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pensions email from SSTA

Discussion in 'Scotland - education news' started by kalamazoo, Nov 3, 2011.

  1. Hi

    Maybe this is a mistype but the email from SSTA states:

    "...a scheme member earning £34,200 at changeover will accrue a pension pot of £570 in year 1 of the average salary pension scheme."

    What I don't understand is that if I've to pay 9.6% (£3283.20) and my employer 12.1% (£4138.20) per year then why is my pension pot only increased by £570? Is it because my contributions don't actually have anything to do with my personal pension but just go in to some fund that pays current pensioners?

    Thanks

    kzoo
     
  2. Hi

    Maybe this is a mistype but the email from SSTA states:

    "...a scheme member earning £34,200 at changeover will accrue a pension pot of £570 in year 1 of the average salary pension scheme."

    What I don't understand is that if I've to pay 9.6% (£3283.20) and my employer 12.1% (£4138.20) per year then why is my pension pot only increased by £570? Is it because my contributions don't actually have anything to do with my personal pension but just go in to some fund that pays current pensioners?

    Thanks

    kzoo
     
  3. cochrane1964

    cochrane1964 New commenter

  4. autoq

    autoq New commenter

    Hmmm.
    Actually, I took it to mean just the that you will get £570 per year of an actual pension (probably based around 1/60 of your salary). I don't think they actually mean a pension pot in the traditional sense which is a slightly different thing. To be honest with salary based earning schemes, the idea of a (personal) pot doesn't really apply. If your salary does not change, then you will get approx £500 per year added onto your annual pension for every year which you contribute.
    I have a private pension from a previous career , it does have a "pot" and the value of pension I get will completely depend on the size of that pot. That's one of the good things about a salary based scheme. The vaguries of the stock market/annuity rates ,etc are all irrelevant. You know what you are going to get (the only question just now is ... when you will get it !).
    Although overall the whole set of proposals is defintely to be fought against, an average salary scheme is actually just plain sensbile because then at least your pension will, in some way, reflect what you have paid in. The idea of final salary is actually pretty ludicrous (nobody in their right mind would setup a scheme like that today). To take it to the limit, I could be on £30000 a year for 30 years and then get a promotion onto e.g.£60000 for 3-5 years and my pension would effectively double !
    Average is definelty more sensible.
     
  5. Dominie

    Dominie New commenter

    I think it may refer to the indexation arrangements for the new CARE (career average) pension proposals intended to counter inflation. An abandonment of a final salary pension means that just such a mechanism would be needed. The way to find out is to send an email query to info@ssta.org.uk.
     
  6. Dominie

    Dominie New commenter

    A wee Math's test ...

    Whats 6.5% (current teachers' contribution rate) of ...

    a. £32k (top of the main scale)

    b. £65k (a stab at a Heidie's salary)

    You also are mistaken re the final salary part. A teacher's pension is based on the average of the best 3 salary years in the final ten (updated for inflation). So we already have some elements of a career average pension.

    The problem is that this kind of detail (which is crucial to understanding pensions) is of no interest to the ConDems who simply want to hammer public servants with a blunt fiscal instrument in order to repay the deficit and because Tories despise public service and want to bring in the private sector at every opportunity.
     
  7. sbf

    sbf New commenter

    The Average is definatly a good idea, and no Dominie, we dont have any kind of average. The system you are talking about is to ensure that you dont loose value in case you make changes as you get older.
    The real benifit for average does not really matter to many teachers, its more for civil servants who can start on £25k and after 20 years be earning £120k. They are in the £120k job for a year then retire and a mega pension.
    My biggets issue with the whole thing is adding contributions when we already have a 2 year pay freeze and linking the pension to the state pension age. Who knows what that might go up to in 10 years time 72, 75, 78?


     
  8. kibosh

    kibosh Star commenter

    Death?
     

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