Final Salary Pensions

[tballrossi]

Talking last night to a pensioner about final salary pensions he said Gorden Brown ruined the schemes but I said Nigel Lawson started the demise in 1988,so who or what caused a lot of the schemes to close. ( the pensioner in question is a die hard Tory who would vote for an orang-utang if it was Tory party leader)

[VHG]

Gordon Brown did not ruin the scheme, but one of the first things he did when Labour came in to power in 1997 was a tax these pensions (as they had promised not to raise income tax they had to find other ways to raise money).

What has "ruined" final salary pension schemes is the fact that people are living longer (costing the pension pots more).

I believe also that companies now have to "top up" the pension pot if the pension pot is under funded. This of course comes out of their profits, meaning they cant pay good dividends to their shareholders.

Final Salary pensions are now too expensive for most companies (which is why most have now stopped them) and mostly only government employees still get them (which is what a lot of the strikes have been about in the last few years).

While I am also a Tory supporter I don't think you can blame Gordon Brown or Labour for the demise of the Final Salary Pension.

[tballrossi]

Thank you VHG

[ToraToraTora]

Brown effected all pensions by taxing dividend income, not only final salary schemes. No Idea what Lawson did in 88. The main reason for the demise of the final salary scheme is purely that they are unnaffordable and unsusutainable. Very few schemes beyond the public sector exist these days

[Old_Geezer]

It would be interesting to know how long those offering these schemes thought people would live. Surely they were not all expecting folk to drop dead between 55 and 65 ?

I have little sympathy with companies complaining about costs that should have been obvious; especially those who simply took "payment holidays" because their kitty was so unnecessary large. I do have sympathy with those employees who entered a contract to pay into their scheme only to find it is frozen before they have finished working, and a less attractive one offered instead (or they can have no scheme, if the offered one is deemed unacceptable). If the company that wants to force an undesired change on the other party, they can, but as we all know if an individual wants to change a contract, that isn't allowed.

[tali1]

Don't MPs still get Final Salary pension?

[Peter Pedant]

// the pensioner in question is a die hard Tory who would vote for an orang-utang if it was Tory party leader //

o the standard tory voter then

Gordon Brown started taxing pensions schemes by levying corporation tax in 1997 and I am afraid is directly blamed for the demise of FS scheme as a result as Gordon Brown got Zillionz ( and the schemes didnt get 20 billion I think which is kinda the amount they WERE in deficit by before they died

The old scheme was a EET scheme ( exempt-exempt-taxed ) exempt on contribution - exempt in maintenance and accumulation and taxed on receipt or disbursement

Gordon Brown converted it into a E E(T) T scheme - exempt on contribution, partially taxed on accumulation and taxed on disbursement

Nigel Lawson as far as I recall didnt do diddly squat to the pension schemes

I have no special knowledge of pension schemes I did something else before I retired

[Peter Pedant]

// Don't MPs still get Final Salary pension?//

yes they avhe their own scheme
and you will be relieved to know they have exempted themselves from the decrease of the pension pot thingey from £1.5m to £1m

[dave50]

Yes all final salary pension schemes are now un-affordable except of course those in the parallel universe of the public where they are subsidsed by the tax payer so the likes of firemen and policemen among others can retire at fifty. It makes me and all of my work colleagues blood boil.

[angie55]

dave50 - firemen have a pension scheme where the only contributions come from the firefighters themselves - the employing authority do not pay a similar contribution (unlike with other local government staff). Hence because of the volatile nature of the job, fire pensions are notoriously hard to budget for and are continuously overspent. eg, you know each firefighters retirement age so you can build that into to budget forecasts, but you can't build forecasts for how many will retire on ill health grounds with any degree of certainty.

[fiction-factory]

^ so who makes up the shortfall, angie? Is it the taxpayer?

[Peter Pedant]

angie 55
I am sorry but according to this
http://www.yourpension.org.uk/Files/Files/HCC%20Fire/FPS%20Scheme%20Guide.pdf

your guide to the firefighters pension scheme the one 2013 that replaced the old scehem - the fire boys themselves contribute 10-15% and the employer contributes a whopping 26.5% !!

this you will notice is NOT close to zero ! (page 3 )

On principle I am not sure if there is or can be an employers scheme where the contribution is zero.
The statutory minimum is I think 2.5 % ( yes one tenth of the sum I have read above ) for outside employers and this means that everyone is trying to reduce their contribution to this sort of level ( except the MPs own scheme of course ). This is called 'The Race to the Bottom' but doesnt really concern us here

[Peter Pedant]

so who makes up the shortfall, angie? Is it the taxpayer?

I think the firefighters scheme has been mistated FF

It may be notional like the NHS scheme where the conts are spent in the current financial year ( like the NHS scheme ) and the govt bleats oo we cant afford it in twenty years. The NHS scheme - in deficit by £163 bn ( total cost ) because there is a pension pot, the doctors' contributions outweigh ( are in excess of, pay into the govt , there is no subsidy but a surprlus ) £2bn in this financial year.

[Peter Pedant]

because there is NO pension pot
sozza