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iain1973

Pension question

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iain1973

Just a quick one, are we opted out of the second state pension when in the Police pension?

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SAV83

I believe thats what I was told a couple of weeks ago when we had federation and pensions people come to talk.

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iain1973

thanks sav83. i seem to think the same but wasnt sure.

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Jimbo2487

No we are not opted out.. State pension also becomes payable at normal state pension age(til they rob that too)

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Meditate

The term is contracted out and not opted out. As a public sector employee in a pension scheme you are contracted out. This means you pay National Insurance of about 9.4% instead of 11%. Bearing in mind that state pensions are going to be reformed (and I would expect a statement in this years budget) with the likelihood of a simplified universal pension, the upshot to public sector empoyees, including the police means this may translate into a 1.4% additional pay cut for all public sector employees in a pension scheme.

contracting out refers to the second pension S2P and not the first, main state pension. So long as you have contributed for 30 years you will receive the full state pension. With the revised changes to simplify the state pension scheme the second pension will not exist in the near future if we move to a universal state pension system.

However, the way to look at it is not that we will be paying an additional 1.4% but that we have got away over the years with paying less when we should have been paying 11% like everyone else.

http://www.moneyweek...an-you-do-00334

The other advantage we have had with a public sector pension is not only have we not contributed to s2p by paying less but, we also pick up s2p earlier than those in the private sector as it is included in our occupational pension!

This may also help

http://www.rosaltmann.com/hutton_press_release_contract_out_2aug10.htm

Edited by meditate

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iain1973

Thanks meditate. Interesting reading.

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Meditate

No problem - I have a feeling things will change in the budget as the Govt are looking to simplify the arrangements. From what I can gather the proposal is a single unified pension of around £140 - £155, then get rid of some of the staff who deal with the complicated aspects of means testing.

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MRF@1972

Is the pension as good as it use to be? Or has it all changed? I know it use to be one of the best pension going.

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Meditate

Short answer no, compared to old schemes but, still better than anything else you could get independently. Independent Financial advisors would think you were mad if you wanted to leave any public sector scheme.

EDIT the attachment explains the changes and is based on the publication in 1996 so there mat have been changes since. the blue box gives an overview of the differences of the two schemes as published in 1996. http://www.polfed.org/0406_p1213_pension_scheme.pdf

Edited by meditate

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MRF@1972

Cheers meditate, great post.

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Meditate

Thanks Jonathan. As with all financial advice if you were to act on any info given by a member it would pay to double check and get proper advice. One advantage of the public sector schemes is that even if you stay in and push it to the back of your mind you know you are already getting a better deal than the majority of the population.

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gloryhornet

EDIT the attachment explains the changes and is based on the publication in 1996 so there mat have been changes since. the blue box gives an overview of the differences of the two schemes as published in 1996. http://www.polfed.or...sion_scheme.pdf

You mean 2006 surely? I don't believe the NPPS has changed in substance since then.

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Meditate

You mean 2006 surely? I don't believe the NPPS has changed in substance since then.

Yes apologies - it is based on the 2006 document that is attached.

1996 is a key year for NHS schemes and I am more used to this date than 2006! They end in 6 so I think I must have been on autopilot when I typed. Bit like driving a usual route then one day having to deviate from it but dont! (dont do this on a Mway as you will be late).

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Meditate

Just read in the proposed NHS pension scheme that the Govt have put a 25 year clause in which states:

The Chief Secretary to the Treasury intends to include provisions in the forthcoming Public Service Pensions Bill to protect the Scheme from further reform for a period of 25 years, outside of the processes agreed for the cost cap noted above.

The cost cap referred to in the above states:

A cap on employer contributions will be introduced to cover unforeseen events and trends that significantly increase scheme costs. The employer cost cap is intended to provide backstop protection to the taxpayer and will be based on already agreed cap and share principles which underpinned the changes introduced in 2008.

I would imagine there would be something similar in the police scheme which may answer some concerns about the scheme continually changing if it is included in yours should the current proposals be accepted.

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