RAF Pensions to change

[True Blue Jack]

The FPS is here for us, to fight for our rights and highlight issues and they generally do a good job.

My opinion on the FPS has been coloured by a briefing I attended earlier this year when the rep spouted a load of alarmist bowlarks about the pension and compensation schemes. Perhaps I am being unfair to them, but I was livid when I left that briefing.

Throwing out figures like £84000 for a 'typical sergeant' without going into detail about what assumptions they have made (length of service, age on discharge, forecast of difference between CPI and RPI for 30+ years, etc.) adds to my suspicion that they are a subsidiary of the Daily Mail! I haven't seen anywhere that they intend to challenge this change to the way our pensions are calculated.

Historically, the CPI has usually been lower than the RPI, that is true. Ultimately though, the public sector pension bill is unaffordable as it stands and has been for a very long time. Getting a lesser increase at age 55 than previous generations is unwelcome but if that's the biggest change to our pension scheme for the next few years then I think we will have got off lightly.

 

[meagain]

"Getting a lesser increase at age 55 than previous generations is unwelcome but if that's the biggest change to our pension scheme for the next few years then I think we will have got off lightly"

Well said that man, some sense of reality at last!

 

[vim_fuego]

"Getting a lesser increase at age 55 than previous generations is unwelcome but if that's the biggest change to our pension scheme for the next few years then I think we will have got off lightly"

Well said that man, some sense of reality at last!

Don't agree with him....Now he'll start to have reasonable opinions on other stuff and others will also agree with him and where will that get us? DT_Xtremez_15:

 

[True Blue Jack]

Don't worry, I'm too much in shock to post anything, DT_Xtremez_30:

 

[busby1971]

I luv excel me

I luv excel me

"Getting a lesser increase at age 55 than previous generations is unwelcome but if that's the biggest change to our pension scheme for the next few years then I think we will have got off lightly"

Well said that man, some sense of reality at last!

If that was all it was then that indeed would not be a problem, it is the compound effect that hurts the most and will mean extra pension provision for every service pensioner from 1 Apr 2011 forward to maintain a similar lifestyle.

Historically there is about a 1.5% difference between RPI and CPI put these figures into excel and you get a spreadsheet like this:

Pension Rate Difference pay me the RPI not CPI
Age Pension Paid RPI Pension Paid CPI Difference
40 £10,000.00 £10,000.00
41 £10,000.00 £10,000.00 £0.00
42 £10,000.00 £10,000.00 £0.00
43 £10,000.00 £10,000.00 £0.00
44 £10,000.00 £10,000.00 £0.00
45 £10,000.00 £10,000.00 £0.00
46 £10,000.00 £10,000.00 £0.00
47 £10,000.00 £10,000.00 £0.00
48 £10,000.00 £10,000.00 £0.00
49 £10,000.00 £10,000.00 £0.00
50 £10,000.00 £10,000.00 £0.00
51 £10,000.00 £10,000.00 £0.00
52 £10,000.00 £10,000.00 £0.00
53 £10,000.00 £10,000.00 £0.00
54 £10,000.00 £10,000.00 £0.00
55 £15,579.67 £12,502.32 £3,077.35
56 £16,047.06 £12,689.86 £3,357.21
57 £16,528.48 £12,880.20 £3,648.27
58 £17,024.33 £13,073.41 £3,950.92
59 £17,535.06 £13,269.51 £4,265.55
60 £18,061.11 £13,468.55 £4,592.56
61 £18,602.95 £13,670.58 £4,932.37
62 £19,161.03 £13,875.64 £5,285.40
63 £19,735.87 £14,083.77 £5,652.09
64 £20,327.94 £14,295.03 £6,032.91
65 £20,937.78 £14,509.45 £6,428.33
66 £21,565.91 £14,727.10 £6,838.82
67 £22,212.89 £14,948.00 £7,264.89
68 £22,879.28 £15,172.22 £7,707.05
69 £23,565.66 £15,399.81 £8,165.85
70 £24,272.62 £15,630.80 £8,641.82
71 £25,000.80 £15,865.26 £9,135.54
72 £25,750.83 £16,103.24 £9,647.58
73 £26,523.35 £16,344.79 £10,178.56
74 £27,319.05 £16,589.96 £10,729.09
£129,532.18

It is not that important which rate you chose just that you maintain a difference of 1.5%, which to be honest is a conservative difference (RPI is currenlty well over 5% and the CPI is close to 3%.

So if you think that a gross amount (yes it will be taxed) you are willing to give if you live to a reasonable age for service pensioner (74) is £129,532 is not that bad then you are believing the hype behind this minor change.

Appologies for layout but they never work out on here.

 

[True Blue Jack]

It is not that important which rate you chose just that you maintain a difference of 1.5%

The rate you choose does matter even as much as the difference between them.

£10,000 + 5.0% (RPI) = £10,500.
£10,000 + 3.5% (CPI) = £10,350.
Difference = £150.

£10,000 + 2.5% (RPI) = £10,250.
£10,000 + 1.0% (CPI) = £10,100.
Difference = £150.

So for year 1 the difference is the same. However:

£10,500 + 5.0% (RPI) = £11025.
£10,350 + 3.5% (CPI) = £10712.50.
Difference = £312.75.

£10,250 + 2.5% = £10506.25.
£10,100 = 1.0% = £10201.00.
Difference = £305.25.

So by year 2 there is a small discrepancy between the amount of pension "lost" dependent upon the rates used even though the separation between the rates is constant. This discrepancy will increase exponentially if we continue to use the same rates.

I'm not saying for a minute that changing from RPI to CPI is a good thing, of course it isn't, but maybe it's the least bad thing. Certainly throwing around 5 and 6 figure sums as money "lost" is futile because it is based on too many assumptions.

The all-important question: taking into account the change in the index to which our pensions are linked would we be better off were we to opt out of the AFPS and take out a private pension?

 

[busby1971]

The rate you choose does matter even as much as the difference between them.

£10,000 + 5.0% (RPI) = £10,500.
£10,000 + 3.5% (CPI) = £10,350.
Difference = £150.

£10,000 + 2.5% (RPI) = £10,250.
£10,000 + 1.0% (CPI) = £10,100.
Difference = £150.

So for year 1 the difference is the same. However:

£10,500 + 5.0% (RPI) = £11025.
£10,350 + 3.5% (CPI) = £10712.50.
Difference = £312.75.

£10,250 + 2.5% = £10506.25.
£10,100 = 1.0% = £10201.00.
Difference = £305.25.

So by year 2 there is a small discrepancy between the amount of pension "lost" dependent upon the rates used even though the separation between the rates is constant. This discrepancy will increase exponentially if we continue to use the same rates.

I'm not saying for a minute that changing from RPI to CPI is a good thing, of course it isn't, but maybe it's the least bad thing. Certainly throwing around 5 and 6 figure sums as money "lost" is futile because it is based on too many assumptions.

The all-important question: taking into account the change in the index to which our pensions are linked would we be better off were we to opt out of the AFPS and take out a private pension?

The rates I picked were conservative and probably provide a picture that is less bad than what will happen. The fact that it makes a bigger difference as you go on because that is the effect of compound interest.

I think that the assumptions I have made are fair and are reflective of what has happened in the past, have a look at firestorms figures to give you some idea of the real difference.

Bit of a naff question really we make an invisible contribution to the pension because the pay review board take it into account for pay rises. The true question is why are we being told that it is minor change when in fact it is quite a major one.

I am not an alarmist but a realist, I would just prefer that we were told the truth by our employers. I like every other service leaver will now have to make some kind of extra provision to get the same level of benefit. I will do this but there are a lot of people out there who are not being told of this issue and will be surprised when the time comes.

 

[meagain]

I am not an alarmist but a realist, I would just prefer that we were told the truth by our employers. I like every other service leaver will now have to make some kind of extra provision to get the same level of benefit. I will do this but there are a lot of people out there who are not being told of this issue and will be surprised when the time comes.

Oh no, I'm starting to agree with everyone now! Like it or not pensions are effectively going to be reduced as the Country can't afford it anymore. The only thing to do is start saving to provide the extra money when you need it.

 

[Tashy_Man]

Oh no, I'm starting to agree with everyone now! Like it or not pensions are effectively going to be reduced as the Country can't afford it anymore. The only thing to do is start saving to provide the extra money when you need it.

Ok...so how much are we gonna need to provide for ourselves ?

Is there a way of opting out of the state pension and the little return it brings ?

Crack on...............DT_Xtremez_09:

 

[Realist78]

Oh no, I'm starting to agree with everyone now! Like it or not pensions are effectively going to be reduced as the Country can't afford it anymore. The only thing to do is start saving to provide the extra money when you need it.

Not whilst we're giving out foreign aid to those that don't need it, not whilst we're suffering massive benefit fraud, not whilst we're the benefit capital of Europe, not whilst we've propped up the banking sector to the same magnitude of the National Debt...DT_Xtremez_32:

 

[Downsizer]

Interim Report!

Interim Report!

So Huttons interim report on pensions is out...

Here

I like this quote

The Commission does not recommend introducing contribution rates for the armed forces at this time.

 

[Billy Whizz]

So Huttons interim report on pensions is out...

Here

I like this quote

Not like we've only just had a major overhaul of the Military Pension is it!

 

[vim_fuego]

Just goes to show that you can 'involve' yourself in some fairly awful activities and still get the pension:

http://www.chasepost.net/news-in-ca...r-pervert-branded-disgraceful-93633-27425463/


God help you if you can't run in between a couple of cones though...DT_Xtremez_42:

 

[Belle and Sebastian]

Just goes to show that you can 'involve' yourself in some fairly awful activities and still get the pension:

http://www.chasepost.net/news-in-ca...r-pervert-branded-disgraceful-93633-27425463/


God help you if you can't run in between a couple of cones though...DT_Xtremez_42:

Hmm, so you lose the pension if you screw over the country but not if you do the same to kiddies.......

 

[222]

Latest on Hutton Pension Review

Latest on Hutton Pension Review

What do we think? Good news or will they 'get us' in another way?

http://www.guardian.co.uk/money/2010/oct/07/public-sector-pensions-lord-hutton-report

In brief:

"There is good news for some: the report suggests it would not be an appropriate short-term measure to introduce pension contributions for members of the armed forces, who currently pay nothing into their schemes."

 

[wobbly]

We don't pay anything? I thought this was because we get less money than our civilian counterparts!

 

[222]

Hey, don't shoot the messenger! I was only directly quoting Hutton! But he is right. We may have a lesser pay, x-factor, etc, for many reasons but the fact is we don't contribute to are pensions directly. If they stick to that for the time being then its a fairly good concession considering what they could have done. Please feel free to, rip my theory to shreds...

 

[chiprafp]

Wobbly

That is mentioned in the report, that the Armed Forces Pay Review Board consider our contributions when making decisions on our pay.

 

[Wuuf]

Wobbly

That is mentioned in the report, that the Armed Forces Pay Review Board consider our contributions when making decisions on our pay.

Exactly: The AFPRB report in 2007 stated:

"Our valuation of Armed Forces’ pensions suggested that the adjustment we apply to comparator pay to reflect the relative value of pensions should be 4 per cent."

Basically our pay is reduced by 4% for the pension outlay.​

 

[Realist78]

Hey, don't shoot the messenger! I was only directly quoting Hutton! But he is right. We may have a lesser pay, x-factor, etc, for many reasons but the fact is we don't contribute to are pensions directly. If they stick to that for the time being then its a fairly good concession considering what they could have done. Please feel free to, rip my theory to shreds...

True, however, when comparing our pay to civilians for the AFPRB reports, they deduct 7% (AFPRB 2007 report, para 2.16) from the civilian figure to arrive at a recommendation on our pay rise. If they didn't do this, our pay would be higher so are we contributing through the backdoor, yes IMO.

Edited, this figure was used between 2001 and 2007, then reduced to 4% in the 2007 report.