHS scheme.

The modernisation of British industry has largely been financed by sacrificing the accrued pension rights of the workforce.