Thursday, 30 July 2009

Union pensions stuff

1. The TUC has produced a rather useful response to some of the guff talked about public sector pensions. You can download it here.

2. GMB pensions supremo Naomi has issued the latest communique from the Worple Road command bunker. Full text below:


Sun hats and waterproofs at the ready and welcome to the summer edition of the Pensions Q&A. A little pension based sunshine in an otherwise grim world. This month some thoughts on what to do when you reach 65, presuming you don’t have the Latin to become a judge.

WHAT TO DO WHEN YOU’RE 65

1. Retire
Well it’s an idea. Not necessarily possible if your pension proves itself to be insufficient to fund even the most frugal of existences. You may of course have no choice in the matter. At the moment with six months notice your employer can say “Happy 65th birthday, don’t come into work again” – but this could be changing, see below…
At retirement of course you will be expecting your employers (old and new) and the state to throw money at you so you can enjoy the fruits of your labours. When you wake up you’ll realise there are a bunch of financial decisions to be made and which yacht you’re going to buy isn’t one of them. If you have a defined benefit pension (either from the company you’re retiring from or an earlier job) you will have a statement saying how much annual pension you’ll receive, whether you’ll get any cash automatically and if you can get more cash by trading some of that annual pension. If you have a defined contribution scheme you may need to buy an annuity (anorak word for pension). Either you’ll be pointed towards one or be able to choose from all the products those lovely insurance companies have to offer. Usually good to shop around when in this situation, you wouldn’t get a mortgage from the first bank you find on the high street, treat your pension the same way. You’ll need to decide what sort of pension you want, one with survivor benefits if you die, one that keeps pace with inflation? These will reduce the annual amount of pension at the outset but in the long term might well be worth it – your choice.
If you’ve got a full national insurance record, the government will pay out £95.25 a week to you. If you’re on a low income you should also claim Pension Credit, your taxes pay for it, if you qualify you should claim it. Too many people don’t (two million at the last count).

2. Work
If you’re a creature of habit and don’t see any reason to stop setting the alarm clock each day you may want to carry on working. There may not be much option if your watered down defined contribution pension hasn’t built up enough money to buy a decent pension or your defined benefit scheme has been so diluted that decades of saving has resulted in just enough cash to stop you qualifying for Pension Credit.
Fortunately, and not before time, the government has realised that having a default retirement age, that is an age at which you can be forcibly ‘retired’ (or sacked in normal language) isn’t such a good idea. They’ve announced that the review (removal) of the default retirement age will happen next year instead of in 2011. The government’s stated reason for this is the current economic climate, seemingly the catch-all justification for anything these days. Clearly removing it because that’s the right thing to do completely escaped them as a course of action.
GMB has been arguing for its removal since it was created in 2006 (the default retirement age I mean, not the union – 1889 since you ask). A two-tier workforce based on age is as bad for the economy and society as one based on gender or race etc. The default retirement age has allowed employers to offer worse terms and conditions to older workers, to dismiss older workers and to refuse to hire older workers. The sooner it goes the better.

3. Emigrate
Denmark apparently has the most content population, they also have a basic state pension of £139 a week which probably helps. Before you all make a dash for the land of beer and bacon I should warn you that you have to live in Denmark for 40 years to qualify (there’s always a catch).

AND FINALLY…
Before you get to 65, perhaps it’s worth thinking about where you’re spending your money today. One of the more suspicious/interesting surveys in recent times examined the amount people save for their pension compared with the amount they spend having affairs. Apparently, and the mind boggles how they worked this out, your average unfaithful partner spends £291 a month on their affair but puts only £59 a month into their pension. Of course if their expression of wish form isn’t up to date, the spouse/civil partner could at least be in line for some death benefits…

So there you have it, more amazing information and news on the pensions page of GMB’s website: www.gmb.org.uk/pensions

3 comments:

buyapension said...

I think that buy annuity is a very good option for your golden years, because is a guaranteed annuity, you’d could enjoy of better way your retirement, without to worry for her income yearly.

tapperh said...

Tom
The TUC's communication is disingenuos- public sector pensions cover a small proportion of the UK adult population but account for nearly as much as the state pensions that cover all of us. They cost council tax payers and income tax payers substantial sums. I would like to see just how much on a per capita basis. When that figure is worked out perhaps we can compare it with the average personal contribution to people's own pensions or perhaps the average projected contribution into personal accounts. I would not be surprised if a substantial proportion of the UK population are contributing more into other people's public sector pensions than their own. There's no opt-out on that and it's hitting the low earning householder hardest. The TUC should not be hiding behind percentages of GDP which is meaningless to the average person, they should be examining the social consequences of a two tier pension scheme in a blanced fashion.

Nicolas Holzapfel said...

Thank you for that helpful guide. If only government publications could be written like that.

Now back to not thinking about pensions because it seems too far away.