Mandatory Ponzi scheme enrolment

[booyaka]

From my understanding, you are auto-enrolled into this scheme every year, and have to opt-out each year if you wish to.

Personally, I would prefer not to be told what to do with my money, and have more choice of where it's invested etc.
I've decided to opt-out until 2017, as the percentages are a lot more attractive. At the moment it's 1%/1%, which on my wages is tiny.

it's every 3 years. If you opt out your employer has to keep a record of the date you opt'd out and then automatically enroll you back in 3 years later, you then decide if you want to opt out again, if you do then 3 years later they opt you back in ....... etc etc.

It's a nightmare for employers to keep a track of this among larger workforces, opting out, contributions refunds, leavers, joiners etc.

That's why it's a good time for me at the moment - loads of employers have no idea how/what to do etc - so looking for advice and options etc.

 

[Destination]

The fact that you have an average career pension means they fund a significant portion of it by default. As the links show, if you are on the NHS Pension Scheme as you say you are (I assume as an a Provider or Performer if you are a dentist and not employed by the GDS/PDS as a limited company contractor and are eligible for the NHSPS scheme?) then your NHS employer does contribute to your pension. The second link explains the various pension methodologies depending on which scheme you are in (post 2008 or not) and your earnings..(I assume from your contribution level that you are high up on that earnings table)

You may not think the NHS contribute, but the very nature of the two schemes means they have to as your contributions would not cover either section of the pension you receive (The trustees estimate this is the equivalent of 14% of the individuals pensionable earnings on average)...you are not on a money purchase plan, which the majority of company pensions are these days where the pension you receive is entirely dependant upon contributions.

Your pension, while you may be making higher contributions, is still one of the best in the country, is based on your Career Earnings not your contributions and is guaranteed by the Government....you are in a very good position regarding your pension despite your increased contributions and understandable annoyance at having to pay them.

http://www.nhsbsa.nhs.uk/Documents/Pensions/GDP_Pensions_Guide_(V1)_09.2011.pdf

http://www.nhsbsa.nhs.uk/Documents/Pensions/GDP_Pensions_Guide_(V2)_12.2012.pdf

Castiel I read what you are typing, and I conceptually understand what you are saying, but the contribution they make does not exist. Ten years ao my contributions were half and they claimed to make contributions of 8%, now I am making 12.3 plus and they claim they are adding 14%. This is the same 1995 scheme, and all the benefits and final amounts are exctly the same.

I won't say that the pension isn't a bad one, it is good, else no one would consider nhs dental at all.
The govt can't just suddenly claim they are contributing 14%, when they used to contribute 8% when nothing has changed at all in any rate or payout, or lumpsum or dead in service benefit.
It is all mythical figures, they were before and they are mytical now.

That is the problem with the country, everyone should have been on average salary from the start, with a proper contribution, and they still haven't realised that doing so will remove any black hole in future. Civil servants on final salary non- contributary, or 1% contributions, such as those in planning are where the issue lies, and this needs addressed across the entire service.

If everyone was paying 12-13% for an average salary scheme, then we wouldn't have any pensions mess.

 

[Robosapien]

Spacktards gon' spack.

 

[div0]

Was it mandatory for you to use the word 'ponzi' in every sentence?

 

[WillyNelson]

Castiel I read what you are typing, and I conceptually understand what you are saying, but the contribution they make does not exist. Ten years ao my contributions were half and they claimed to make contributions of 8%, now I am making 12.3 plus and they claim they are adding 14%. This is the same 1995 scheme, and all the benefits and final amounts are exctly the same.

I won't say that the pension isn't a bad one, it is good, else no one would consider nhs dental at all.
The govt can't just suddenly claim they are contributing 14%, when they used to contribute 8% when nothing has changed at all in any rate or payout, or lumpsum or dead in service benefit.
It is all mythical figures, they were before and they are mytical now.

I think you're misunderstanding how a DB (final salary) pension scheme works. The benefit you will receive is defined by a calculation against your final or career average salary. Back in 1995 there would have been expectations of how much you and your employer's contributions would grow and the funding level (how much you contribute) would have been set to fund your defined benefit at the point of retirement. Because the markets and investments have not performed as expected you need to increase the funding in order to achieve the same defined benefit. This is why your contributions have increased but your benefits have not.

 

[Glaucus]

I think you're misunderstanding how a DB (final salary) pension scheme works. The benefit you will receive is defined by a calculation against your final or career average salary. Back in 1995 there would have been expectations of how much you and your employer's contributions would grow and the funding level (how much you contribute) would have been set to fund your defined benefit at the point of retirement. Because the markets and investments have not performed as expected you need to increase the funding in order to achieve the same defined benefit. This is why your contributions have increased but your benefits have not.

Most of these schemes simply weren't putting enough into the pot to start with, hence they've gone up.
Then silly people protest in anger about loosing/paying more for something they never paid enough money in to support in the first place.

 

[WillyNelson]

Exactly.

 

[Destination]

So why have they increased it on some but not others, there are still final salary scheme out there, there are still 1% and zero % contribution schemes? They'll never pay for themselves.
There is no pot there is no money, there never was a pot, there never was an investment.
Private pensions might have worked that way, and indeed have been performing poorly. You conceptually don't seem to understand that when someone works under a term of contract employment, they take a job based on that employment terms, 15 years later they change the end result by altering what you pay as you go along. there still isn't a pot, or a contribution, its all complete fabrication. The markets can't perform badly when they were never invested into in the first place.

If the government actually cared or bothered they would reset the entire system starting with any new employee, average salary, based on contributions, but that would actually mean the government would have to create a pot and invest it. They are incapable of doing this, they have no money to invest, unless they take government loans from the alleged contributions instead of the IMF, hedge funds and others.

 

[div0]

Most of these schemes simply weren't putting enough into the pot to start with, hence they've gone up.
Then silly people protest in anger about loosing/paying more for something they never paid enough money in to support in the first place.

I can't agree with this.

Obviously people are going to be annoyed when a change is made that negatively affects them. Yes, a rational person will understand why the change may need to be made, but I don't see anything 'silly' about being annoyed at the change.

If your bank turned round to you at the end of your mortgage and said, actually we still own x percent of your house, because you didn't pay enough in - despite you paying in exactly what had previously been agreed. Then you'd rightly be a bit annoyed.

Pension schemes being poorly managed, so that they promise to pay out more than they actually can is not the problem of the employee. Whether the shortfall be down to reduced return on investment, or just a lack of input to the pot - it is all still poor management of the fund.

In the case of pensions the agreement is basically you pay us x amount per year for y years and at the end of it we will then give you z.

For a mortgage the agreement is basically you pay us (back) x amount per year for y years and at the end of it we will accept that your debt is paid.

I don't see anything silly about people not being happy when the 'deal' they originally signed up for is changed so that they don't get out what they were originally 'promised'.

Don't get me wrong, I know things aren't simple and I fully accept that there are reasons for such schemes being changed - I just think it's harsh to call people 'silly' for objecting to it.

 

[Glaucus]

I can't agree with this.

it.

There's a by difference between being annoyed and protesting/striking.

My pension has changed for the worse and didnt feel the need to strike, and I bet before retirement it will change several times again. They is lay aren't affordable. I don't belive I/company is paying in enough to sustain final salary pension.